10-K
HENRY SCHEIN INC (HSIC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C.
20549
FORM
10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 27, 2025
☐
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
Securities registered pursuant to Section 12(g)
of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
YES
:
☒
NO:
☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
YES:
☐
NO
:
☒
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared
or issued its audit report.
☒
If securities are registered pursuant to
Section 12(b) of the Act, indicate by
check mark whether the financial statements of
the registrant included in the
filing reflect the correction of an error to previously issued financial statements.
☐
Indicate
by
check
mark
whether
any
of
those
error
corrections
are
restatements
that
required
a
recovery
analysis
of
incentive-based
compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
YES:
☐
NO
:
☒
The aggregate market value of the registrant’s voting stock held by non-affiliates of the registrant, computed by reference to the closing sales price as
quoted on the Nasdaq Global Select Market on June 28, 2025, was approximately $
8,885,457,000
.
As of February 17, 2026, there were
114,704,121
shares of registrant’s Common Stock, par value $.01 per share, outstanding.
Documents Incorporated by Reference:
Portions of the Registrant’s definitive proxy statement to be filed pursuant to Regulation 14A not later than 120 days after the end of the fiscal year
(December 27, 2025) are incorporated by reference in Part III hereof.
2
TABLE OF CONTENTS
Page
Number
PART I
ITEM 1.
Business
3
ITEM 1A.
Risk Factors
28
ITEM 1B.
Unresolved Staff Comments
42
ITEM 1C.
Cybersecurit
y
43
ITEM 2.
Properties
45
ITEM 3.
Legal Proceedings
45
ITEM 4.
Mine Safety Disclosures
45
PART II
ITEM 5.
Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
46
ITEM 6.
[Reserved]
47
ITEM 7.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
48
ITEM 7A.
Quantitative and Qualitative Disclosures About Market Risk
67
ITEM 8.
Financial Statements and Supplementary Data
69
ITEM 9.
Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure
137
ITEM 9A.
Controls and Procedures
137
ITEM 9B.
Other Information
141
ITEM 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
141
PART III
ITEM 10.
Directors, Executive Officers and Corporate Governance
141
ITEM 11.
Executive Compensation
141
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
142
ITEM 13.
Certain Relationships and Related Transactions, and Director Independence
142
ITEM 14.
Principal Accounting Fees and Services
142
PART IV
ITEM 15.
Exhibits and Financial Statement Schedules
142
ITEM 16.
Form
10-K Summary
149
Signatures
150
Table of Contents
Index to Financial Statements
3
PART
I
ITEM 1.
Business
General
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.
Our philosophy is grounded in our
commitment to serve as trusted advisors and help customers operate a more
efficient and successful business so the
practitioner can provide better clinical care.
With 94 years of experience distributing health care products, we have built a vast base of small, mid-sized
and
large customers in the dental and medical markets, serving more than one million customers worldwide
across
dental practices, laboratories,
physician practices, and ambulatory surgery centers, as well as government,
institutional health care clinics, home health providers, and other alternate care
clinics.
We are headquartered in Melville, New York
and employ more than 25,000 people.
Approximately 48% of our
workforce is based in the United States and 52% outside of the United States.
Our operations or affiliates are
located in 34 countries and territories.
Our broad global footprint has evolved over time through
organic growth as
well as through the contribution from our strategic acquisitions.
We stock a comprehensive selection of more than 300,000 branded and Henry Schein corporate brand products
through our network.
Our infrastructure, including over 5.4 million square feet of
space in 38 strategically located
distribution centers and 0.6 million square feet of space in 17 manufacturing
facilities around the world, enables us
to historically provide rapid and accurate order fulfillment, 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, which we
believe is a competitive advantage.
We conduct our business through three reportable segments:
•
Global Distribution and Value-Added Services: 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 practice services.
This segment also markets and sells under our own corporate
brand,
a portfolio of cost-effective, high-quality consumable merchandise;
•
Global Specialty Products: manufacturing, marketing and sales of dental
implant and biomaterial products;
endodontic, orthodontic and orthopedic products and other health
care-related products and services; and
•
Global Technology: development and distribution of practice management software, e-services, and other
products, which are distributed to health care providers.
Recent Developments
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent
Developments” herein for a discussion related to recent Company developments.
Table of Contents
Index to Financial Statements
4
Industry
The distribution and value-added services industry, as it relates to office-based health care practitioners, is
fragmented and diverse.
The industry spans a wide spectrum, from sole practitioners or small
independent offices
to mid-size and large group practices.
These larger organizations may include just a few clinicians or scale to
several hundred practices, often owned and operated by dental support organizations
(DSOs) or integrated delivery
networks (IDNs).
Due in part to the limited capacity 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, hygienist or office manager.
Supplies and small equipment are generally
purchased from more than one distributor, with one generally serving as the primary supplier.
The distribution and value-added services industry should benefit from
favorable long-term macro trends that
should help stimulate patient traffic and demand for products and services.
This includes an aging population,
increased health care awareness and the importance of preventive care,
an increasing understanding of the
connection between good oral health and overall health, improved access
to care globally, the proliferation of
medical technology and testing, new pharmacology treatments and
expanded third-party insurance coverage,
partially offset by the effects of unemployment on insurance coverage and technological
improvements, including
the advancement of software and services, prosthetic solutions and telemedicine.
In addition, the non-acute market
continues to benefit from the shift of procedures and diagnostic
testing from acute care settings to alternate-care
sites, particularly physicians’ offices and ambulatory surgery centers.
Customer consolidation will likely lead to multiple locations under
common management and the movement of
more procedures from the hospital setting to the physician or alternate
care setting, as the health care industry is
increasingly focused on efficiency and 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 Health Maintenance
Organizations (“HMOs”), management service organizations, group practices, other managed
care accounts and
collective buying groups such as Dental Service Organizations (“DSOs”) and Group Purchasing
Organizations
(“GPOs”), 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 the potential to favorably affect demand for technology solutions,
including software, which
can enhance the efficiency and facilitation of practice management.
Table of Contents
Index to Financial Statements
5
Competition
The distribution and manufacture of health care supplies and equipment is
highly competitive.
Many of the health
care products we sell are available to our customers from a number of suppliers.
In addition, our competitors could
obtain exclusive rights from manufacturers to market particular products.
Manufacturers also could seek to sell
directly to end-users and thereby eliminate or reduce our role and
that of other distributors.
In certain parts of the
dental end market, such as those related to dental specialty products, and
medical end market manufacturers already
sell directly to end customers.
In North America, we compete with other distributors, as well as several
manufacturers, of dental and medical
products, primarily on the basis of price, breadth of product line, e-commerce
capabilities, customer service and
value-added products and services.
In the dental distribution market, our primary competitors in the U.S. are
the
Patterson Dental division of Patterson Companies, Inc. and Benco Dental Supply
Company.
In addition, we
compete against a number of other distributors that operate on a national,
regional and local level.
Our primary
competitors in the U.S. medical distribution market, which accounts
for the large majority of our global medical
sales, are McKesson Corporation and Medline Industries, Inc., which are national
distributors.
We also compete
with a number of regional and local medical distributors, as well as a number
of manufacturers that sell directly to
physicians and patients in their homes.
Outside of the U.S., we believe we are the only global distributor of supplies
and equipment to dental practices, and
our competitors are primarily local and regional companies.
We compete on the basis of price and customer service
against several large competitors, including Cadence Group, Proclinic Group, DD
Group, Nuent Group, Lifco AB,
Planmeca Group, Dental Union, and Dental Bauer, as well as a large number of other dental and medical product
distributors and manufacturers.
Within Global Specialty Products, our primary global competitors include Straumann, Envista, Zimvie,
and
Dentsply Sirona for dental implants.
These companies, along with Geistlich Pharma AG and Botiss Biomaterials
GmbH, also compete with us in the biomaterials for dental tissue
regeneration market.
Within Global Technology,
we compete against numerous dental software providers, including the Eaglesoft
division of Patterson Companies, Inc., Carestream Dental LLC, Centaur Software
Development Co Pty Ltd. (d.b.a.
dental4windows, dental4web), Open Dental Software, Inc., PlanetDDS
LLC, Good Methods Global Inc. (d.b.a.
CareStack), Curve Dental, LLC., the NextGen division of Quality Systems,
Inc., eClinicalWorks and Epic Systems
Corporation.
In other software end markets, including revenue cycle management,
patient relationship
management and patient demand generation, we compete with companies
such as Vyne
Medical, Dental
Intelligence, and Weave Communications, Inc.
Many of these competitors connect to our software platforms
through our API program.
Manufacturing and Raw Materials
We manufacture certain of our specialty products (dental implants, endodontics, and orthopedics) at our 17
company manufacturing sites.
We also outsource certain manufactured products to third parties.
We purchase our
raw materials from distributors or mills.
Although no single supplier is material, raw materials may be sourced
from a single supplier or a limited number of suppliers for reasons
of quality assurance, regulatory requirements,
cost, and availability.
We believe that we have a readily available supply of raw materials and components sourced from various suppliers
for our major product lines with some redundancy to ensure product availability.
In recent periods, we have
experienced increased costs due to labor cost increases, source of supply, and tariffs, which may have had a
negative impact on our profit margins.
In most cases, through negotiations, consolidation of suppliers,
and
insourcing, we have been able to reduce the impact.
Table of Contents
Index to Financial Statements
6
Competitive Strengths
We have 94 years of experience in distributing products to health care practitioners resulting in strong awareness of
the Henry Schein
®
brand.
Our competitive strengths include:
A focus on understanding and meeting our customers’ unique needs.
Leveraging our deep expertise in the end
markets we serve, we are committed to providing customized value-driven products
and solutions to our customers
that reflect the technology-driven services best suited for their practice
needs.
We are committed to continuing to
enhance these offerings through organic investment in our portfolio and our teams, as well as
through the
acquisition of new products and services that may help us better serve
our customers.
Direct sales and marketing expertise.
Our sales and marketing efforts are designed to establish and solidify
customer relationships through coordinated and tailored engagement strategies
that connect customers where and
how they prefer.
We deliver value by emphasizing our broad product lines, including exclusive distribution
agreements, competitive prices and ease of order placement, particularly
through our e-commerce platforms.
The
key elements of our direct sales and marketing efforts are:
•
Field sales consultants.
Our field sales consultants, including equipment and specialty sales specialists,
covering major North American, European and other international
markets.
These consultants complement
our direct marketing and telesales efforts and enable us to better market, service
and support the sale of
more sophisticated products and equipment.
•
Omni-channel marketing.
We market to existing and prospective office-based health care providers
through a combination of owned, earned and paid digital channels, tradeshows,
as well as through catalogs,
flyers, direct mail and other promotional materials.
Our strategies include an emphasis on educational
content through webinars and content marketing initiatives.
We continue to leverage our marketing
technology and data insights to improve our targeting capability and the relevance of messaging
and offers.
•
Telesales.
We support our direct marketing effort with inbound and outbound telesales representatives,
who facilitate order processing, generate new sales through direct and frequent
contact with customers and
stay abreast of market developments and the hundreds of new products,
services and technologies
introduced each year to educate practice personnel.
Through automation and skilled agents, we have
strengthened our support model, enhancing the customer experience.
•
Electronic commerce solutions.
We provide our customers and sales teams with innovative and
competitive e-commerce solutions.
We continue to invest in our e-commerce platforms so customers can
find the products they need and to enable an engaging purchase experience,
supported by excellent
customer service.
Additionally, we have built enhanced account management tools that meet the needs of
customers of all sizes.
Our global e-commerce platform,
henryschein.com, focuses on accelerating the
adoption of digital commerce technologies across our Company, driving the transformation of our business
strategy and operations using digital technology, and enabling the growth of digital sales revenue.
•
Social media.
Our operating entities and employees engage our customers and
supplier partners through
various social media platforms, which are an important element of our
communications and marketing
efforts.
We continue to expand our social media presence to raise awareness about issues, engage
customers beyond a sale and deliver services and solutions to specialized
audiences.
Cost-effective purchasing
.
We believe that cost-effective purchasing is a key element to maintaining and enhancing
our position as a competitively priced provider of health care products.
We continuously evaluate our purchase
requirements and suppliers’ offerings and prices in order to obtain products at the
lowest possible cost.
In 2025,
our top 10 Global Distribution and Value-Added Services suppliers and our single largest supplier accounted for
approximately 25% and 4%, respectively, of our aggregate purchases.
Efficient distribution
.
We distribute our products from our 38 strategically located distribution centers.
We strive
to maintain optimal inventory levels in order to satisfy customer demand
for prompt delivery and complete order
Table of Contents
Index to Financial Statements
7
fulfillment.
These inventory levels are managed on a daily basis with
the aid of our management information
systems.
Once an order is entered, it is electronically transmitted to the distribution
center nearest the customer’s
location for order fulfillment.
Supply chain solutions.
We have implemented a fulfillment system, supported by customized inventory
management systems for individual practices, large group practices, and integrated
delivery networks.
Commitment to superior customer service
.
We maintain a strong commitment to providing superior customer
service.
We frequently monitor our customer service through customer surveys, focus groups and statistical
reports.
Our customer service policy primarily focuses on:
•
Exceptional order fulfillment.
We ship an average of approximately 150,000 cartons daily.
•
Comprehensive ordering process.
Customers may place orders 24 hours a day, 7 days a week via e-
commerce solutions, telephone, e-mail and mail.
Broad product and service offerings at competitive prices.
We offer
a broad range of products, including the Henry
Schein corporate brand, and services to our customers at competitive prices,
in the following categories:
Global Distribution and Value-Added Services
•
Consumable merchandise and equipment.
We distribute consumable products, small equipment, laboratory
products, large equipment, equipment repair services, branded and generic pharmaceuticals,
vaccines,
dental specialty products, diagnostic tests, infection-control products and vitamins.
We stock a
comprehensive selection of more than 300,000 products and Henry Schein
corporate brand cost-effective,
high-quality consumable merchandise and specialty products.
•
Home health business.
We distribute homecare medical products, including incontinence, urology, ostomy,
enteral nutrition, advanced wound, and diabetes supplies, as well as
continuous glucose monitoring devices.
These products are delivered directly to patients in their homes, providing
convenience and accessibility
while supporting patient care and adherence to treatment plans.
•
Value
-added products and services.
We offer a broad range of value-added solutions, including continuing
education programs for practitioners, consulting services, and practice
services.
Our suite of technology-
driven tools and expert advisory services helps health care professionals
enhance practice efficiency and
improve patient outcomes.
•
Repair services.
We have 127 equipment sales and service centers worldwide that provide a variety of
repair, installation and technical services for our health care customers.
Our equipment service technicians
understand the importance of having tools and equipment running smoothly
to operate offices without
interruption.
Our manufacturer-trained technicians cover major markets and deliver
personalized and local
services, providing installation and repair services for dental handpieces, dental
and medical small
equipment, table-top sterilizers and large dental equipment.
•
Financial service
s.
We offer our customers solutions in operating their practices more efficiently by
providing access to a number of financial services and products
provided by third party suppliers (including
non-recourse financing for equipment, technology and software
products, non-recourse practice financing
for leasehold improvements, business debt consolidation and commercial
real estate, non-recourse patient
financing and credit card processing) at rates that we believe are generally
lower than what our customers
would be able to secure independently.
We also provide staffing services, dental practice valuation and
brokerage services.
Table of Contents
Index to Financial Statements
8
Global Specialty Products
•
Dental implants and digital solutions.
We develop, manufacture, market and distribute a broad portfolio of
patented and evidence-based dental implants, prosthetic components,
instruments and digital workflow
solutions for implant-based tooth restorations.
With research and development and manufacturing facilities
in the United States,
Switzerland, Germany, Brazil and France, we serve customers with various global and
regional implant brands across a wide range of price segments.
Supported by our specialized sales force,
we market our products and solutions in approximately 90 countries, directly
to dental practices and
surgical specialists via our sales subsidiaries and network of international third-party
and Henry Schein
distribution partners.
•
Biomaterials.
We market and distribute a broad portfolio of biomaterials for dental tissue
regeneration.
The product portfolio primarily consists of a broad range of
privately branded allograft,
xenograft, and synthetic biomaterials.
Our dedicated biomaterial specialists support our direct implant
sales force and Henry Schein oral surgery-focused distribution channels.
•
Orthodontics.
We develop, manufacture, and distribute a comprehensive range of orthodontic products,
including brackets, braces, aligners, and accessories.
In collaboration with leading clinicians, our research
and development teams drive innovation to enhance patient care.
With manufacturing facilities in the
Unted States, Mexico, and France, we serve dental practices in over
70 countries through our specialized
sales force, international partners, and the Henry Schein distribution
network.
•
Endodontics
.
We develop, manufacture, market and distribute a complete portfolio of endodontic products
across multiple brands catering to both endodontic specialists and general
practitioners.
This includes
stainless steel and NiTi shaping files, irrigation solutions, endodontic power equipment, sealers,
and root
repair materials.
Leveraging our research and development and manufacturing facilities
in the United
States, Switzerland, and Brazil we focus on delivering meaningful
innovation to help advance endodontic
care, provide advanced training and education through a network of training
centers and digital services,
and serve our customers through multiple brands and multiple channels
addressing all segments of the
market.
By investing in dedicated endo-specific competencies and resources
to support our different sales
channels, we are successfully marketing our products and brands
in over 90 countries.
•
Orthopedics
.
We develop, manufacture and distribute innovative implants and instruments that are
designed to treat injuries, diseases and disorders of the limbs, joints
and related tissues in the upper and
lower extremities.
We also provide surgical accessories, including blades, burs, drills, a variety of pins and
wires to support orthopedic surgical procedures, and a portfolio of specialized instruments
designed to
simplify implant removal and preserve patient bone-stock during
revision arthroplasty procedures.
We
employ an extensive global network of independent sales agencies
and direct sales specialists, and we
partner closely with IDNs and GPOs.
The majority of our revenue is generated in the United States market,
with the remaining revenue coming from Canada and countries in Latin America,
Europe and Asia Pacific
region.
•
Other.
We also source or manufacture other medical and dental health care products and services that are
sold to customers, including handpiece and small equipment, rotary, hand instruments, repair services,
restoratives and preventives, as well as certain other health care-related
consumable merchandise products
and services.
Table of Contents
Index to Financial Statements
9
Global Technology
•
We sell practice management, business analytics, revenue cycle management, clinical workflow, artificial
intelligence, patient engagement and patient demand creation software
solutions to our dental
customers.
Our practice management solutions provide practitioners with
electronic medical records,
patient treatment history, analytics, billing, accounts receivable analyses and management, appointment
calendars, revenue cycle management, clinical workflow, electronic claims processing,
network and
hardware services, e-commerce and electronic marketing services,
e-Prescribe medications and prescription
solutions, sourcing third party patient payment plans, and transition
services and training and education
programs for practitioners.
We have technical representatives supporting customers using our practice
management solutions and services.
As of December 27, 2025, we had an active user base of approximately 95,000
practices and 324,000
consumers, including users of AxiUm®, Dentally®, Dentrix Ascend®,
DentalVision®, Dentrix® Dental
Systems, EXACT®, Gesden®, Jarvis Analytics®, Oasis, Officite™, OrisLine®, PBS Endo®,
Power
Practice® Px and subscriptions for Demandforce®, Sesame, and Lighthouse
360® for dental practices and
DentalPlans.com® for dental patients.
Products and Services
The following table sets forth the percentage of consolidated net sales
by principal categories of products and
services offered through our Global Distribution and Value-Added Services,
Global Specialty Products, and Global
Technology reportable segments:
December 27,
December 28,
December 30,
2025
2024
2023
Global Distribution and Value
-Added Services:
Dental merchandise
(1)
36.6
%
37.3
%
38.8
%
Dental equipment
(2)
13.6
13.6
13.5
Value
-added services
(3)
1.8
1.8
1.6
Total
Dental
52.0
52.7
53.9
Medical
(4)
32.5
32.2
31.7
Total
Global Distribution and Value
-Added Services:
84.5
84.9
85.6
Global Specialty Products
(5)
11.7
11.4
10.8
Global Technology
(6)
5.1
5.0
4.9
Eliminations
(1.3)
(1.3)
(1.3)
Total
100.0
%
100.0
%
100.0
%
(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, home solutions products, 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 the development and distribution of practice management software, e-services and other technology-enabled products
for health care providers.
Table of Contents
Index to Financial Statements
10
Business Strategy
Our mission is to provide innovative, integrated health care products and
services; and to be trusted advisors and
consultants to our customers - enabling them to deliver the best quality patient
care and enhance their practice
management efficiency and profitability.
Our BOLD+1 Strategic Plan consists of the following:
•
Build (“B”)
Complementary software, specialty, and services businesses for high growth
•
Operationalize (“O”)
One Distribution to deliver exceptional customer experience, increased
efficiency,
and growth
•
Leverage (“L”)
One Schein to broaden and deepen relationships with our customers
•
Drive (“D”)
Digital transformation for our customers and for Henry Schein
•
+1
Create value for our stakeholders
To accomplish this, we apply our competitive strengths in executing the following strategies:
•
Increase penetration of our existing customer base.
We have over one million customers worldwide and
we intend to increase sales to our existing customer base and enhance
or secure our position as their
primary supplier.
We believe our offering of a broad range of products, services and support, including
software solutions that can help drive improved workflow efficiency and patient communications
for
practices, coupled with our full-service value proposition, helps us to retain
and grow our customer base.
•
Increase the number of customers we serve.
This strategy includes increasing the productivity of our field
sales consultants and telesales team, as well as using our customer
database to focus our marketing efforts
in all of our operating segments.
In the dental business, we provide products and services to
independent
practices, mid-market groups, and large DSOs as well as community health centers
and government sites of
care.
Leveraging our broad array of assets and capabilities, we offer solutions to address these
new
markets.
In the medical business, we have expanded to serve customers
located in settings outside of the
traditional office, such as urgent care clinics, retail, occupational health and home health settings.
As
health care settings shift, we remain committed to serving these practitioners
and providing them with the
products and services they need.
•
Leverage our value-added products and services.
We continue to increase cross-selling efforts for key
product lines utilizing a consultative selling process.
We have significant cross-selling opportunities
between our dental software users and our dental customers, and opportunities
to expand our vaccine,
injectables and other pharmaceuticals sales to health care practitioners, as
well as cross-selling Electronic
Health Record (“EHR”) systems and software when we sell our core products.
Our strategy extends to
providing health systems, integrated delivery networks and other large group and
multi-site health care
organizations, including physician clinics, these same value-added products and services.
As physicians
and health systems closely align, we have increased access to opportunities
for cross-marketing and selling
our product and service portfolios.
•
Pursue strategic acquisitions and joint ventures.
Our acquisition strategy is focused on investments in
companies, including high growth high margin businesses aligned with our BOLD+1 strategy, 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.
Markets Served
Demographic trends indicate that our markets are growing, as an
aging U.S. population is increasingly using health
care services.
According to the U.S. Census Bureau’s International Database, between 2025 and 2035, the
population of people aged 45 and older 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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In the dental industry, expenditures in in oral health care are predicted to rise as the 45-and-older segment of
the
population increases.
There is increasing demand for new technologies that allow
dentists to increase productivity,
and this is being driven in the U.S. by lower insurance reimbursement
rates.
At the same time, there is an expected
increase in dental insurance coverage.
In the medical market, there continues to be a migration of procedures from
acute-care settings to physicians’
offices and home health settings, a trend that we believe provides additional opportunities
for us.
There also is the
continuing use of vaccines, injectables and other pharmaceuticals in alternate-care
settings.
We believe we have
established a leading position as a vaccine supplier to the office-based physician
practitioner.
We support our dental and medical professionals through the many SKUs that we offer, as well as through
important value-added services, including practice management software,
electronic claims processing, financial
services and continuing education, all designed to help maximize a practitioner’s
efficiency.
Additionally, we seek to expand our dental full-service model and medical offerings in countries where
opportunities exist.
We do this through both direct sales and by partnering with local distribution and
manufacturing companies.
For information on revenues and long-lived assets by geographic area, see
Note 4 – Segment and Geographic Data
of “Notes to Consolidated Financial Statements.”
Seasonality and Other Factors Affecting Our Business and Quarterly Results
Our business is subject to seasonal and other quarterly fluctuations.
Sales and profitability generally have been
higher in the third and fourth quarters due to the timing of sales of seasonal
products (including influenza vaccine),
purchasing patterns of office-based health care practitioners for certain products (including
equipment and
software) and year-end promotions.
Sales and profitability may also be impacted by the timing of
certain annual
and biennial dental tradeshows where equipment promotions are offered.
In addition, some dental practices delay
equipment purchases in the U.S. until year-end due to tax incentives.
We expect our historical seasonality of sales
to continue in the foreseeable future.
Governmental Regulations
We
strive to be compliant in all material respects with the applicable
laws, regulations and guidance described
below, and believe we have effective compliance programs and other controls in place to ensure substantial
compliance.
However, compliance is not guaranteed either now or in the future, as certain laws, regulations and
guidance may be subject to varying and evolving interpretations that could
affect our ability to comply, as well as
future changes, additions and enforcement approaches, including political changes.
When we discover situations of
non-compliance we seek to remedy them and bring the affected area back into compliance.
Changes to applicable laws, regulations and guidance described below, as well as related administrative or judicial
interpretations, may require us to update or revise our operations, services,
marketing practices and compliance
programs and controls, and may impose additional and unforeseen costs
on us, pose new or previously immaterial
risks to us, or may otherwise have a material adverse effect on our business.
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.
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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/private 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 (as amended,
the “ACA”).
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; warnings related
to potential cancer or reproductive harm linked to chemicals; amalgam bans; pricing disclosures;
supply chain
transparency around human trafficking and 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
financial performance.
Certain of our businesses also maintain contracts with governmental agencies
and are subject to certain regulatory
requirements specific to government contractors.
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.
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) by introducing a uniform two-year postponement of
the sustainability reporting
requirements for financial years beginning on or after January 1, 2025 and
on or after January 1, 2026.
It
also extends the deadline for transposing Directive (EU) 2024/1760 (CSDDD)
by one year (i.e. July 26,
2027) and the date of application of the transposed provisions depending
on the type of companies subject
to it (July 26, 2028, or July 26, 2029, as applicable).
●
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.
●
The U.S. has adopted new and increased tariffs on imports from countries, and
such tariffs remain subject
to frequently evolving exemptions and modifications,
as well as to court challenges, including a recent
invalidation in the Supreme Court of many of the tariffs.
Some countries have imposed retaliatory tariffs
and other restrictions on imports from the U.S.
These developments, and anticipated future developments,
have created a volatile environment for global trade, and new trade policies
with individual countries.
It is
unclear whether, or the extent to which, the current tariffs on trade with numerous countries will remain in
place, or change, the exceptions that may apply, and their timing.
●
In the United States, the One Big Beautiful Bill Act (“OBBBA”),
signed into law on July 4, 2025, includes
a number of provisions that are expected to result in reductions in the number of
Medicaid enrollees, as
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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 changes to corporate tax
rates, limitations on certain deductions and modifications to international
tax provisions.
Operating, Security and Licensure Standards
Certain of our businesses are subject to local, state and federal governmental
laws and regulations relating to the
manufacturing and/or distribution of pharmaceuticals and medical devices
and supplies.
Among the United States
federal laws applicable to us are the Controlled Substances Act, the Federal Food,
Drug, and Cosmetic Act, as
amended (“FDC Act”), Section 361 of the Public Health Service Act and Section
401 of the Consolidated
Appropriations Act of the Social Security Act, as well as laws regulating
the billing of and reimbursement from
government programs, such as Medicare and Medicaid, and from commercial payers.
We
are also subject to
comparable foreign regulations.
The FDC Act, the Controlled Substances Act, their implementing regulations,
and similar foreign laws generally
regulate the introduction, manufacture, advertising, marketing and promotion,
sampling, pricing and
reimbursement, labeling, packaging, storage, handling, returning or recalling,
reporting, and distribution of, and
record keeping for, pharmaceuticals and medical devices shipped in interstate commerce or internationally, and
states may similarly regulate such activities within the state.
Furthermore, Section 361 of the Public Health Service
Act, which provides authority to prevent the introduction, transmission
or spread of communicable diseases, serves
as the legal basis for the United States Food and Drug Administration’s (“FDA”) regulation of human cells,
tissues
and cellular and tissue-based products, also known as “HCT/P products.”
The Federal Drug Quality and Security Act of 2013 regulates pharmaceutical
supply chain requirements and pre-
empts certain state laws.
Title II of this measure, known as the Drug Supply Chain Security Act (“DSCSA”),
establishes a national electronic, interoperable system to identify and trace
certain prescription drugs as they are
distributed in the United States that went into effect on November 27, 2023.
The law’s track and trace requirements
applicable to manufacturers, wholesalers, third-party logistics providers (e.g., trading
partners), repackagers and
dispensers (e.g., pharmacies) of prescription drugs took effect in January 2015, and,
as stated, continues to be
implemented.
The DSCSA product tracing requirements replace the former FDA
drug pedigree requirements and
pre-empt certain state requirements that are inconsistent with, more stringent
than, or in addition to, the DSCSA
requirements.
Those DSCSA requirements that were scheduled to change on November
27, 2023, and include requiring trading
partners to provide, receive and maintain documentation about products and
ownership only “electronically” (and
not via paper), were subject to a one-year “stabilization period” announced by
the FDA through two guidance
documents in late August 2023.
The FDA permitted the stabilization period to accommodate an additional
year,
until November 27, 2024, to allow trading partners to implement, troubleshoot
and mature their electronic (versus
paper), interoperable systems, during which time the FDA did not intend to
take action to enforce the requirements
for the interoperable, electronic, package level product tracing.
Additionally, the FDA announced that it did not
intend to take action to enforce the portion of the FDC Act with respect
to drug product that was introduced in a
transaction into commerce by the product’s manufacturer or repackager before November 27, 2024, and for
subsequent transactions of such product through the product’s expiry.
The FDA stated this stabilization period was
intended to avoid disruption to the supply chain and ensure continued patient
access to drug products as trading
partners move towards full implementation of the DSCSA’s
enhanced drug security requirements.
The FDA again
extended the stabilization period in late 2024 as follows: (1) manufacturers and
repackagers: May 27, 2025; (2)
wholesale distributors: August 27, 2025; (3) dispensers with 26 or more pharmacists
and technicians: November 27,
2025; and (4) small dispensers: November 27, 2026.
The FDA stated that these continued exemptions apply to any
product transacted by eligible trading partners who have initiated their “systems
and processes, as described in
section 582(g)(1) of the FD&C Act,” including electronic DSCSA data connections
with immediate trading
partners by November 27, 2024.
The additional time extends to trading partners throughout the pharmaceutical
distribution supply chain who subsequently engage in a transaction including such
product.
The FDA also stated
that, for the purposes of these exemptions, eligible trading partners are those
who have initiated their systems and
processes by successfully completing data connections with their
immediate trading partners, and those trading
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14
partners who initiated processes including documentation of efforts to establish data
connections, but were not able
to fully complete these processes.
The DSCSA also establishes certain requirements for the licensing and operation
of prescription drug wholesalers
and third-party logistics providers (“3PLs”) and includes the eventual
creation of national wholesaler and 3PL
licenses in cases where states do not license such entities.
The DSCSA requires that wholesalers and 3PLs
distribute drugs in accordance with certain standards regarding the recordkeeping,
storage and handling of
prescription drugs.
The DSCSA requires wholesalers and 3PLs to report state licensure
to the FDA on an annual
basis, including the name and address of each facility, and contact information.
According to FDA guidance, states
are pre-empted from imposing any licensing requirements that are inconsistent
with, less stringent than, directly
related to, or covered by the standards established by federal law in this area.
Current state licensing requirements
concerning wholesalers will remain in effect until the FDA issues new regulations as directed
by the DSCSA.
The
FDA issued a proposed rule establishing wholesaler and 3PL national standards
for licensing and other
requirements in February 2022, but that rule has not yet been finalized.
In addition, with respect to our specialty
home medical supplies business, we are subject to certain state licensure
laws (including state pharmacy laws), and
also certain accreditation standards, including to qualify for reimbursement
from Medicare, Medicaid, and other
third-party payers.
The Food and Drug Administration Amendments Act of 2007 and
the Food and Drug Administration Safety and
Innovation Act of 2012 amended the FDC Act to require the FDA to promulgate
regulations to implement a unique
device identification (“UDI”) system for medical devices.
The UDI rule phased in the implementation of the UDI
regulations, generally beginning with the highest-risk devices (i.e., Class
III medical devices) and ending with the
lowest-risk devices.
The UDI regulations require “labelers” to include unique device identifiers
(“UDIs”), with a
content and format prescribed by the FDA and issued under a system operated
by an FDA-accredited issuing
agency, on the labels and packages of medical devices (including, but not limited to, certain software that qualifies
as a medical device under FDA rules), and to directly mark certain devices
with UDIs.
The UDI regulations also
require labelers to submit certain information concerning UDI-labeled devices
to the FDA, much of which
information is publicly available on an FDA database, the Global Unique Device
Identification Database (GUDID).
The UDI regulations and subsequent FDA guidance regarding the UDI
requirements provide for certain exceptions,
alternatives and time extensions.
For example, the UDI regulations include a general exception
for Class I devices
exempt from the Quality System Regulation (other than record-keeping
requirements and complaint files).
Regulated labelers include entities such as device manufacturers, repackagers,
reprocessors and relabelers that
cause a device’s label to be applied or modified, with the intent that the device will be commercially distributed
without any subsequent replacement or modification of the label and include certain
of our businesses.
The FDA
also released a final rule in February 2024 to amend, effective February 2026, certain device current
good
manufacturing practice requirements in 21 CFR Part 820 (Quality System Regulation)
to align more closely with
the international consensus standard (ISO 13485) specific for device quality
management systems requirements
(QMSR) used by other countries.
As a distributor of controlled substances and List 1 and 2 chemicals, we are
required, under the Controlled
Substances Act, to obtain and renew annually registrations for our
facilities from the United States Drug
Enforcement Administration (“DEA”) permitting us to handle controlled
substances.
We
are also subject to other
statutory and regulatory requirements relating to the storage, sale, marketing,
handling, reporting, record-keeping
and distribution of such drugs and List 1 and 2 chemicals, in accordance
with the Controlled Substances Act and its
implementing regulations, and these requirements have been subject to
heightened enforcement activity in recent
times.
We
are subject to inspection by the DEA.
Certain of our businesses are also required to register for permits and/or
licenses with, and comply with operating
and security standards of, the DEA, the FDA, the United States Department of
Health and Human Services
(“HHS”), state radiation control agencies, and various state boards of pharmacy, state health departments and/or
comparable state agencies as well as comparable foreign agencies, and certain
accrediting bodies, depending on the
type of operations and location of product distribution, manufacturing or
sale.
These businesses include those that
distribute, manufacture, relabel, and/or repackage prescription pharmaceuticals
and/or medical devices and/or
HCT/P products, or own pharmacy operations, or install, maintain or repair
equipment,
including X-ray machines.
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In addition, Section 301 of the National Organ Transplant Act, and a number of comparable state laws, impose civil
and/or criminal penalties for the transfer of human organs, as defined in the regulations, for
valuable consideration,
while generally permitting payments for the reasonable costs incurred
in their procurement, processing, storage and
distribution.
We
are also subject to foreign government regulation of such products.
The DEA, the FDA and state
regulatory authorities have broad inspection and enforcement powers, including
the ability to suspend or limit the
distribution of products by our distribution centers, seize or order the
recall of products and impose significant
criminal, civil and administrative sanctions for violations of these laws and regulations.
Foreign regulations subject
us to similar foreign enforcement powers.
EU Regulation of Medicinal and Dental Products
European Union (“EU”) member states regulate their own health care systems,
as does EU law.
The latter regulates
certain matters, most notably medicinal products and medical devices.
Medicinal products are defined, broadly, as
substances or combinations of substances having certain functionalities and
may not include medical devices.
EU
“regulations” apply in all member states, whereas “directives” are implemented
by the individual laws of member
states.
On medicines for humans, we are regulated under Directive No. 2001/83/EC
of 6 November 2001, as amended by
Directive 2003/63/EC of 25 June 2003, EU Regulation (EC) No. 726/2004
of 31 March 2004 and others.
These
rules provide for the authorization of products, and regulate their manufacture,
importation, marketing and
distribution.
These rules implement requirements which may be implemented without
warning, as well as a
national pharmacovigilance system under which marketing authorizations
may be withdrawn, and includes
potential sanctions for breaches of the rules, and on other bases such
as harmfulness or lack of efficacy.
As
mentioned above, Directive No. 2001/83/EC was recently amended by Regulation
(EU) 2023/1182 of 14 June
2023.
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.
EU Regulation No. 1223/2009 of 30 November 2009
on cosmetic products
requires that cosmetic products (which
includes dental products) be safe for human health when used under normal
or reasonably foreseeable conditions of
use and comply with certain obligations which apply to manufacturers,
importers and distributors.
It includes
market surveillance, and non-compliance may result in the recall or withdrawal
of products, along with other
sanctions.
In the EU, the EU Medical Device Regulation No. 2017/745 of 5 April 2017
(“EU MDR”) covers a wide scope of
our activities, from dental material and medical devices to X-ray machines,
and certain software.
It was meant to
become applicable three years after publication (i.e., May 26, 2020).
However, on April 23, 2020, to allow
European Economic Area (“EEA”) national authorities, notified bodies,
manufacturers and other actors to focus
fully on urgent priorities related to the COVID-19 pandemic, the European Council
and Parliament adopted
Regulation 2020/561, postponing the date of application of the EU MDR by
one year (to May 26, 2021).
The EU MDR significantly modifies and intensifies the regulatory compliance
requirements for the medical device
industry as a whole.
Among other things, the EU MDR:
•
strengthens the rules on placing devices on the market and reinforces surveillance
once they are available;
•
establishes explicit provisions on manufacturers’ responsibilities
for the follow-up of the quality,
performance and safety of devices placed on the market;
•
improves the traceability of medical devices throughout the supply chain to the end-user
or patient through
a unique identification number;
•
sets up a central database to provide patients, health care professionals and the
public with comprehensive
information on products available in the EU;
•
strengthens rules for the assessment of certain high-risk devices, such as
implants, which may have to
undergo an additional check by experts before they are placed on the market; and
•
identifies importers and distributors and medical device products through
registration in the EUDAMED
database, which comprises several modules that are not yet fully functional.
In order not to hinder the mandatory
use of EUDAMED by the functional delay of a single module, Regulation
No. 2024/1860 of 13 June 2024 has
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therefore amended Article 34 of the EU MDR to organize a gradual commissioning of the various
modules of
EUDAMED, once they have been independently audited and declared operational
by means of a Commission
notice published in the Official Journal of the European Union. In this case, the obligations
and requirements
relating to the concerned electronic modules of EUDAMED will apply six months
after the date of publication of
the notice.
These changes came into force on July 9, 2024.
Due to Commission Decision No. 2025/2371 of
26 November 2025, as from May 28, 2026, the first four EUDAMED modules
will be mandatory to use; and
•
as amended by the above-mentioned Regulation No. 2024/1860, contains
specific provisions in the event of
interruption or discontinuation of supply of a device.
In particular, the EU MDR imposes strict requirements for the confirmation that a product meets the
regulatory
requirements, including regarding a product’s clinical evaluation and a company’s quality systems, and for the
distribution, marketing and sale of medical devices, including post-market surveillance.
Regulation 2023/607 of the European Parliament and of the Council of
March 15, 2023
amending Regulations (EU)
2017/745 and (EU) 2017/746 as regards the transitional provisions for certain medical devices and in vitro
diagnostic medical devices
has, notably, extended the EU MDR transitional periods applicable to certain medical
devices that have been assessed and/or certified under the Directive No.
93/42/EEC of 1993
concerning medical
devices
(“EU Medical Device Directive”).
Subject to certain conditions, medical devices that (i) obtained a
certificate under the EU Medical Device Directive from May 25, 2017,
(ii) which was still valid on May 26, 2021,
and (iii) has not been subsequently withdrawn may, for the moment, continue to be placed on the market or put into
service until December 31, 2027 for higher risk devices or December 31, 2028 for
medium and lower risk devices.
Nevertheless, EU MDR requirements regarding the distribution, marketing
and sale including quality systems and
post-market surveillance have to be observed by manufacturers, importers and
distributors as of the application date
(i.e., since May 26, 2021).
Other EU regulations that may apply under appropriate circumstances
include EU Regulation No. 1907/2006 of 18
December 2006
concerning the Registration, Evaluation, Authorisation and
Restriction of Chemicals
, which
requires importers to register substances or mixtures that they import
in the EU beyond certain quantities, and the
EU Regulation No. 1272/2008 of 16 December 2008
on classification, labelling and packaging of substances and
mixtures
(recently amended by Regulation No. 2024/2865 of October 23, 2024, whose
provisions come into force
on different dates), which sets various obligations with respect to the labelling and packaging
of concerned
substances and mixtures.
Furthermore, compliance with legal requirements has required and may in the future
require us to delay product
release, sale or distribution, or institute voluntary recalls of, or other corrective
action with respect to products we
sell, each of which could result in regulatory and enforcement actions, financial
losses and potential reputational
harm.
Our customers are also subject to significant federal, state, local
and foreign governmental regulations,
which may affect our interactions with customers, including the design and functionality
of our products.
Antitrust and Consumer Protection
The federal government of the United States, most U.S. states and many
foreign countries have antitrust laws that
prohibit certain types of conduct deemed to be anti-competitive, as well as consumer
protection laws that seek to
protect consumers from improper business practices.
At the U.S. federal level, the Federal Trade Commission
oversees enforcement of these types of laws, and states have similar government
agencies.
Violations of antitrust
or consumer protection laws may result in various sanctions, including criminal
and civil penalties.
Private
plaintiffs may also bring civil lawsuits against us in the United States for alleged antitrust
law violations, including
claims for treble damages.
EU law also regulates competition and provides for detailed rules protecting
consumers.
Health Care Fraud
Certain of our businesses are subject to federal and state (and similar
foreign) health care fraud and abuse, referral
and reimbursement laws and regulations with respect to their operations.
Some of these laws, referred to as “false
claims laws,” prohibit the submission or causing the submission of false or fraudulent
claims for reimbursement to
federal, state and other health care payers and programs.
Other laws, referred to as “anti-kickback laws,” prohibit
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17
soliciting, offering, receiving or paying remuneration in order to induce the referral
of a patient or ordering,
purchasing, leasing or arranging for, or recommending, ordering, purchasing or leasing of, items or services
that are
paid for by federal, state and other health care payers and programs.
Certain additional state and federal laws, such
as the federal Physician Self-Referral Law, commonly known as the “Stark Law,” prohibit physicians and other
health care professionals from referring a patient to an entity with which
the physician (or family member) has a
financial relationship, for the furnishing of certain designated health services
(for example, durable medical
equipment and medical supplies), unless an exception applies. Violations of the federal Anti-Kickback Statute or
the Stark Law may be enforced as violations of the federal False Claims
Act.
The fraud and abuse laws and regulations have been subject to heightened
enforcement activity over the past few
years, and significant enforcement activity has been the result of “relators” who
serve as whistleblowers by filing
complaints in the name of the United States (and if applicable, particular states)
under applicable false claims laws,
and who may receive up to 30% of total government recoveries.
Penalties under fraud and abuse laws may be
severe, including treble damages and substantial civil penalties under
the federal False Claims Act, as well as
potential loss of licenses and the ability to participate in federal and state
health care programs, criminal penalties,
or imposition of a corporate integrity agreement or corporate compliance
monitoring which could have a material
adverse effect on our business.
Also, these measures may be interpreted or applied by a prosecutorial,
regulatory or
judicial authority in a manner that could require us to make changes
in our operations or incur substantial defense
and settlement expenses.
Even unsuccessful challenges by regulatory authorities or private
relators could result in
reputational harm and the incurring of substantial costs.
Most states have adopted similar state false claims laws,
and these state laws have their own penalties, which may be in addition
to federal False Claims Act penalties, as
well as other fraud and abuse laws.
With respect to measures of this type, the United States government and industry trade associations
(among others)
have expressed concerns about financial relationships among suppliers, manufacturers
and distributors on the one
hand and physicians, dentists and other health care professionals on the other.
As a result, we regularly review and
revise our marketing practices as necessary to facilitate compliance.
We
also are subject to certain United States and foreign laws and regulations
concerning the conduct of our foreign
operations, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery
Act, German anti-corruption laws
and other anti-bribery laws and laws pertaining to the accuracy of our internal
books and records, which have been
the focus of increasing enforcement activity globally in recent years.
While we believe that we are substantially compliant with applicable fraud and
abuse laws and regulations, and
have adequate compliance programs and controls in place to ensure substantial
compliance, we cannot predict
whether changes in applicable law, or interpretation of laws, or changes in our services or marketing practices in
response to changes in applicable law or interpretation of laws, or failure
to comply with applicable law, could have
a material adverse effect on our business.
Affordable Care Act (ACA) and Other Insurance Reform
The ACA increased federal oversight of private health insurance plans and
included a number of provisions
designed to reduce Medicare expenditures and the cost of health care generally, to reduce fraud and abuse, and to
provide access to increased health coverage.
The ACA also materially expanded the number of individuals in
the
United States with health insurance.
The ACA remains subject to ongoing legal and political challenges
that
contribute to create uncertainty, and any outcomes of those challenges could have a significant impact on the
U.S.
health care industry.
The federal Physician Payments Sunshine Act or Open Payments Program
(the “Sunshine Act”) imposes annual
reporting and disclosure requirements for drug and device manufacturers and distributors
with regard to payments
or other transfers of value made to certain covered recipients (including physicians,
dentists, teaching hospitals,
physician assistants, nurse practitioners, clinical nurse specialists, certified
registered nurse anesthetists, and
certified nurse midwives), and for such manufacturers and distributors
and for group purchasing organizations, with
regard to certain ownership interests held by covered recipients in
the reporting entity.
CMS publishes information
from these reports on a publicly available website, including amounts transferred
and physician, dentist, teaching
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hospital, and non-physician practitioner identities.
The Sunshine Act pre-empts similar state reporting laws,
although we or our subsidiaries may be required to report under certain
state transparency laws that address
circumstances not covered by the Sunshine Act, and some of these state laws,
as well as the federal law, can be
unclear.
We
are also subject to foreign regulations requiring reporting or disclosures
to provide transparency on
certain interactions between manufacturers, suppliers, distributors and
their customers.
This includes certain
member states in the EU and other countries such as Brazil (Minas Gerais state),
Saudi Arabia and Israel.
In the United States, federal and state government actions to seek to increase health-related
price transparency may
also affect our business.
For example, CMS requires hospitals to publish online a
list of their standard charges for
all items and services, including discounted cash prices and payer-specific and de-identified negotiated
charges, in a
publicly accessible online file, and payers to disclose in-network negotiated
rates, including with device suppliers
and manufacturers, and historical out-of-network allowed amounts for all
covered items and services, including
prescription drugs.
Hospitals are also required to publish a consumer-friendly list
of standard charges for certain
“shoppable” services (i.e., services that can be scheduled by a patient in
advance) and associated ancillary services
or, alternatively, maintain an online price estimator tool.
These requirements went into effect in three stages from
2022 to 2024.
CMS may impose civil monetary penalties for noncompliance with
these price transparency
requirements.
In addition to a variety of transparency measures being enacted
at the state level, the federal No
Surprises Act (“NSA”) imposes additional price transparency requirements.
The NSA is intended to reduce the
number of “out-of-network” patients.
This will result in fewer out-of-network payments to physicians and
other
providers, which may cause financial stress to those providers who
are dependent on higher out-of-network fees.
The Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”),
enacted on April 16, 2015, established
the Quality Payment Program, which modifies certain Medicare Part B payments
to “eligible clinicians,” including
physicians, dentists and other practitioners.
Under MACRA, certain eligible clinicians are required to participate
in
Medicare through the Merit-Based Incentive Payment System (“MIPS”) or Advanced
Alternative Payment Models,
through which Medicare Part B is adjusted up or down based on reported
data related to quality, promoting
interoperability, cost and improvement activities.
MIPS eligible clinicians must report performance year data by
March 31 of the following calendar year.
Payment adjustments, based on submitted data, are applied to Medicare
Part B claims during the performance year following data submission.
MACRA provides substantial financial
incentives for physicians to participate in risk contracts, and to increase physician
information technology and
reporting obligations.
MACRA continues to evolve and its implications depend on future regulatory
activity and
physician activity in the marketplace.
New state-level payment and delivery system reform
programs, including
those modeled after such federal programs, are also increasingly being rolled out
through Medicaid administrators,
as well as through the private sector, which may further alter the marketplace and impact our business.
Recently, in addition to other government efforts to control health care costs, there has been increased scrutiny on
drug pricing and concurrent efforts to control or reduce drug costs by Congress, the
President, executive branch
agencies and various states.
At the state level, several states have adopted laws that require drug manufacturers
(including relabelers and repackagers) to provide advance notice of certain
price increases and to report information
relating to those price increases, while others have taken legislative or administrative
action to establish
prescription drug affordability boards or multi-payer purchasing pools to reduce the cost of
prescription drugs.
At
the federal level, section 1927 of the Social Security Act sets forth Average Sales Price (ASP) reporting
requirements for manufacturers (including repackagers and relabelers) and
requires that manufacturers provide
CMS with pricing information for their Part B-covered drugs no later than
30 days after the close of the previous
quarter.
Also at the federal level, several related bills have been introduced and regulations
proposed which, if
enacted or finalized, respectively, would impact drug pricing and related costs.
Under the Medicare Drug Price
Negotiation Program, CMS continues to negotiate prices for certain drugs with participating
manufacturers.
Also,
at the federal level, the Inflation Reduction Act of 2022, among other things,
requires drug manufacturers
(including repackagers and relabelers) that raise certain of their drug prices
faster than the rate of inflation to pay
rebates to Medicare, and over time will authorize the federal government to negotiate
directly with drug
manufacturers to lower the prices of certain brand-name drugs covered
by Medicare.
These various evolving
efforts create uncertainty and may adversely affect our business.
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As a result of political, economic and regulatory influences, the health care distribution
industry in the United
States is under intense scrutiny and subject to fundamental changes.
We
cannot predict what further reform
proposals, if any, will be adopted, when they may be adopted, or what impact they may have on us.
EU Directive on the pricing and reimbursement of medicinal products
EU law provides for the regulation of the pricing of medicinal products which are
implemented by EU member
states (Directive No. 89/105/EC of 21 December 1988
relating to the transparency of measures regulating the
pricing of medicinal products for human use and their inclusion in the scope of national health insurance
systems
).
Member states may, subject notably to transparency conditions and to the statement of reasons based upon
objective and verifiable criteria, regulate the price charged (or its increases) for authorized
medicines and their level
of reimbursement, or they may freeze prices, place controls on the profitability
of persons responsible for placing
medicinal products on the market, and include or exclude the medicine on
the list of products covered by national
health insurance systems.
EU law does not expressly include provisions like those of the Sunshine Act in
the United States, but a number of
EU member states (such as France in 2011, Denmark in 2014, and Italy in 2022) have enacted laws
to increase the
transparency of relationships in the health care sector.
The scope of these laws varies from one member state to
another and may, for example, include the relations between health care industry players and physicians or their
associations, students preparing for medical professions or their associations,
teachers, health establishments or
publishers of prescription and dispensing assistance software.
Regulated Software; Electronic Health Records; Privacy
The FDA has become increasingly active in addressing the regulation of
computer software and digital health
products intended for use in health care settings, including, for
example, most recently, with respect to artificial
intelligence and machine learning-enabled medical devices, and
the cybersecurity of medical devices.
Certain of
our businesses involve the development and sale of software and related
products, including to support physician
and dental practice management, and it is possible that the FDA or foreign
government authorities could determine
that one or more of our products is a medical device, which could subject us
or one or more of our businesses to
substantial additional requirements with respect to these products.
In addition, our businesses that involve physician and dental practice management
products, our specialty home
medical supplies business, and our self-insured health plans include electronic
information technology systems that
store and process personal health, clinical, financial and other sensitive information
of individuals.
These
information technology systems may be vulnerable to breakdown, wrongful
intrusions, data breaches and malicious
attack, which could require us to expend significant resources to eliminate
these problems and address related
security concerns and could involve claims against us by private parties and/or
governmental agencies.
For
example, we are directly or indirectly subject to numerous and evolving
federal, state, local and foreign laws and
regulations that protect the privacy and security of personal information,
such as the federal Health Insurance
Portability and Accountability Act of 1996, as amended, and implementing
regulations (“HIPAA”) under which
parts of our business are covered entities or business associates, the Controlling
the Assault of Non-Solicited
Pornography and Marketing Act (“CAN-SPAM”), the Telephone
Consumer Protection Act of 1991 (“TCPA”),
Section 5 of the Federal Trade Commission Act (“FTC Act”), the California Privacy Act (“CCPA”), various other
state comprehensive and health data-specific privacy laws that have or will soon come
into effect, and several
privacy bills have been proposed both at the federal and state level that may
result in additional legal requirements
that impact our business.
Laws and regulations relating to privacy and data protection are continually
evolving and
subject to potentially differing interpretations, including those relating to artificial intelligence,
the proliferation of
which may result in additional regulation.
These requirements may not be harmonized, may be interpreted and
applied in a manner that is inconsistent from one jurisdiction to another or
may conflict with other rules or our
practices.
In addition to state-specific data breach notification laws (which exist
in all U.S. states and territories),
cybersecurity laws such as the federal Cyber Incident Reporting for Critical
Infrastructure Act of 2022, proposed
Federal Acquisition Regulations, and amendments to SEC reporting requirements
require us to provide
notifications about material cybersecurity incidents in limited timeframes
and before investigations are complete.
Our businesses’ failure to comply with these laws and regulations could expose
us to breach of contract claims,
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20
substantial fines, penalties and other liabilities and expenses, government
investigations, litigation, costs for
remediation and harm to our reputation.
Also, evolving laws and regulations in this area could restrict the ability
of
our customers to obtain, use or disseminate patient information, or could
require us to incur significant additional
costs to re-design our products to reflect these legal requirements, which
could have a material adverse effect on
our operations.
Also, the European Parliament and the Council of the EU adopted the pan-European
General Data Protection
Regulation (“GDPR”), that has been effective since May 25, 2018, which increased
privacy rights for individuals
(“Data Subjects”), including individuals who are our customers, suppliers
and employees.
The GDPR extended the
scope of responsibilities for data controllers and data processors, and generally
imposes increased requirements and
potential penalties on companies, such as us, that are either established in
the EU and process personal data of Data
Subjects (regardless the Data Subject location), or that are not established
in the EU but that offer goods or services
to Data Subjects in the EU or monitor their behavior in the EU. Noncompliance
can result in penalties of up to the
greater of EUR 20 million, or 4% of global company revenues (sanction
that may be public), and Data Subjects
may seek damages.
Member states may individually impose additional requirements
and penalties regarding
certain limited matters (for which the GDPR left some room of flexibility),
such as employee personal data.
With
respect to the personal data it protects, the GDPR requires, among other things, controller
accountability, consents
from Data Subjects or another acceptable legal basis to process the personal
data, notification within 72 hours of a
personal data breach where required, data integrity and security, and fairness and transparency regarding the
storage, use or other processing of the personal data.
The GDPR also provides rights to Data Subjects relating
notably to information, access, rectification, erasure of the personal data and
the right to object to the processing.
Despite the UK’s exit from the EU, the UK still also has laws equivalent to the GDPR/EU data protection laws (UK
GDPR) and has implemented further data protection related legislation.
Data protection authorities located in
different EU Member States and in the UK may interpret GDPR/UK GDPR
differently, or requirements of national
laws may vary between the EU Member States and the UK, or guidance on GDPR/UK
GDPR and compliance
practices may be often updated or otherwise revised.
Any of these events will increase the complexity and costs of
processing personal data in the UK or European Economic Area or concerning
individuals located in the UK or
European Economic Area.
On August 20, 2021, China promulgated the PRC Personal Information Protection
Law (“PIPL”), which took effect
on November 1, 2021.
The PIPL imposes specific rules for processing personal information
and it also specifies
that the law shall also apply to personal information activities carried out
outside China but for the purpose of
providing products or services to PRC citizens.
Any non-compliance with these laws and regulations may subject
us to fines, orders to rectify or terminate any actions that are deemed
illegal by regulatory authorities, other
penalties, as well as reputational damage or legal proceedings against us, which
may affect our business, financial
condition or results of operations.
The PIPL carries maximum penalties of CNY50 million or 5% of
the annual
revenue of entities that process personal data.
Data protection laws in other countries outside of the United States
are also quickly evolving, with many countries having updated, or are in the
process of updating, their laws to bring
them more in line with the model created by GDPR.
In the United States, the CCPA, which increases the privacy protections afforded California residents, became
effective January 1, 2020.
The CCPA establishes a privacy framework for covered businesses such as ours by,
among other things, creating an expanded definition of personal information,
establishing new data privacy rights
for California residents and creating a new and potentially severe statutory damages
framework for violations of the
CCPA, as well as potentially severe statutory damages and a private right of action against businesses that suffer a
data security breach due to their violation of a duty to implement reasonable
security procedures and practices.
This private right of action may increase the likelihood of, and risks associated with,
data breach litigation.
In
addition, in November 2020, California voters adopted the CPRA, which
became effective January 1, 2023 and
enhances and strengthens regulatory requirements and individual protections
that currently exist under the CCPA.
Other states have enacted or are considering enacting similar privacy laws, which
may subject us to additional
requirements and restrictions that could have an impact on our business.
As of January 1, 2026, broad state laws
relating to privacy, data protection, and information security are in effect in 20 states, further complicating our
privacy compliance obligations through the introduction of increasingly disparate
requirements across the various
U.S. jurisdictions in which we operate.
Additionally, Washington
state and Nevada have enacted specific health
data privacy laws, and other states are considering similar legislation.
Additional states are expected to pass their
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own versions of data privacy laws in the future.
Congress is considering legislation that may preempt some or all
of such U.S. state privacy laws, but which may also provide a more expansive
private right of action for privacy
claims than exists under current state laws.
The evolving complexity of privacy and data security legislation in the United
States and other jurisdictions
globally may complicate our compliance efforts and further increase our risk of regulatory
enforcement, penalties,
and litigation.
While we believe we have substantially compliant programs
and controls in place to comply with
the U.S. state and federal privacy laws and applicable international privacy
laws such as GDPR and PIPL, our
compliance with data privacy and cybersecurity laws is likely to impose additional
costs on us, and we cannot
predict whether the interpretations of the requirements, or changes in our practices
in response to new requirements
or interpretations of the requirements, could have a material adverse effect on our business.
Our products and services utilize new technologies, such as AI.
The regulatory landscape for AI is changing
rapidly, with both domestic and international activity.
While there is currently no comprehensive federal legislation
in the U.S. concerning the use, development or deployment of AI, regulators
pursue AI-related enforcement actions
under existing federal consumer protection laws and have issued related
guidance.
Further, state privacy, consumer
protection and AI-specific laws are proliferating and may be applicable to our business.
Other countries are also
applying their data and consumer protection laws to AI, particularly generative
AI, and are considering and
implementing specific legal frameworks with respect to AI.
Regulation (EU) 2024/1689 on harmonized rules on
artificial intelligence (the EU AI Act), for example, establishes a comprehensive
regulatory framework for AI that
became law in August 2024 with implementation phased through into 2027.
As with the GDPR, it has extra-
territorial effect.
Any failure or perceived failure by us to comply with such requirements
could have an adverse
impact on our business.
Anticipated further evolution of regulations and legislation on this
topic may substantially
increase the penalties to which we could be subject in the event of any
non-compliance.
Compliance with these
laws is challenging, constantly evolving, and time consuming and federal regulators,
state attorneys general and
plaintiff’s attorneys have been and will likely continue to be active in this space.
We
may incur substantial expense
in complying with legal obligations to be imposed by new regulations and
we may be required to make significant
changes to our solutions and expanding business operations, all of which
may materially adversely affect our
operations.
We
also sell products and services that health care providers, such as physicians
and dentists, use to store and
manage patient medical or dental records.
These customers, and we, are subject to laws, regulations and industry
standards, such as HIPAA and the Payment Card Industry (PCI) Data Security Standards, which require the
protection of the privacy and security of those records, and our products
may also be used as part of these
customers’ comprehensive data security programs, including in connection
with their efforts to comply with
applicable privacy and security laws. Perceived or actual security vulnerabilities
in our products or services, or the
perceived or actual failure by us or our customers who use our products or
services to comply with applicable legal
or contractual data privacy and security requirements, may not only cause us
significant reputational harm, but may
also lead to claims against us by our customers and/or governmental agencies
and involve substantial fines,
penalties and other liabilities and expenses and costs for remediation.
Various
federal initiatives involve the adoption and use by health care
providers of certain EHR systems and
processes.
The initiatives include, among others, programs that incentivize
physicians and dentists, through MIPS,
to use EHR technology in accordance with certain evolving requirements,
including regarding quality, promoting
interoperability, cost and improvement activities.
Qualification for the MIPS incentive payments requires the use
of EHRs that are certified as having certain capabilities designated in evolving
standards adopted by CMS and the
Office of the National Coordinator for Health Information Technology of HHS (“ONC”).
Certain of our businesses
involve the manufacture and sale of such certified EHR systems and other products
linked to government supported
incentive programs.
In order to maintain certification of our EHR products, we
must satisfy these changing
governmental standards.
If any of our EHR systems do not meet these standards, yet have been
relied upon by
health care providers to receive federal incentive payments, we may be exposed
to risk, such as under federal health
care fraud and abuse laws, including the False Claims Act.
Additionally, effective September 1, 2023, the Office of
the Inspector General (“OIG”) for HHS issued a final rule implementing
civil money penalties for information
blocking as established by the Cures Act.
OIG incorporated regulations published by ONC as the basis for
enforcing information blocking penalties.
Each information blocking violation carries up to a $1 million penalty.
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Moreover, in order to satisfy our customers, and comply with evolving legal requirements, our products may
need
to incorporate increasingly complex functionality, such as with respect to reporting and information blocking.
Although we believe we are positioned to accomplish this, the effort may involve
increased costs, and our failure to
implement product modifications, or otherwise satisfy applicable standards,
could have a material adverse effect on
our business.
Other health information standards, such as regulations under HIPAA, establish standards regarding electronic
health data transmissions and transaction code set rules for specific electronic
transactions, such as transactions
involving claims submissions to third party payers.
Failure to abide by these and other electronic health data
transmission standards could expose us to breach of contract claims,
substantial fines, penalties, and other liabilities
and expenses, costs for remediation and harm to our reputation.
Additionally, as electronic medical devices are increasingly connected to each other and to other technology, the
ability of these connected systems to safely and effectively exchange and use exchanged
information becomes
increasingly important.
As a medical device manufacturer, we must manage risks including those associated with
an electronic interface that is incorporated into a medical device.
There may be additional legislative or regulatory initiatives in the future impacting
health care.
E-Commerce
Electronic commerce solutions have become an integral part of traditional health
care supply and distribution
relationships.
Our distribution business is characterized by rapid technological
developments and intense
competition.
The continuing advancement of online commerce requires
us to cost-effectively adapt to changing
technologies, to enhance existing services and to develop and introduce a
variety of new services to address the
changing demands of consumers and our customers on a timely basis, particularly
in response to competitive
offerings.
Through our proprietary, technologically-based suite of products, we offer customers a variety of competitive
alternatives.
We
believe that our tradition of reliable service, our name recognition
and large customer base built
on solid customer relationships, position us well to participate in
this significant aspect of the distribution business.
We
continually explore ways and means to improve and expand our
online presence and capabilities, including in
our online commerce offerings and our use of various social media outlets.
International Transactions
United States and foreign import and export laws and regulations require us to
abide by certain standards relating to
the importation and exportation of products.
We
also are subject to certain laws and regulations concerning the
conduct of our foreign operations, including the U.S. Foreign Corrupt Practices
Act, the U.K. Bribery Act, German
anti-corruption laws and other anti-bribery laws and laws pertaining
to the accuracy of our internal books and
records, as well as other types of foreign requirements similar to those
imposed in the United States.
While we believe that we are substantially compliant with the foregoing laws
and regulations promulgated
thereunder and possess all material permits and licenses required for the conduct
of our business, there can be no
assurance that laws and regulations that impact our business or laws
and regulations as they apply to our customers’
practices will not have a material adverse effect on our business.
See “
Item 1A. Risk Factors
.
” for a discussion of additional burdens, risks and regulatory developments
that may
affect our results of operations and financial condition.
Proprietary Rights
We hold trademarks relating to the “Henry Schein
®
” name and logo, as well as certain other trademarks.
Additionally, certain of our manufacturing businesses hold patents on certain of our products.
We believe that we
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have taken necessary steps to protect our proprietary rights, but no assurance
can be given that we will be able to
successfully enforce or protect our rights in the event that they are infringed
upon by a third party.
Employees and Human Capital
At Henry Schein, we have long recognized that as a purpose-driven company, our commitment to creating shared
value drives positive societal and environmental impact while supporting long-term
business success.
Building
trusted relationships with the key stakeholders who make up our Mosaic of
Success - Team Schein Members
(TSMs), customers, suppliers, stockholders, and society, helps drive our Company’s sustained growth, amplifies
our collective strengths, and brings to life our vision of making the world healthier, together.
Overseen by the
Nominating and Governance Committee of our Board of Directors (“Board”)
with the Compensation Committee
also playing a role in environmental, social, and governance matters related
to human capital engagement and
executive compensation, some key 2025 highlights related to human capital
matters include:
•
Continuing to compensate employees based on role, experience, and
performance, consistent with fair
pay practices and competitive outcomes across the workforce;
•
Expanding our learning journey by educating TSMs on multiple components
of our culture and values,
creating an understanding of how to sustain a meaningful, inclusive, and learning
oriented culture; and
•
Continuing to drive a connected and caring community for our TSMs
by fostering an environment
where they can feel a sense of inclusion, belonging, and purpose.
At Henry Schein, our employees continue to be one of our greatest assets.
We
employ more than 25,000 people,
with approximately 48% of our workforce based in the United States and approximately
52% based outside of the
United States.
Approximately 14% of our employees are subject to collective bargaining agreements.
We
believe
that our relations with our employees are excellent.
TSMs are the cornerstone of our Company.
We
provide a connected and caring community that invests
in the
career journey of our TSMs and encourages their contribution to our
mission of making the world healthier.
Our
TSM experience strategy is centered around our Team Schein Values
under the pillars of Community, Caring, and
Career.
We
know our business success is built on the engagement and commitment
of our team, which is dedicated
to meeting the needs of their fellow TSMs, our customers, supplier partners, stockholders,
and society.
We
recognize the changes in how and where we work, and that a continued
connection to our long-standing values
is important for our team members as we evolve our culture.
Throughout 2025, we continued listening to our team
through our continuous listening program, including The Pulse Global Culture
Survey, quarterly Pulse surveys, and
TSM roundtables, to garner feedback from our TSMs on their employee experience.
We
believe that a great
employee experience also drives a great customer experience.
We
want all our TSMs to pursue their ambitions,
deliver within our value-driven culture, and enjoy a rewarding career enabled
by great people leaders.
Our recent listening efforts show that our Team Schein Values
and TSM community remain our top strengths, and
that overall TSM engagement is driven by a small set of people-centric factors,
led by how supported, well, and
connected TSMs feel, with communication and culture acting as amplifiers of
trust and inclusion.
Day-to-day
experience varies across teams, particularly during periods of change, shaping how
workload, pace, and priorities
are experienced.
The greatest opportunity lies in strengthening consistency and clarity around
direction and
expectations, so teams feel better supported as we continue to evolve.
The feedback from our listening efforts is
shared with our Executive Management Committee and Board, both of whom are
committed to addressing
identified opportunities.
Additionally, in 2025 we conducted our second Corporate Citizenship Barometer
to
quantify stakeholder perceptions of the Company’s environmental and social priorities, commitments, and impacts.
As part of this commitment, some highlights from 2025 included:
•
Community:
Provide opportunities for TSMs to have fun while contributing to an inclusive team that
respects and supports one another.
•
Continued our focus on creating an inclusive environment where TSMs
feel a sense of belonging;
notably, in 2025 for the fourth time, our top strength identified in The Pulse Global Culture Survey was
our Company’s inclusive culture.
To deepen our commitment to inclusion across the Company, Global
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Directors and Vice Presidents and U.S. Managers are responsible for attending educational training
focused on developing our culture.
We
continue to expand our learning journey, educating TSMs on
key topics that help us develop a culture of inclusion and understanding.
•
Completed our second year of Henry Schein Games, a global virtual platform
that drives community
and engagement and offers field-day type in-person events at various global locations
that brought
TSMs together through friendly competition by earning points for their team
by engaging in cultural-
related activities and posting photos.
•
Expanded the number of Connection Days throughout the globe at Henry Schein
facilities, which were
designed to boost team morale by bringing TSMs together to participate
in team building activities at
least once per quarter.
•
Continued focus on our Employee Resource Groups (“ERGs”), a vehicle
for all TSMs to share,
connect, learn, and develop both personally and professionally.
Each of our ERGs has a sponsor from
our Executive Management Committee and our Board.
Our Chief Executive Officer (“CEO”) engages
directly in many of our ERG programs.
•
Launched Functional Resource Groups (“FRGs”), a vehicle for TSMs to
learn, collaborate, and
problem-solve – bridging gaps and uniting global TSMs within similar functions
across departments,
regions, and work models.
•
Launched MySchein Reels and Community Explorer –pages on our internal intranet
that drive
awareness of various connection opportunities throughout the Company.
•
Piloted an enhanced workplace technology tool that offers functionality for collaboration by
allowing
teams to see when others are working in an office, seamless booking of spaces both at
Henry Schein
facilities and on-demand spaces, and a Company events calendar.
•
Certified an additional 100 TSMs through our Culture Ambassador Program,
which educates TSMs on
our culture and certifies TSMs as mentors to new hires during their first 90 days
to ensure new TSMs
understand how we live our values day to day, and how they can engage in the Team Schein Culture.
•
Caring:
Build a world we want to live in by supporting each other and the communities
in which we live
and work.
•
Continued to offer a variety of opportunities to volunteer to drive purpose and engage
in local
communities in which TSMs live and work, such as through Carry the Load, the
We
Care Global
Challenge, Back to School, and Holiday Cheer.
•
Continued to strengthen our strategic partnerships with industry associations, customers,
and suppliers
that support access to quality health care through various key programs and
initiatives (e.g., S.M.I.L.E.
Healthcare Pathway Program, Gives Kids A Smile, Cares Package Program, Global
Student Outreach
Program, and Prepare to Care).
•
In 2025, we shipped nearly 2,500 Henry Schein CARES packages to over 200
grant recipients.
These
packages contained donated products enabling health care heroes across
the globe to support screening,
restorative, and educational events.
•
Developed the Stan’s Service Award
program to honor Stanley M. Bergman’s legacy that aims to
celebrate TSMs who embody the philosophy of “doing well by doing good.” This
program awards a
limited number of cash grants to non-profit organizations globally where TSMs volunteer
their time.
•
Expanded our global and highly rated Steps for Suicide Prevention campaign,
which brings TSMs
together to walk for a cause and provide education, partnering with the American
Foundation for
Suicide Prevention, Suicide Awareness and Remembrance (for Veterans),
and other local
organizations.
•
We
also understand the importance of driving a culture of wellness
for our own team members through
our Mental Wellness Committee, which is supported by our CEO, Executive Management Committee,
and Board.
In 2025, we launched an “Intrinsic Motivation” campaign to help TSMs
understand what
drives them at work and how they can get more involved in initiatives that
align to that motivator to
help TSMs find work that is more meaningful, energizing, and fulfilling.
•
Career:
Provide opportunities for TSMs to develop personally and professionally with an emphasis on
embodying our values to achieve our collective goals with excellence
and integrity.
•
Launched The HELIX Network,
a leadership development program that cultivates high-performing
TSMs to represent Henry Schein with external partners.
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•
Implemented globally the Core Leadership Capabilities (CLCs) for all TSMs
that highlights the
leadership capabilities that all TSMs are expected to demonstrate for career
success.
The CLCs are a
common language and foundational step to developing and refining the tools,
processes, and programs
which support the evolution of a TSM’s career,
including enhancing skills and career development,
leading to enhanced career pathing and internal mobility.
•
Launched Career Explorer, a centralized hub for TSMs to access the tools and resources needed to
support their career journey.
The hub provides access to the Career & Leadership Opportunities page
which markets internal roles and assignments across the company to support
internal movement;
directs TSMs to the Global Talent & Development page for support in the talent, performance,
learning, and assessment space; highlights career stories from fellow TSMs
for inspiration; and details
our Core Leadership Capabilities, which provide transparency of the leadership
capabilities that all
TSMs are expected to demonstrate for career success.
•
Continued investment in our employees by providing both formal and
informal learning opportunities
focused on growing and enhancing knowledge, skills, and abilities through a broad
suite of professional
development training programs for current and future roles.
In 2025, we continued to add new
workshops that enabled TSMs to build the skills they need for today and for the
future.
•
Continued expansion of our Leadership Development programs, inclusive of
our formal mentorship
and coaching programs.
•
Continued roll-out of talent planning efforts designed to ensure a strong leadership
pipeline across the
organization by strategically identifying and developing talent through targeted development
opportunities and intentional succession plans.
Information derived from talent planning efforts
informs curriculum design and content to help focus on the right
capabilities and help ensure alignment
of career development efforts with the future needs of the organization.
Our Board is provided with
periodic updates regarding our talent and succession planning efforts and participates
in professional
development activities with our TSMs.
•
Enhanced company-wide recognitions, including our Teddy Philson Team Schein Award,
which was
redesigned in 2023 to provide more visibility and meaningful
recognition to TSMs who exemplify our
Team Schein Values,
as well as other programs including service awards which highlight TSMs who
exemplify our Team Schein Values.
In 2025, we recognized 16 award winners around the world at our
Global Directors and Vice Presidents Management Meeting.
Available Information
We make available free of charge through our website, www.henryschein.com,
our annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, statements
of beneficial ownership of securities on
Forms 3, 4 and 5 and amendments to these reports and statements filed or furnished
pursuant to Section 13(a) and
Section 16 of the Securities Exchange Act of 1934 as soon as reasonably
practicable after such materials are
electronically filed with, or furnished to, the United States Securities and
Exchange Commission, or SEC.
Our
principal executive offices are located at 135 Duryea Road, Melville, New York 11747, and our telephone number
is (631) 843-5500.
Unless the context specifically requires otherwise, the terms
the “Company,” “Henry Schein,”
“we,” “us” and “our” mean Henry Schein, Inc., a Delaware corporation,
and its consolidated subsidiaries.
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26
Information about our Executive Officers
The following table sets forth certain information regarding our executive
officers as of February 24, 2026:
Name
Age
Position
Stanley M. Bergman
76
Chairman, Chief Executive Officer, Director
Andrea Albertini
55
Chief Executive Officer, Global Distribution and Technology
Michael S. Ettinger
64
Executive Vice President and Chief Operating Officer
Mark E. Mlotek
70
Executive Vice President, Chief Strategic Officer
Tom Popeck
56
Chief Executive Officer, Henry Schein Products
Christine Sheehy
58
Senior Vice President, Chief Human Resources Officer
Ronald N. South
64
Senior Vice President, Chief Financial Officer
Stanley M. Bergman
has been our Chairman and Chief Executive Officer since 1989 and a director
since 1982.
Mr. Bergman held the position of President from 1989 to 2005.
Mr. Bergman held the position of Executive Vice
President from 1985 to 1989 and Vice President of Finance and Administration from 1980 to 1985.
Mr. Bergman
is a South African Chartered Accountant and a Certified Public Accountant.
Mr. Bergman will retire as Chief
Executive Officer on March 1, 2026, following which Mr. Bergman will remain as Chairman of the Board.
Andrea Albertini
has been Chief Executive Officer, Global Distribution Group and Technology Group since
January 2025.
In this role, Mr. Albertini is responsible for our Global Distribution and Value-Added Services
segment and our Global Technology segment.
Mr. Albertini joined us in 2013 and has held several positions within
the organization including Chief Executive Officer, International Distribution Group, President, International
Distribution Group, President of our EMEA Dental Distribution Group,
and Vice-President of International Dental
Equipment.
Prior to joining Henry Schein, Mr. Albertini held leadership positions at Cefla Dental Group and
Castellini.
Michael S. Ettinger
has been our Executive Vice President and Chief Operating Officer since 2022.
Prior to his
current position, Mr. Ettinger served as Senior Vice President, Corporate & Legal Affairs, Chief of Staff and
Secretary from 2015 to 2022, Senior Vice President, Corporate & Legal Affairs and Secretary from 2013 to 2015,
Corporate Senior Vice President, General Counsel & Secretary from 2006 to 2013, Vice President, General
Counsel and Secretary from 2000 to 2006, Vice President and Associate General Counsel from 1998 to 2000
and
Associate General Counsel from 1994 to 1998.
Before joining us, Mr. Ettinger served as a senior associate with
Bower & Gardner and as a member of the Tax Department at Arthur Andersen.
Mark E. Mlotek
has been our Executive Vice President and Chief Strategic Officer since 2012.
Mr. Mlotek was a
director from 1995 to May 2025.
Prior to his current role, Mr. Mlotek was Senior Vice President and subsequently
Executive Vice President of the Corporate Business Development Group between 2000 and 2012.
Prior to that, Mr.
Mlotek was Vice President, General Counsel and Secretary from 1994 to 1999 and became a director in
1995.
Prior to joining us, Mr. Mlotek was a partner in the law firm of Proskauer Rose LLP, counsel to us,
specializing in mergers and acquisitions, corporate reorganizations and tax law from 1989 to 1994.
Tom
Popeck
has been our Chief Executive Officer, Henry Schein Products Group since January 2025.
In this role,
Mr. Popeck is responsible for our Global Specialty Products segment.
Since joining us in 2019, Mr. Popeck has
held several key positions including Chief Executive Officer, Healthcare Specialties Group, and President of our
Healthcare Specialties Group.
Prior to joining Henry Schein, Mr. Popeck held various sales leadership and general
management executive positions at Stryker.
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27
Christine Sheehy
has been our Senior Vice President, Chief Human Resources Officer since November 2024.
Ms.
Sheehy joined us in 2019 and has held several key positions with increasing
responsibility, including Vice
President
of the Human Resources Business Partner function for our North America
Distribution Group, Healthcare
Specialties Group, several Global Oral Reconstruction businesses, and our
Corporate Functions.
Prior to joining
Henry Schein, Ms. Sheehy held various leadership positions at Standard Chartered
Bank and Banco Real.
Ronald N. South
has been our Senior Vice President
and Chief Financial Officer (and principal financial officer
and principal accounting officer) since 2022.
Prior to holding his current position, Mr. South was our Vice
President Corporate Finance since 2008, and Chief Accounting Officer from 2013 until 2022.
Prior to joining us in
2008 as our Vice President, Corporate Finance, Mr. South held leadership roles at Bristol-Myers Squibb and
PepsiCo, and held several roles of increasing responsibility with PricewaterhouseCoopers
LLP,
where he advised
clients located in the United States, Europe, and Latin America.
Mr. South is a Certified Public Accountant.
Other Executive Management
The following table sets forth certain information regarding other Executive
Management as of February 24, 2026:
Name
Age
Position
R. Steven Boggan
61
Chief Executive Officer, Global Oral Reconstruction Group, Americas
David Kochman
46
Senior Vice President, Chief Corporate Affairs Officer
James Mullins
61
Senior Vice President, Global Supply Chain
Kelly Murphy
45
Senior Vice President and General Counsel
Christopher Pendergast
63
Senior Vice President and Chief Technology Officer
R. Steven Boggan
has been our Chief Executive Officer, Global Oral Reconstruction Group since July 2025.
As
CEO of our Global Oral Reconstruction Group, which is part of our Global
Specialty Products segment, Mr.
Boggan leads commercial operations in the Americas, global marketing,
and R&D.
Mr. Boggan joined Henry
Schein, as the President and CEO of BioHorizons, which we acquired in
2014.
Mr. Boggan joined BioHorizons in
1995 and was promoted to President and CEO in 2000.
Prior to BioHorizons, Mr. Boggan was employed at Dow
Corning Wright and Wright Medical Technology
from 1989 until 1995.
David Kochman
has been our Senior Vice President, Chief Corporate Affairs Officer since January 2025.
Mr.
Kochman joined us in 2015 and has held roles of increasing responsibility, including Vice President, Chief
Corporate Affairs Officer, and Vice
President, Corporate Affairs & Deputy Chief of Staff, Office of the CEO.
Prior
to joining Henry Schein, Mr. Kochman served as General Counsel and Corporate Development Officer for a
privately held company and was previously a Partner at the law firm Reed Smith
LLP.
James Mullins
has been our Senior Vice President of Global Supply Chain since 2018.
Mr. Mullins joined us in
1988 and has held a number of key positions with increasing responsibility, including Global Chief Customer
Service Officer.
Kelly Murphy
has been our Senior Vice President and General Counsel since 2021.
In 2025, in addition to her
global legal responsibilities, her role expanded to include leadership of
our Regulatory and Compliance functions.
Since joining us in 2011, Ms. Murphy has held several key positions of increasing responsibility within
the legal
function, most recently serving as Deputy General Counsel.
Christopher Pendergast
has been our Senior Vice President and Chief Technology Officer since 2018.
Prior to
joining us, Mr. Pendergast was employed by VSP Global from 2008 to 2018, most recently as the Chief
Technology Officer and Chief Information Officer.
Prior to VSP Global, Mr. Pendergast served in roles of
increasing responsibility at Natural Organics, Inc., from 2006 to 2008, IdeaSphere Inc./Twinlab Corporation from
2000 to 2006, IBM Corporation from 1987 to 1994 and 1998 to 2000
and Rohm and Haas from 1994 to 1998.
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ITEM 1A. Risk Factors
Our business operations could be affected by factors that are not presently known
to us or that we currently
consider not to be material to our operations, so you should not consider
the risks disclosed in this section to
necessarily represent a complete statement of all risks and uncertainties.
The Company believes that the following
risks could have a material adverse impact on our business, reputation, operating
results, financial condition and/or
the trading price of our common stock.
The order in which these factors appear does not necessarily reflect
their
relative importance or priority.
COMPANY RISKS
We are dependent upon third parties for the manufacture/supply of a significant volume of our products and
where we manufacture products, we are dependent upon third parties
for raw materials/purchased components.
We obtain a significant volume of the products we distribute from third parties, with whom we generally do not
have long-term contracts.
While there is typically more than one source of supply, some key suppliers, in the
aggregate, supply a significant portion of the products we sell.
In 2025, our top 10 Global Distribution and Value-
Added Services suppliers and our single largest supplier accounted for approximately
24% and 4%, respectively, of
our aggregate purchases.
Additionally, where we are the manufacturer of products for our speciality business (
e.g.
,
dental implants, endodontics, and orthopedics), we are dependent upon third parties
for raw materials and
purchased components.
Although no single supplier is material, because of our dependence
upon such suppliers,
our operations are subject to the suppliers’ ability and willingness to supply
products in the quantities that we
require, and the risks include delays caused by interruption in production
based on conditions outside of our
control, including a supplier’s failure to comply with applicable government
requirements (which may result in
product recalls, product detentions, and/or cessation of sales) or an interruption
in the suppliers’ manufacturing
capabilities.
In the event of any such interruption in supply, we would need to timely identify and obtain acceptable
replacement sources.
There is no guarantee that we would be able to obtain such alternative
sources of supply on a
timely basis, if at all, and an extended interruption in supply, particularly of a high-sales volume and/or high-
margin product, could result in a significant disruption in our sales and operations,
as well as damage to our
relationships with customers and our reputation.
We may be unsuccessful in achieving our strategic growth objectives.
Our 2025 – 2027 BOLD+1 Strategic Plan is defined under “Business, Business
Strategy” above.
In particular, we
are focused on continuing to grow our Henry Schein specialty brands
and technology and value-added services
solutions both organically and inorganically, and to drive greater efficiencies.
If we are unable to effectively
implement our strategic plan, we may not achieve our desired return on our
investments through our growth
strategies.
Our business could be affected by the Strategic Partnership Agreement with KKR.
On January 29, 2025, we announced a strategic investment by
funds affiliated with KKR & Co. Inc. (“KKR”), a
leading global investment firm, and a Strategic Partnership Agreement (the “Partnership
Agreement”) with KKR.
Under the Partnership Agreement, two independent directors, Max Lin and
William K. “Dan” Daniel, joined our
Board of Directors.
On May16, 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.
Pursuant to the Partnership Agreement, 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.
On November 4, 2025, the Company and KKR entered
into an amendment to the Partnership Agreement that increased the beneficial ownership
limit from 14.9% to19.9%
of the outstanding shares of the Company’s common stock that KKR is permitted to acquire during the
standstill
period.
The standstill provisions, including the increased ownership limit,
continue in effect for a period of six
months following the later of the expiration of the term of the Partnership Agreement
and the date on which no
KKR director appointed pursuant to the Partnership Agreement is serving on
the Company’s Board of Directors.
On December 7, 2025, pursuant to the Partnership Agreement, KKR notified
the Company of its election to
exercise the Extension Election (as defined in the Partnership Agreement) whereby
the Company’s Board of
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Directors will renominate KKR’s designees, Max Lin and William K. “Dan” Daniel, to stand for election at the
Company’s 2026 annual meeting of stockholders for a term expiring at the Company’s 2027 annual meeting of
stockholders. The Partnership Agreement may have unintended consequences,
such as uncertainty about our
management, operations, or future strategic direction, which could
result in the loss of future business opportunities
or negatively impact our ability to attract and retain qualified talent.
KKR also invests in many different types of
businesses, and has or may continue to invest in customers, suppliers,
joint venture partners, or other entities that
have relationships with the Company, or in competitors of such entities, which may create unintended conflicts
resulting in a loss of business.
Our future growth (especially for our Global Technology and Global Specialty Products segments) is dependent
upon our ability to develop or acquire and maintain and protect
new products and services and utilize new
technologies that achieve market acceptance with acceptable margins.
Our future success depends on our ability to timely develop (or obtain the right
to sell) competitive and innovative
(particularly for our Global Technology and Global Specialty Products segments) products and services and utilize
new technologies, such as artificial intelligence (“AI”) (among other emerging technologies)
and to market them
and/or utilize them quickly and cost-effectively.
Our ability to anticipate customer needs and emerging trends and
develop or acquire new products, services and technologies at competitive
prices requires significant resources,
including employees with the requisite skills, experience and expertise, particularly
in our Global Technology
segment, including dental practice management, patient engagement
and demand creation software solutions.
The
failure to successfully address these challenges could materially disrupt
our sales and operations.
We have increased and expect to continue to increase our use of AI technologies in various contexts to improve
customer and patient experiences and drive efficiencies in certain areas of our business,
including, without
limitation, making AI features available within our practice management
systems, which, among other things, helps
dentists and clinical staff detect caries.
While these innovations can present benefits to the Company, they also
create risks and challenges.
The use of AI in healthcare offerings poses certain clinical risks resulting
from
potential misdiagnosis or misinformation provided from AI applications, diminishing
critical judgment, or loss of
interpersonal care from clinicians.
These deficiencies could undermine the decisions, predictions,
or analysis AI
applications produce, as well as their adoption, subjecting us to competitive
harm, legal liability (including under
new proposed legislation regulating AI in jurisdictions such as the EU
or new applications of existing data
protection, privacy, intellectual property, and other laws), regulatory actions, and reputational harm.
In addition,
some AI scenarios, such as using AI applications to generate patient data
(including, without limitation, using AI to
capture and summarize patient interactions, and voice-activated perio charting),
present ethical, privacy, or other
social issues, risking reputational harm and/or reduced market demand
or acceptance of AI solutions.
The
safeguards we have designed to promote the ethical implementation
of AI may not be sufficient to protect us
against negative outcomes.
All of these risks are amplified by the critical nature of healthcare decisions
and the
sensitivity of health-related information, and the occurrence of any of
the above could have a material adverse
effect on our business, financial condition or operating results.
Additionally, if investments in emerging
technologies are less successful at attracting and retaining customers than
similar investments by our competitors,
or if we are otherwise unsuccessful at realizing the benefits of these
technological investments generally, this could
have a material adverse effect on our business, financial condition, or operating
results.
Additionally, widely
accessible generative AI that rapidly surpasses our organizational ability to understand
associated risks and
opportunities (including employees’ failure to comply with principles,
policies and processes governing AI usage)
could endanger our intellectual property, lead to misuse or loss of data and cause reputational harm and other fines,
penalties or losses.
Risks inherent in acquisitions, dispositions and joint ventures could
offset the anticipated benefits.
One of our business strategies has been to expand in part through acquisitions
and joint ventures and we expect to
continue to make acquisitions and enter into joint ventures in the future.
There is risk that one or more may not
succeed.
We cannot be sure, for example, that we will achieve the benefits of revenue growth that we expect from
these transactions or that we will avoid unforeseen additional costs, taxes,
or expenses.
Our ability to successfully
implement our acquisition and joint venture strategy depends upon,
among other things, the following:
•
the availability of suitable acquisition or joint venture candidates at
acceptable prices;
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•
our ability to consummate such transactions, which could potentially
be prohibited due to U.S. or
foreign antitrust regulations;
•
the liquidity of our investments and the availability of financing on
acceptable terms;
•
our ability to retain customers or product lines of the acquired businesses or
joint ventures;
•
our ability to retain, recruit and incentivize the management of the
companies we acquire; and
•
our ability to successfully integrate these companies’ operations, systems,
services, products and
personnel with our culture, management policies, legal, regulatory and compliance
policies,
information technology and cybersecurity systems and policies,
internal procedures, working capital
management, financial, operational and internal controls and strategies.
Furthermore, some of our acquisitions and future acquisitions may give
rise to an obligation to make contingent
payments or to satisfy certain repurchase obligations, which payments
could have material adverse impacts on our
financial results individually or in the aggregate.
Additionally, when we decide to sell assets or a business, we may
encounter difficulty in finding buyers or timely executing alternative exit strategies
on acceptable terms, which
could delay the accomplishment of our strategic objectives.
Dispositions may also involve continued financial
involvement in a divested business, such as through transition service agreements,
indemnities or other current or
contingent financial obligations.
Certain provisions in our governing documents and other documents to
which we are a party may discourage
third parties from seeking to acquire us that might otherwise result
in our stockholders receiving a premium
over the market price of their shares.
The provisions of our certificate of incorporation and by-laws may
make it more difficult for a third-party to
acquire us, may discourage acquisition bids and may impact the price
that certain investors might be willing to pay
in the future for shares of our common stock.
These provisions, among other things require (i) the affirmative vote
of the holders of at least 60% of the shares of common stock entitled to vote
to approve a merger, consolidation, or
a sale, lease, transfer or exchange of all or substantially all of our assets;
and (ii) the affirmative vote of the holders
of at least 66 2/3% of our common stock entitled to vote to (a)
remove a director; and (b) to amend or repeal our
by-laws, with certain limited exceptions.
In addition, certain of our employee incentive plans provide
for
accelerated vesting of equity awards upon termination without cause within
two years following a change in
control, or grant the plan committee discretion to accelerate awards
upon a change of control.
Further, certain
agreements between us and our executive officers provide for increased severance
payments and certain benefits if
those executive officers are terminated without cause by us or if they terminate
for good reason, in each case within
two years following a change in control or within ninety days prior to the
effective date of the change in control or
after the first public announcement of the pendency of the change
in control.
Adverse changes in supplier rebates or other purchasing incentives
could negatively affect our business.
The terms on which we purchase or sell products from many suppliers may
entitle us to receive a rebate or other
purchasing incentive based on the attainment of certain growth goals.
Suppliers may reduce or eliminate rebates or
incentives offered under their programs, or increase the growth goals or other conditions
we must meet to earn
rebates or incentives to levels that we cannot achieve.
Increased competition either from generic or equivalent
branded products could result in us failing to earn rebates or incentives
that are conditioned upon achievement of
growth goals.
Additionally, factors outside of our control, such as customer preferences, consolidation of suppliers
or supply issues, can have a material impact on our ability to achieve
the growth goals established by our suppliers,
which may reduce the amount of rebates or incentives we receive.
Sales of corporate brand products and products that we manufacture
entail additional risks, including the risk
that such sales could materially adversely affect our relationships with suppliers.
We offer
certain corporate brand products that are available exclusively
from us.
The sale of such corporate brand
products and the sale of products that we manufacture subject us to
potential product liability risks, mandatory or
voluntary product recalls, potential supply chain and distribution chain
disruptions and potential intellectual
property infringement risks, among other risks.
In addition, an increase in the sales of our corporate brand products
and our own manufactured products may negatively affect our sales of products
owned by our suppliers which,
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consequently, could adversely impact certain of our supplier relationships.
Our ability to locate qualified,
economically stable suppliers who satisfy our requirements, and
to acquire sufficient products in a timely and
effective manner, are critical to ensuring, among other things, that customer confidence is not diminished.
In
addition, we are exposed to the risk that our competitors or our large customers may
introduce their own private
label, generic, or low-cost products that compete with our products at
lower price points.
Such products could
capture significant market share or decrease market prices overall, eroding
our sales and margins.
Any failure to
develop sourcing relationships with a broad and deep supplier base
could have a material adverse effect on our
business, financial condition or operating results.
Our business could be affected by activist investors.
We actively engage in discussions with our stockholders.
In other cases, stockholders can engage in certain
divisive activist tactics, which can take many forms (including potential
proxy contests).
Some stockholder
activism has resulted in, and could in the future result in, substantial
costs, such as professional fees, and the
diversion of management’s and our Board of Directors’ attention and resources from our business and strategic
plans.
Additionally, it could cause uncertainty about our management, operations or future strategic direction,
which could result in the loss of future business opportunities or negatively
impact our ability to attract and retain
qualified talent.
Activists or other stockholders holding a large portion of our outstanding shares
could also exert
influence on actions requiring a stockholder vote, including the election of directors
and the approval of certain
extraordinary business transactions.
These risks could cause volatility in the trading price of our common
stock
based on factors other than the fundamentals of our business.
INDUSTRY RISKS
Security risks generally associated with our information systems and our
technology products and services have
in the recent past adversely affected our business and results of operations, and could
in the future materially
adversely affect our business and our results of operations if such products, services,
or systems (or third-party
systems we rely on) are interrupted, damaged by unforeseen events, are subject
to cyberattacks or fail for any
extended period of time.
We rely on information systems (“IS”) in our business to obtain, rapidly process, analyze, manage and store
customer, product, supplier and employee data to, among other things:
•
maintain and manage worldwide systems to facilitate the purchase and
distribution of thousands of
inventory items from numerous distribution centers;
•
receive, process and ship orders on a timely basis;
•
manage the accurate billing and collections for our customers;
•
process payments to suppliers;
•
provide products and services that maintain certain of our customers’ electronic
medical or dental
records (including protected health information of their patients); and
•
maintain and manage global human resources, compensation and payroll
systems.
There could be an adverse impact on our business, financial condition
or operating results if we do not maintain an
adequate information and technology infrastructure (
e.g.
, hardware, networks, software, people and processes) to
effectively protect and support the current and future information requirements of the business.
In addition to
health information in our customers’ electronic medical and dental records, certain
of our IS store other sensitive
personal and financial information, such as health care and other information
related to our employees and
individuals we service, as well as other sensitive information such as
credit card information from our third-party
business partners, that is confidential, and in many cases subject to privacy
laws.
Our IS are susceptible to, among other things, natural disasters, power
losses, telecommunication failures,
cybersecurity threats and other criminal activity.
Information security risks have significantly increased
in recent
years in part because of an overall increase in cyber incidents, their increased
sophistication and the involvement of
organized crime, hackers, terrorists and foreign state agents.
The health care industry has been targeted by threat
actors seeking to undermine companies’ cybersecurity defensive
measures.
Moreover, cyberattacks have become
more difficult to detect and respond to.
They increasingly exploit AI and machine learning techniques,
such as
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generative AI-phishing, deepfake impersonations, automated vulnerability
discovery, adaptive malware and large-
scale credential-stuffing campaigns.
New subsidiaries that we acquire and non-integrated subsidiaries have
been,
and may continue to be, targets to cyberattacks as we update their defensive measures
to meet our standards.
We
have processes in place intended to ensure that our security measures
keep pace with new and emerging risks.
We
regularly review, monitor and implement multiple layers of security through technology, processes and our people.
We utilize security technologies designed to protect and maintain the integrity of our IS and data, and our defenses
are monitored and routinely tested internally and by external parties.
Despite these efforts, our facilities and
systems and those of our third-party service providers have been, and
may in the future be, vulnerable to privacy
and security incidents, cybersecurity attacks and data breaches, acts of
vandalism or theft, computer viruses and
other malicious code, misplaced or lost data, programming and/or human
errors, attacks or other acts undermining
IS of third party business partners including our customers, or other similar
events that could impact the security,
reliability and availability of our systems.
In addition, hardware, software or applications developed
internally or
procured from third parties may contain defects in design or manufacture
or other problems that could unexpectedly
compromise information security.
As a practical matter, so long as we depend on IS to operate our business, and
our business partners do the same, there can be no guaranty
that such measures will successfully stop any one
particular cybersecurity incident given the constantly evolving nature of
the threat.
We have incurred, continue to
incur, and may in the future incur substantial costs as we update our cybersecurity defense systems
and our general
computer controls to meet evolving challenges, and legislative or regulatory
action related to cybersecurity which
may increase our costs to develop or implement new technology products
and services.
A cyberattack that bypasses or compromises our, or our vendors’, IS cybersecurity and/or general
information
technology (“IT”) controls (including third-party systems we rely on)
causing an IS security breach may lead, and
has in the past led, to a disruption of our, or our vendors’, IS business systems (including third-party systems
we
rely on), interruption of operations (including, without limitation, receiving,
verifying and processing customer
orders, customer service, accounts payable, warehouse management and
shipping and systems tied to internal
controls over financial reporting), the loss or alteration of business,
financial and other protected information, a
negative impact on our financial performance, and to an adverse
impact on our financial accounting and reporting
controls.
A cyberattack that bypasses or compromises our IS cybersecurity
and/or general computer controls or
those of third parties with whom we engage may also lead to claims against
us by affected parties and/or
governmental agencies, and involve fines and penalties, as well as substantial
defense and settlement expenses.
Any of these impacts may alone, or collectively, have a material impact on our business.
A successful cyberattack
has, and may again in the future, disrupt our business operations, adversely
impact our financial accounting and
reporting of results of operations, divert the attention of management,
and adversely impact our results of
operations.
In addition, we develop products and provide services to our customers
that are technology-based, and a
cyberattack that bypasses the IS supporting our products or services causing
a security breach and/or perceived
security vulnerabilities in our products or services could also cause significant
loss of business and reputational
harm, and actual or perceived vulnerabilities may lead to claims against
us by our customers and/or governmental
agencies.
In addition, certain of our practice management products and services
purchased by health care
providers, such as physicians and dentists, are used to store and manage patient
medical or dental records, and when
cloud-based approaches are used, we may be responsible for hosting
those records.
These customers, and in some
cases, we are subject to laws and regulations which require that
they protect the privacy and security of those
records, and our products may be used as part of these customers’ comprehensive
data security programs, including
in connection with their efforts to comply with applicable privacy and security laws.
In addition to immaterial and unrelated incidents at certain of our subsidiaries,
in October 2023 Henry Schein
experienced a cybersecurity 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.
Nevertheless, the October 2023 cybersecurity incident disrupted
key business
operations, adversely impacted our financial results for the fourth quarter
and full year 2023, diverted attention of
management, and caused the Company to incur significant remediation
costs.
The incident had residual impact on
our financial results in 2024.
We have spent, and plan to expend in the future, additional resources to continue to
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protect against, or to address problems caused by, business interruptions and data security breaches.
We also may
be perceived as a more vulnerable target of the cyber hackers as a result of the October
2023 incident.
The health care products distribution industry is highly competitive
(including, without limitation, competition
from third-party online commerce sites) and consolidating, and we may not
be able to compete successfully.
We compete with numerous companies, including several major manufacturers and distributors.
Some of our
competitors have greater financial and other resources than we do, which
could allow them to compete more
successfully.
Most of our products are available from several sources and our customers
tend to have relationships
with several distributors.
Competitors could obtain exclusive rights to market particular
products, which we would
then be unable to market.
Manufacturers also could increase their efforts to sell directly to end-users and
thereby
eliminate or reduce our role in distribution.
Industry consolidation among health care product distributors and
manufacturers, price competition, product unavailability, whether due to our inability to gain access to products or
to interruptions in manufacturing supply, or the emergence of new competitors, also could increase competition.
Consolidation has also increased among manufacturers of health care
products, which could have a material
adverse effect on our margins and product availability.
We could be subject to charges and financial losses in the
event we fail to satisfy minimum purchase commitments contained
in some of our contracts.
Additionally,
traditional health care supply and distribution relationships are being challenged
by online commerce solutions.
The continued advancement of online commerce by third parties and online
price transparency requires us to cost-
effectively adapt to changing technologies, to enhance existing services and to differentiate
our business (including
with additional value-added services) to address changing demands
of consumers and our customers.
The
emergence of such competition and our inability to anticipate and effectively respond to changes on
a timely basis
could have a material adverse effect on our business, financial condition or operating
results.
The health care industry is experiencing changes due to political, economic
and regulatory influences that could
materially adversely affect our business.
The health care industry is highly regulated and subject to changing
political, economic and regulatory influences.
Uncertainty surrounding possible changes to the health care environment,
including changes to regulatory
enforcement priorities, may directly or indirectly adversely affect us.
In recent years, the health care industry has
been undergoing significant changes driven by various efforts to reduce costs, including, among
other factors:
trends toward managed care; collective purchasing arrangements and
consolidation among office-based health care
practitioners; and changes in reimbursements to customers, including increased
attention to value-based payment
arrangements, as well as enforcement activities (and related
monetary recoveries) by governmental officials.
Both
our profitability and that of our customers may be materially adversely
affected by laws and regulations reducing
reimbursement rates for pharmaceuticals, medical supplies and devices,
and/or medical treatments or services,
changes to the methodology by which reimbursement levels are determined,
or regulating pricing, contracting and
discounting practices with respect to medical products and services.
It is possible that the adoption of the One Big
Beautiful Bill Act could impact eligibility for participation in Medicare
and Medicaid programs, resulting in a
change in utilization of the health care system.
In addition, a number of states are considering and enacting laws
or
regulations to expand their oversight of health care transactions, which
may impact the financial stability and
strategic opportunities of certain of our customers.
If we are unable to react effectively to these and other changes
in the health care industry, our business could be materially adversely affected.
The ACA greatly expanded health
insurance coverage in the United States and has been the target of legal and political
challenges since its adoption.
Any outcome of these challenges that changes the ACA could have
a significant impact on the U.S. health care
industry and the ability or willingness of individuals to engage with it.
Expansion of GPOs, DSOs, MSOs or provider networks and the
multi-tiered costing structure may place us at a
competitive disadvantage.
The health care products industry is subject to a multi-tiered costing structure, which
can vary by manufacturer
and/or product.
Under this structure, certain institutions can obtain more favorable
prices for health care products
than we are able to obtain.
The multi-tiered costing structure continues to expand as many large integrated health
care providers and others with significant purchasing power, such as GPOs, DSOs and MSOs, demand
more
favorable pricing terms.
Additionally, the formation of provider networks, GPOs, DSOs and MSOs may shift
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purchasing decisions to entities or persons with whom we do not have a historical
relationship and may threaten our
ability to compete effectively, which could in turn negatively impact our financial results.
In addition, such
organizations may establish direct relationships with manufacturers, thereby
either eliminating or reducing the
services historically provided by distributors.
Although we are seeking to obtain similar terms from manufacturers
to access lower prices demanded by GPO, DSO and MSO contracts or
other contracts, and to develop relationships
with existing and emerging provider networks, GPOs, DSOs and MSOs, we
cannot guarantee that such terms will
be obtained or contracts executed.
Increases in shipping costs or service issues with our third-party shippers
could harm our business.
Our ability to meet our customers’ expedited delivery expectations is an
integral component of our business
strategy for which our customers rely.
Shipping is a significant expense in the operation of our business.
We ship
almost all of our orders through third-party delivery services, and typically bear
the cost of shipment.
Accordingly,
any significant increase in shipping rates could have a material adverse
effect on our business, financial condition
or operating results.
While we have recently experienced increases in shipping costs,
we do not expect these
additional expenses to be material to our results now, however they could become material in a future fiscal period.
Similarly, strikes or other service interruptions by those shippers, including at transportation centers or shipping
ports, could cause our operating expenses to rise and materially adversely
affect our ability to deliver products on a
timely basis.
MACRO-ECONOMIC AND POLITICAL RISKS
Uncertain global and domestic macro-economic and political conditions
could materially adversely affect our
results of operations and financial condition.
Uncertain global and domestic macro-economic and political conditions
that affect the economy and the economic
outlook of the United States, Europe, Asia and other parts of the
world could have a material adverse effect on our
business, financial condition or operating results.
These uncertainties, include, among other things, those listed
under “Management’s Discussion and Analysis of Financial Condition and Results of Operations, Cautionary
Note
Regarding Forward-Looking Statements.”
Additionally, changes in government, government debt and/or budget crises may lead to reductions in government
spending in certain countries, which could reduce overall health care spending
and/or lead to higher income or
corporate taxes, which could depress spending overall.
Recessionary or inflationary conditions and depressed
levels of consumer and commercial spending may also cause customers
to reduce, modify, delay,
or cancel plans to
purchase our products and may cause suppliers to reduce their output
or change their terms of sale.
We have
experienced inflationary pressures, including higher freight costs and
interest expense, and pressures resulting from
the strengthening of the dollar, which have and continue to impact our results of operations.
We generally sell
products to customers with payment terms.
If customers’ cash flow or operating and financial performance
deteriorate, or if they are unable to make scheduled payments or obtain
credit, they may not be able to, or may
delay, payment to us.
Likewise, for similar reasons suppliers may restrict credit or impose
different payment terms.
REGULATORY
AND LITIGATION RISKS
Failure to comply with existing and future regulatory requirements
could materially adversely affect our
business.
We strive to be compliant with the applicable laws, regulations and guidance described below in all material
respects, and believe we have effective compliance programs and other controls
in place to ensure substantial
compliance.
However, compliance is not guaranteed either now or in the future as certain laws, regulations
and
guidance may be subject to varying and evolving interpretations that could
affect our ability to comply, as well as
future changes, additions and enforcement approaches, including in light
of political changes.
Changes with
respect to the applicable laws, regulations and guidance described below
may require us to update or revise our
operations, services, marketing practices, and compliance programs
and controls, and may impose additional and
unforeseen costs on us, pose new or previously immaterial risks to us, or
may otherwise have a material adverse
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effect on our business.
There can be no assurance that current and future government
regulations will not adversely
affect our business, and we cannot predict new regulatory priorities, the form, content
or timing of regulatory
actions, and their impact on the health care industry and on our business
and operations.
Global efforts to contain health care costs continue to exert pressure on product pricing.
In the United States, there
has been increased scrutiny on drug pricing and concurrent efforts to control or
reduce drug costs by Congress, the
President, executive branch agencies and various states.
We may be required to report drug pricing data under
federal laws and regulations.
Several U.S. states have adopted laws, that may apply to some of
our operations, that
require drug manufacturers, including re-packagers or re-labelers, to provide
advance notice of certain price
increases and to report information relating to price increases, while
others have established prescription drug
affordability boards or multi-payer purchasing pools to reduce the cost of prescription
drugs.
At the federal level,
for example, the Inflation Reduction Act of 2022, among other things,
requires drug manufacturers that raise certain
of their drug prices faster than the rate of inflation to pay rebates to Medicare,
and over time will authorize the
federal government to negotiate directly with drug manufacturers to
lower the prices of certain brand-name drugs
covered by Medicare.
These various evolving efforts create uncertainty and may adversely affect our business.
Under the Sunshine Act, we are required to collect and report detailed
information regarding certain financial
relationships we have with covered recipients (
e.g.
, physicians, dentists, teaching hospitals, other health care
practitioners) as well as physician ownership or investment interest.
We may be required to report information
under state transparency laws that address circumstances not covered
by the Sunshine Act.
We are also subject to
similar foreign transparency laws.
While we believe we have substantially compliant programs and controls
in
place satisfying the above laws and requirements, such compliance imposes
additional costs on us and the
requirements are sometimes unclear.
Our business is subject to additional requirements under various local, state,
federal and foreign laws and
regulations applicable to the sale and distribution of, and third-party payment
for, pharmaceuticals and medical
devices and HCT/P products.
Among the federal laws with which we must comply are the Controlled Substances
Act, the Food, Drug & Cosmetic Act, the Federal Drug Quality and Security
Act, including the Drug Supply Chain
Security Act, and Section 361 of the Public Health Services Act.
Among other things, such laws and the
regulations promulgated thereunder:
•
regulate the introduction, manufacture, advertising, marketing, promotion,
sampling, pricing,
reimbursement, labeling, packaging, storage, handling, returning,
recalling, reporting, distribution of,
disposal, and recordkeeping for drugs, HCT/P products and medical devices,
including unique device
identifiers;
•
subject us to inspection by the FDA, OSHA, and DEA and similar state
authorities;
•
regulate the storage, transportation and disposal of hazardous materials;
•
require us to advertise and promote our drugs and devices in accordance
with FDA regulations;
•
require us to report average sales price (ASP) to CMS for drugs or biologicals
payable under Medicare
Part B with or without a Medicaid drug rebate agreement;
•
require registration with the FDA and the DEA and various state agencies;
•
require us to design and operate a system to identify and report suspicious
orders of controlled
substances to the DEA and certain states;
•
require us to manage returns of products that have been recalled and subject
us to inspection of our
recall procedures and activities;
•
impose on us reporting requirements if a pharmaceutical, HCT/P product or
medical device causes an
adverse event, serious illness, injury or death;
•
require manufacturers, wholesalers, re-packagers and dispensers of prescription
drugs to identify and
trace certain prescription drugs as they are distributed;
•
require the licensing of prescription drug wholesalers and third-party
logistics providers; and
•
mandate compliance with standards for the recordkeeping, storage,
handling and documentation of
transactions involving prescription drugs and devices and associated
reporting requirements.
The FDA regulates certain computer software and digital health products intended
for use in health care settings,
including, for example, AI and machine learning-enabled medical devices
and the cybersecurity of medical devices.
Certain of our businesses involve the development and sale of
software and related products to support physician
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and dental practice management, and it is possible that the FDA or
foreign government authorities could determine
that one or more of our products is subject to regulation as a medical device,
which could subject our businesses to
substantial additional requirements, costs, potential enforcement actions
or liabilities for noncompliance with
respect to these products.
For example, some of our imaging software is regulated
as a medical device which
subjects our businesses to substantial additional requirements, costs
and potential enforcement actions or liabilities
for noncompliance with respect to these products.
Applicable federal, state, local and foreign laws and regulations also may
require us to meet various standards
relating to, among other things, licensure, registration, program eligibility, procurement, third-party reimbursement,
sales and marketing practices, product integrity and supply
tracking to product manufacturers, product labeling,
personnel, privacy and security of health or other personal information,
installation, maintenance and repair of
equipment and the importation and exportation of products.
The FDA, DEA, OCR, and state privacy regulators, as
well as CMS (including with respect to complex Medicare reimbursement
requirements applicable to our specialty
home medical supplies business) and state Medicaid agencies, have
recently increased their regulatory and
enforcement activities and, in particular, the DEA has heightened enforcement activities due to the
opioid crisis in
the United States.
The failure to comply with any of these laws or regulations, or new interpretations
of them, or the imposition of any
additional laws and regulations, could materially adversely affect our business.
The costs to us associated with
complying with the various applicable statutes and regulations, as they now
exist and as they may be modified,
could be material.
Allegations by a governmental body that we have not complied
with these laws could have a
material adverse effect on our businesses.
While we believe that we are substantially compliant with
applicable
laws and regulations, and have adequate compliance programs and controls
in place to ensure substantial
compliance, if it is determined that we have not complied with these laws,
we are potentially subject to warning
letters, substantial civil and criminal penalties, mandatory recall of product,
seizure of product and injunction,
consent decrees and suspension or limitation of payments to us, product
sale and distribution.
If we enter into
settlement agreements to resolve allegations of non-compliance, we
could be required to make settlement payments
or be subject to civil and criminal penalties, including fines and
the loss of licenses.
Non-compliance with
government requirements could also adversely affect our ability to participate in
important federal and state
government health care programs, such as Medicare and Medicaid,
and damage our reputation.
The EU Medical Device Regulation (“MDR”) may adversely affect our business.
The EU MDR significantly modified the regulatory compliance requirements
for the medical device industry as a
whole.
Among other things, as mentioned above, the EU
MDR:
•
strengthens the rules on placing devices on the market and reinforces
surveillance thereafter;
•
establishes explicit provisions on manufacturers’ responsibilities
for the follow-up of the quality,
performance and safety of devices placed on the market;
•
improves the traceability of medical devices throughout the supply chain to
the end-user or patient
through a unique identification number;
•
sets up a central database (EUDAMED) to provide patients, health care
professionals and the public
with comprehensive information on devices, importers, and distributors
registered in the EU;
•
strengthens rules for the assessment of certain high-risk devices, such
as implants, which may have to
undergo an additional check by experts before they are placed on the market; and
•
contains specific provisions in the event of interruption or discontinuation
of supply of a device.
The EU MDR imposes strict requirements for the confirmation that a
product meets the regulatory requirements,
including regarding a product’s clinical evaluation and a company’s quality systems, and for the distribution,
marketing and sale of medical devices, including post-market surveillance.
Pursuant to Regulation 2023/607 and
subject to certain conditions, medical devices that (i) obtained
a certificate under the EU Medical Device Directive
from May 25, 2017, (ii) which was still valid on May 26, 2021, and (iii)
has not been subsequently withdrawn may
continue to be placed on the market or put into service until December
31, 2027 for higher risk devices or
December 31, 2028 for medium and lower risk devices.
The modifications created by the EU MDR may have an
impact on the way we design and manufacture products and the way we
conduct our business in the EEA.
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If we fail to comply with laws and regulations relating to health care
fraud or other laws and regulations, we
could suffer penalties or be required to make significant changes to our operations,
which could materially
adversely affect our business.
Certain of our businesses are subject to federal and state (and similar
foreign) health care fraud and abuse, referral
and reimbursement laws and regulations with respect to their operations.
Some of these laws, referred to as “false
claims laws,” prohibit the submission or causing the submission of false or
fraudulent claims for reimbursement to
federal, state and other health care payers and programs.
Other laws, referred to as “anti-kickback laws,” prohibit
soliciting, offering, receiving or paying remuneration in order to induce or reward
the referral of a patient or
ordering, purchasing, leasing or arranging for, or recommending ordering, purchasing or leasing
of, items or
services that are paid for by federal, state and other health care payers and programs.
Certain additional state and
federal laws, such as the federal Physician Self-Referral Law (“Stark Law”),
prohibit physicians and other health
care professionals from referring a patient to an entity with which
the physician (or family member) has a financial
relationship, for the furnishing of certain designated health services
(for example, durable medical equipment and
medical supplies), unless an exception applies.
The fraud and abuse laws and regulations have been subject to heightened
enforcement activity over the past few
years, often as the result of “relators” who serve as whistleblowers by filing
complaints in the name of the United
States (and if applicable, particular states) under applicable false claims
laws, and who may receive up to 30% of
total government recoveries.
Penalties under fraud and abuse laws may be severe, including treble damages
and
substantial civil penalties under the federal False Claims Act, as
well as potential loss of licenses and the ability to
participate in federal and state health care programs, criminal penalties,
or imposition of a corporate compliance
monitor, which could have a material adverse effect on our business.
Also, these measures may be interpreted or
applied by a prosecutorial, regulatory or judicial authority in a
manner that could require us to make changes in our
operations or incur substantial defense and settlement expenses.
Even unsuccessful challenges by regulatory
authorities or relators could result in reputational harm and the incurring of
substantial costs.
Most states have
adopted similar state false claims acts, and these state laws have their
own penalties which may be in addition to
federal False Claims Act penalties, and other fraud and abuse laws.
The U.S. government and industry trade associations (among others) have expressed
concerns about financial
relationships between suppliers or manufacturers on the one hand and
physicians, dentists and other health care
providers, on the other.
As a result, we regularly review and revise our marketing
practices as necessary to
facilitate compliance.
Our aspirations, goals and disclosures related to environmental, social
and governance matters and the focus on
regulators and private litigants among other things on related claims made
by companies and funds expose us to
numerous risks, including reputational, financial, legal and other risks,
that could have an adverse impact on us.
California has adopted stringent new climate disclosure requirements, as
has the EU.
We are subject to Directive (EU) 2022/2464 on corporate sustainability reporting (“CSRD”) which became
effective on January 5, 2023.
CSRD requires in-scope companies to report sustainability-related information
that is
material from both a financial risk or opportunity and an environmental
or social impact perspective, and the
assessment of materiality is inherently subjective.
Furthermore, Directive No. 2025/794 of 14 April 2025, the
“Omnibus” Directive, amended Directive 2022/2464 by introducing a
two-year postponement of the sustainability
reporting requirements for financial years beginning on or after 1
st
January 2025 and on or after 1
st
January 2026.
This “Omnibus” legislative package amending the CSRD alters the scope,
thresholds, timing and contents of
reporting obligations, which may increase our costs.
CSRD is being transposed into national law across EU
Member States, and further legislative or implementation changes may
also increase our costs.
We also are subject to certain United States and foreign laws and regulations concerning the conduct of our foreign
operations, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery
Act, German anti-corruption laws
and other anti-bribery laws and laws pertaining to the accuracy of our internal
books and records.
Our businesses
are generally subject to numerous other laws and regulations that
could impact our financial results, including,
without limitation, securities, antitrust, consumer protection and marketing
laws and regulations.
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In the EU, Directive No. 2019/1937 of October 23, 2019,
on the protection of persons who report breaches of
Union law,
organizes the legal protection of whistleblowers.
This Directive covers whistleblowers reporting
breaches of EU laws and regulations and protects a wide range of people,
including former employees.
All private
companies with 50 or more employees are required to create effective internal reporting
channels.
All EU Member
States have now implemented the Directive.
In the EU, both active and passive corruption in the private sector are
criminalized.
The EU Council Framework
Decision 2003/568/JHA of 22 July 2003
on combating corruption in the private sector
establishes more detailed
rules on the liability of legal persons and deterrent sanctions.
However, the liability of legal persons is regulated at
a national level.
Failure to comply with fraud and abuse laws and regulations, and other
laws and regulations, could result in
significant civil and criminal penalties and costs, including the loss of
licenses and the ability to participate in
federal and state health care programs, and could have a material adverse
effect on our business.
We may
determine to enter into settlements, make payments, agree to consent decrees
or enter into other arrangements to
resolve such matters.
Intentional or unintentional failure to comply with settlement agreements
or consent decrees
could materially adversely affect our business.
While we believe that we are substantially compliant with applicable
laws and regulations, and believe we have
adequate compliance programs and controls in place to ensure substantial
compliance, we cannot predict whether
changes in applicable law, or interpretation of laws, or changes in our services or marketing practices in response
to
changes in applicable law or interpretation of laws, could have a material
adverse effect on our business.
If we fail 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,
we could be required to make
significant changes to our products, or incur substantial fines, penalties, or
other liabilities.
Our businesses that involve physician and dental practice management
products, equipment and our specialty home
medical supplies businesses, and our self-funded employee benefits programs
include information technology (IT)
systems that store and process personal health, clinical, financial, and
other sensitive information of individuals.
These IT systems may be vulnerable to breakdown, wrongful intrusions, data
breaches and malicious attack, which
could require us to expend significant resources to eliminate these
problems and address related security concerns,
and could involve claims against us by private parties and/or governmental agencies.
We are directly or indirectly subject to numerous and evolving federal, state, local and foreign laws and regulations
that protect the privacy and security of personal information (including
health data), such as HIPAA, CAN-SPAM,
TCPA, Section 5 of the FTC Act, the CCPA/CPRA
and various other privacy laws that have or will soon come
into
effect.
Laws and regulations relating to privacy and data protection
are continually evolving and subject to
potentially differing interpretations, including those relating to AI.
These requirements may not be harmonized,
may be interpreted and applied in a manner that is inconsistent from one
jurisdiction to another or may conflict with
other rules or our practices.
In addition to state-specific data breach notification laws (which exist in
all U.S. states
and territories), cybersecurity laws such as the federal Cyber Incident
Reporting for Critical Infrastructure Act of
2022, proposed Federal Acquisition Regulations and amendments to SEC
reporting requirements may require us to
provide notifications about cybersecurity incidents in limited timeframes and
before investigations are complete.
Our businesses’ failure to comply with these laws and regulations could expose
us to breach of contract claims,
substantial fines, penalties and other liabilities and expenses, costs
for remediation and harm to our reputation.
Evolving laws and regulations in this area could restrict the ability
of our customers to obtain, use or disseminate
patient information, or could require us to incur significant additional
costs to re-design our products to reflect these
legal requirements, which could have a material adverse effect on our operations.
In addition, the European Parliament and the Council of the EU adopted
the GDPR that has been effective since
May 25, 2018, which increased privacy rights for Data Subjects in
the European Economic Area (EEA), including
individuals who are our customers, suppliers and employees.
The GDPR extended the scope of responsibilities for
data controllers and data processors, and generally imposes increased
requirements and potential penalties on
companies, such as us, that are either established in the EU and process personal
data of Data Subjects (regardless
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the Data Subject location), or that are not established in the EU but
that offer goods or services to Data Subjects in
the EU or monitor their behavior in the EU. Noncompliance can result
in penalties of up to the greater of EUR 20
million, or 4% of global company revenues (sanction that may be public),
and Data Subjects may seek damages.
Member states may individually impose additional requirements and penalties
regarding certain limited matters (for
which the GDPR left some room of flexibility), such as employee personal data.
With respect to the personal data
it protects, the GDPR requires, among other things, controller accountability, consents from Data Subjects or
another acceptable legal basis to process the personal data, notification
within 72 hours of a personal data breach
where required, data integrity and security, and fairness and transparency regarding the storage, use or other
processing of the personal data.
The GDPR also provides rights to Data Subjects relating notably
to information,
access, rectification, erasure of the personal data and the right to object to
the processing.
Despite Brexit, the UK
also has data protection laws equivalent to the GDPR and has implemented
further data protection related
legislation.
Switzerland enacted FADP.
Data protection authorities located in different EU Member States may
interpret GDPR differently, or requirements of national laws may vary between the EU Member States, UK and
Switzerland, or guidance on GDPR and related laws and compliance practices
may be often updated or otherwise
revised.
Any of these events will increase the complexity and costs of
processing personal data in the European
Economic Area, UK or Switzerland or concerning individuals located
in these jurisdictions.
Effective November 1, 2021, China’s PIPL imposes specific rules for processing personal information and specifies
that the law shall also apply to personal information activities carried
out outside China but for the purpose of
providing products or services to PRC citizens.
Any non-compliance with these laws and regulations may
subject
us to fines, orders to rectify or terminate any actions that are deemed
illegal by regulatory authorities, other
penalties, reputational damage, or legal proceedings against us, which
may affect our business, financial condition
or results of operations.
The PIPL carries maximum penalties of CNY50 million or
5% of the annual revenue of
entities that process personal data.
Data protection laws in other countries, such as Brazil, are
also quickly
evolving, with many countries having updated, or are in the process
of updating, their laws to bring them more in
line with the model created by GDPR.
In the United States, the CCPA, effective January 1, 2020, establishes a privacy framework for covered businesses
such as ours by, among other things, creating an expanded definition of personal information, establishing new data
privacy rights for California residents and creating a new and potentially
severe statutory damages framework for
violations of the CCPA, as well as potentially severe statutory damages and a private right of action against
businesses that suffer a data security breach due to their violation of a duty to
implement reasonable security
procedures and practices.
This private right of action may increase the likelihood of, and risks associated
with, data
breach litigation.
In addition, California voters adopted the CPRA (effective January 1, 2023)
which enhances and
strengthens regulatory requirements and individual protections that currently
exist under the CCPA.
Effective as of
January 1, 2026, the CCPA/CPRA regulatory framework includes expanded requirements.
Other states have
enacted or are considering enacting similar privacy laws, which may subject
us to additional requirements and
restrictions that could have an impact on our business.
As of January 1, 2026, comprehensive privacy laws are now
in effect in 20 states, further complicating our privacy compliance obligations through
the introduction of
increasingly disparate requirements across the various U.S. jurisdictions
in which we operate.
Additionally, certain
states have enacted specific health data privacy laws and other states
are considering similar legislation.
Congress
is considering legislation that may preempt some or all of such U.S. state
privacy laws, but which may also provide
a more expansive private right of action for privacy claims than exists under
current state laws.
The evolving complexity of privacy and data security legislation in
the U.S. and other jurisdictions globally may
complicate our compliance efforts and further increase our risk of regulatory enforcement,
penalties and litigation.
While we believe we have substantially compliant programs and controls
in place to comply with privacy laws
domestically and internationally, our compliance with data privacy and cybersecurity laws is likely to impose
additional costs on us, and we cannot predict whether the interpretations
of the requirements, or changes in our
practices in response to new requirements/interpretations, could have
a material adverse effect on our business.
Our products and services utilize new technologies, such as AI.
The regulatory landscape for AI is changing
rapidly, with both domestic and international activity.
While there is currently no comprehensive federal legislation
in the U.S. concerning the use, development or deployment of AI, regulators
pursue AI-related enforcement actions
under existing federal consumer protection laws and have issued related
guidance.
Further, state privacy, consumer
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40
protection and AI-specific laws are proliferating and may be applicable to our
business.
Other countries are also
applying their data and consumer protection laws to AI, particularly
generative AI, and are considering and
implementing specific legal frameworks with respect to AI.
Regulation (EU) 2024/1689 on harmonized rules on
artificial intelligence (the EU AI Act), for example, establishes a comprehensive
regulatory framework for AI that
became law in August 2024 with implementation phased through
into 2027.
As with the GDPR, it has extra-
territorial effect.
Any failure or perceived failure by us to comply with such requirements
could have an adverse
impact on our business.
Anticipated further evolution of regulations and legislation
on this topic may substantially
increase the penalties to which we could be subject in the event of any
non-compliance.
Compliance with these
laws is challenging, constantly evolving and time consuming and federal
regulators, state attorneys general and
plaintiff’s attorneys have been and will likely continue to be active in this space.
We may incur substantial expense
in complying with legal obligations to be imposed by new regulations
and we may be required to make significant
changes to our solutions and expanding business operations, all of which
may adversely affect our operations.
We also sell products and services that health care providers, such as physicians and dentists, use to store and
manage patient medical or dental records.
These customers and we are subject to laws, regulations and
industry
standards, such as HIPAA and the Payment Card Industry (PCI) Data Security Standards, which require the
protection of the privacy and security of those records.
Our products or services may be used as part of these
customers’ comprehensive data security programs, including in connection
with their efforts to comply with
applicable data privacy and security laws and contractual requirements.
Perceived or actual security vulnerabilities
in our products or services, or the perceived or actual failure by us
or our customers who use our products or
services to comply with applicable legal or contractual data privacy and
security requirements, may not only cause
us significant reputational harm, but may also lead to claims against us by our
customers and/or governmental
agencies and involve substantial fines, penalties and other liabilities and
expenses and costs for remediation.
Additionally, under the GDPR (and equivalent laws) and U.S. state privacy laws, health data belong to the category
of “sensitive data” and benefit from specific protection.
Processing of such data is generally prohibited, except for
specific exceptions.
Certain of our businesses involve the manufacture and sale of electronic
health record (EHR) systems and other
products linked to government supported incentive programs, where
the EHR systems must be certified as having
certain capabilities designated in evolving standards, such as those adopted
by CMS and ONC.
In order to maintain
certification of our EHR products, we must satisfy the changing governmental
standards.
If any other EHR systems
do not meet these standards, yet have been relied upon by health care providers
to receive federal incentive
payments, we may be exposed to risk, such as under federal health care
fraud and abuse laws, including the False
Claims Act.
Additionally, effective September 1, 2023, the HHS-OIG issued a final rule implementing civil money
penalties for information blocking as established by the Cures Act.
OIG incorporated regulations published by
ONC as the basis for enforcing information blocking penalties.
Each information blocking violation carries a $1
million penalty.
While we believe we are substantially in compliance with such certifications
and with applicable
fraud and abuse laws and regulations and that we have adequate compliance
programs and controls in place to
ensure substantial compliance, we cannot predict whether changes in
applicable law, or interpretation of laws, or
resulting changes in our compliance programs and controls, could have a
material adverse effect on our business.
Moreover, in order to satisfy our customers and comply with evolving legal requirements, our products
may need to
incorporate increasingly complex functionality, such as reporting and information blocking.
Although we believe
we are positioned to accomplish this, the effort may involve increased costs, and
our failure to implement product
modifications, or otherwise satisfy applicable standards, could have a
material adverse effect on our business.
Additionally, as electronic medical devices are increasingly connected to each other and to other technology, the
ability of these connected systems to safely and effectively exchange and use exchanged
information becomes
increasingly important.
As a medical device manufacturer, we must manage risks including those associated with
an electronic interface that is incorporated into a medical device.
Tax legislation could materially adversely affect our financial results and tax liabilities.
We are subject to the tax laws and regulations of the United States federal, state and local governments, as well as
foreign jurisdictions.
From time to time, various legislative initiatives may be proposed
that could materially
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41
adversely affect our tax positions.
There can be no assurance that our effective tax rate will not be
materially
adversely affected by legislation resulting from these initiatives.
In addition, tax laws and regulations are extremely
complex and subject to varying interpretations.
Although we believe that our historical tax positions are sound and
consistent with applicable laws, regulations and existing precedent,
there can be no assurance that our tax positions
will not be challenged by relevant tax authorities or that we would be
successful in any such challenge.
We face inherent risk of exposure to product liability, intellectual property infringement and other claims in the
event that the use of the products we sell results in injury.
Our business involves a risk of product liability, intellectual property infringement and other claims in the ordinary
course of business, and from time to time we are named as a defendant
in cases as a result of our distribution of
products.
Additionally, we own and own interests in companies that manufacture certain dental and medical
products.
As a result, we could be subject to the potential risk of product liability, intellectual property
infringement or other claims relating to the manufacture and distribution
of products by those entities.
In addition,
as our corporate brand business continues to grow, purchasers of such products may increasingly seek recourse
directly from us, rather than the ultimate product manufacturer, for product-related claims.
Another potential risk
we face in the distribution of our products is liability resulting from counterfeit
or tainted products infiltrating the
supply chain.
In addition, some of the products that we transport and sell are
considered hazardous materials.
The
improper handling of such materials or accidents involving the transportation
of such materials could subject us to
liability or at least legal action that could harm our reputation.
Customs policies or legislative import restrictions could hinder the Company’s ability to import goods necessary
to our operations on a timely basis and result in government enforcement
actions and/or sanctions.
Government-imposed import policies and legislation regulating the
import of goods and prohibiting the use of
forced labor or human trafficking could result in delays or the inability to import
goods in a timely manner that are
necessary to our operations, and such policies or legislation could also
result in financial penalties, other sanctions,
government enforcement actions and reputational harm.
Certain of our suppliers have had their ability to service
certain markets restricted or negatively impacted because of allegations
of forced labor in their supply chain.
While
the Company has policies against and seeks to avoid the import of goods
that are manufactured in whole or in part
by forced labor or through human trafficking, as a result of legislative and governmental
policy initiatives, we may
be subject to increasing potential delays, added costs, supply chain disruption
and other restrictions.
GENERAL RISKS
Our business operations, results of operations, cash flows, financial condition
and liquidity may be negatively
impacted by the effects of disease outbreaks, epidemics, pandemics, or similar wide-spread public
health
concerns and other natural or man-made disasters, such as terrorism, civil
unrest, fire and extreme weather
.
Our business operations, results of operations, cash flows, financial condition
and liquidity may be negatively
impacted by the effects of disease outbreaks, epidemics, pandemics, similar wide-spread
public health concerns and
other natural or man-made disasters, such as terrorism, civil unrest, fire
and extreme weather (“disasters”).
For
example, as a global health care solutions company, the COVID-19 pandemic and the governmental responses
to it
had a material adverse effect on our business, financial condition, operating results
and cash flows.
The impacts
and potential impacts from the COVID-19 pandemic included, and could include
as a result of other disasters,
adverse impacts such as significant volatility in supply, demand and selling prices, interrupted operations of
industries that use or manufacture the products we distribute for personal
protective equipment (PPE), test kits and
related products, reduction in peoples’ ability and willingness to be in
public, impact of adapted business practices,
volatility in the financial markets, and unavailability or impairment
of our manufacturing, distribution, or other
facilities, or firmwide systems such as our IS.
Our global operations are subject to inherent risks that could materially
adversely affect our business.
Our global operations are subject to risks that could materially adversely affect our business,
including, among
other things:
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42
•
difficulties and costs relating to staffing and managing foreign operations;
•
difficulties and delays inherent in sourcing products, establishing channels of distribution
and contract
manufacturing in foreign markets;
•
fluctuations in the value of foreign currencies;
•
uncertainties relating to trade agreements and international trade relationships;
•
longer payment cycles and difficulty of collecting receivables in foreign jurisdictions;
•
repatriation of cash from our foreign operations to the United States;
•
regulatory requirements, including, without limitation, anti-bribery, anti-corruption and laws pertaining
to the accuracy of our internal books and records;
•
litigation risks;
•
unexpected difficulties in importing or exporting our products and import/export
tariffs, quotas,
sanctions or penalties;
•
limitations on our ability under local laws to protect our intellectual
property;
•
unexpected regulatory, legal, economic and political changes in foreign markets;
•
changes in tax regulations that influence purchases of capital equipment;
•
civil disturbances, geopolitical turmoil, including terrorism, war or political
or military coups; and
•
risks associated with climate change, including physical risks such as
impacts from extreme weather
events and other potential physical consequences, regulatory and technological
requirements, market
developments, stakeholder expectations and reputational risk.
Our future success is substantially dependent upon our senior
management, and our revenues and profitability
depend on our relationships with capable personnel, as well as
customers, suppliers and manufacturers of the
products that we distribute.
On July 15, 2025, the Company announced that Mr. Bergman will retire as the Company’s CEO on December 31,
2025 (which date was extended to March 1, 2026), and that Mr. Bergman will continue to serve as Chairman of the
Board of Directors of the Company following his retirement.
On January 12, 2026, the Company announced the
appointment of Frederick M. Lowery as its next CEO, effective March 2, 2026, at
which time he will join the
Company’s Board of Directors.
Our future success is substantially dependent upon the efforts and abilities of
members of our senior management.
Competition for senior management is intense, burnout and turn-over rates
are increasing workplace concerns,
transitions among senior level officers can present challenges as well as opportunities,
and we may not be
successful in attracting and retaining key personnel, or transitioning to
new personnel following departures.
Additionally, our future revenues and profitability depend on our ability to maintain satisfactory relationships with
qualified personnel, as well as customers, suppliers and manufacturers.
If we fail to maintain our existing
relationships with such persons or fail to acquire relationships with such key
persons in the future, our business may
be materially adversely affected.
Disruptions in the financial markets may materially adversely
affect the availability and cost of credit to us.
Our ability to make scheduled payments or refinance our obligations with
respect to indebtedness will depend on
our operating and financial performance, which in turn is subject to prevailing
economic conditions and financial,
business and other factors beyond our control.
Disruptions in the financial markets may materially adversely affect
the availability and cost of credit to us.
Item 1B.
Unresolved Staff Comments
We have no unresolved comments from the staff of the SEC that were issued 180 days or more preceding the end of
our 2025 fiscal year.
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43
Item 1C.
Cybersecurity
We rely on information systems in our business to obtain, rapidly process, analyze, manage and store customer,
product, supplier and employee data to, among other things: maintain
and manage multiple information systems
worldwide to facilitate the purchase and distribution of thousands of
inventory items from numerous distribution
centers; receive, process and ship orders on a timely basis; manage the
accurate billing and collections for
thousands of customers; process payments to suppliers and vendors; provide
products and services that maintain
certain of our customers’ electronic medical or dental records (including
protected health information of their
patients) and maintain and manage global human resources, compensation
and payroll systems.
For these purposes,
we define “information systems” in a manner consistent with the definition
contained in the rules adopted by the
SEC to mean “electronic information resources, owned or used by the
registrant, including physical or virtual
infrastructure controlled by such information resources, or components thereof,
organized for the collection,
processing, maintenance, use, sharing, dissemination, or disposition
of the registrant's information to maintain or
support the registrant's operations.”
Cybersecurity Risk Management and Strategy
We have developed and implemented a cybersecurity risk mitigation strategy intended to protect our information
systems.
Our cybersecurity risk mitigation strategy is designed
so that the Company’s cybersecurity program is
aligned with generally accepted cybersecurity standards and frameworks,
in particular the NIST Cybersecurity
Framework, or “NIST CSF,” and our Company is externally audited, or certified, with ISO27001 partial scope.
We maintain an Office of Cybersecurity (“OCS”), led by our Chief Information Security Officer (“CISO”), which
oversees
the operations of our cyber risk mitigation strategy.
The OCS is a cross-functional, enterprise-wide
management team, which continuously evaluates our global cybersecurity
program’s effectiveness and is focused
on maintaining and protecting our information systems.
In overseeing the operations of our cyber risk mitigation
strategy, the OCS partners with our Global Technology Solutions team, which is led by our Chief Technology
Officer (“CTO”) and is comprised of over one hundred professionals that support our information
systems and
operations.
Our cyber risk mitigation strategy includes
monitoring
for and addressing risks that materialize within
the Company’s information systems, as well as at our
third-party
vendors, suppliers and other third-party business
partners.
Our CISO reports to our CTO.
Our CTO,
who also serves as Senior Vice President,
has more than 30 years of
experience leading large-scale global IT organizations and received a Bachelor of Business Administration
in
Business Computer Information Systems and a Master of Business Administration
from Hofstra University.
See
also
Item 1. Business, Other Executive Management
.
Our Vice President, Global CISO, who also serves as Vice
President and Head of the Office of Cyber Security, has over 30 years of experience leading global cybersecurity
and technology programs in large and complex corporations, and holds a Certified
Information Systems Security
Professional and a Certified Information Systems Auditor certification.
He also received a BS, Information
Technology and Security from Baker College.
The cybersecurity risk mitigation strategy is also overseen by
senior
managers who are members of our Executive Steering Committee, comprised
of the Company’s most senior
technology, legal and internal auditing officers.
Our CEO is regularly briefed on issues, incidents, and
developments, and our Board oversees our risk mitigation strategy principally
through its Audit Committee and
Regulatory, Compliance and Cybersecurity Committee, as described in more detail below.
Our cybersecurity risk management program includes, among other
elements:
•
risk assessments designed to help identify material cybersecurity risks
to our information systems;
•
a security team principally responsible for managing our (i) cybersecurity
risk assessment processes, and
(ii) defining cybersecurity control standards;
•
the use of expert external service providers to assess, test or otherwise assist
with aspects of our
cybersecurity controls, and to respond to specific cybersecurity threats;
•
the review and assessment of past cybersecurity incidents with a view to
learning from those events to
further strengthen our cyber risk mitigation strategy;
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44
•
a written cybersecurity incident response plan that includes procedures
for responding to cybersecurity
incidents; and
•
a Global Information Security Policy, together with more detailed information security policies,
procedures, standards, and guidelines.
In addition, all employees with systems access are required to participate
in mandatory annual cybersecurity and
anti-phishing courses, along with compliance programs.
Our employees who perform financial gatekeeper roles
also receive additional mandatory annual data security training specific
to spoofing, phishing and similar data
security threats.
Per written Company policies, employees are also required
to safeguard confidential information.
Our cybersecurity risk strategy is integrated into our overall enterprise
risk management program, and our
cybersecurity team is supported by and connected with the enterprise risk management
team.
Cyber Incidents
In addition to immaterial and unrelated incidents at certain of our subsidiaries,
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.
The October 2023 cyber incident disrupted key business operations,
adversely impacted our
financial results for the fourth quarter and full year 2023, diverted
attention of management, and caused the
Company to incur significant remediation costs.
The incident had residual impact on our financial results in 2024.
Cybersecurity Governance
Our Board has a Regulatory, Compliance and Cybersecurity Committee that focuses on cybersecurity oversight,
together with other board committees, principally the Audit Committee.
The purpose of the Regulatory,
Compliance and Cybersecurity Committee is to assist the Board by providing
guidance to, and oversight of, the
Company’s senior management responsible for assessing and managing Company-wide regulatory, corporate
compliance and cybersecurity risk management programs.
The primary responsibilities of the Regulatory,
Compliance and Cybersecurity Committee are to (i) discuss cybersecurity
strategic decisions, issues, challenges and
opportunities relating thereto, (ii) provide expertise to guide assessment
and monitoring of Company-wide
regulatory, corporate compliance and cybersecurity risk management budgeting, spending and capital investment,
(iii) monitor progress and status of the Company’s regulatory, corporate compliance and cybersecurity risk
management programs, (iv) review and evaluate major regulatory, corporate compliance and cybersecurity risk
management initiatives to identify emerging and future opportunities for synergy or to
leverage regulatory,
corporate compliance and cybersecurity risk management investments
more effectively and cost efficiently,
(v) report to the Audit Committee on regulatory, corporate compliance and cybersecurity risk management matters
reviewed by the Regulatory, Compliance and Cybersecurity Committee that may impact the Company’s financial
reporting and (vi) be generally available to, and communicate with,
the Company’s senior management, and to
inform the Board in the areas described above.
Our CISO and CTO, along with other key executives who are part of our Executive
Steering Committee, review
strategy, policy,
program effectiveness, standards, enforcement and cybersecurity issue management
with the
Board’s Regulatory,
Compliance and Cybersecurity Committee on at least a quarterly basis and
with the Audit
Committee on at least a bi-annual basis.
Our CTO
meets
with Board members outside of the formal meetings on a
regular basis as well as in connection with specific cybersecurity issues or
threats.
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45
ITEM 2.
Properties
Within our Global Distribution and Value
-Added Services and Global Specialty Products segments (for properties
with more than 100,000 square feet) we lease and/or own approximately
5.0 million square feet of properties,
consisting of distribution, office, showroom, manufacturing and sales space, in significant
locations including
United States, Germany, France, Canada, and Brazil.
We also have meaningful market presence in several other
European countries, and the Asia-Pacific region.
Lease expirations range from 2026 to 2048.
We believe that our properties are in good condition, are well maintained and are suitable and adequate to carry on
our business.
We have additional operating capacity at certain distribution center facilities.
ITEM 3.
Legal Proceedings
For a discussion of Legal Proceedings, see
Note 17 – Commitments and Contingencies
of the Notes to the
Consolidated Financial Statements included under Item 8.
ITEM 4.
Mine Safety Disclosures
Not applicable.
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46
PART
II
ITEM 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Our common stock is traded on the Nasdaq Global Select Market tier of
the Nasdaq Stock Market, or Nasdaq,
under the symbol HSIC.
On February 17, 2026, there were approximately 251 holders of record
of our common stock and the last reported
sales price was $77.21.
A substantially greater number of holders of our common
stock are “street name” or
beneficial holders, whose shares are held by banks, brokers and other financial
institutions.
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 $6.7 billion,
authorized by our Board, to the repurchase
program provide for a total of $6.8 billion (including $500 million authorized
on January 27, 2025 and an
additional $750 million authorized on September 8, 2025) of shares of our common
stock to be repurchased under
this program, with $780 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.
In May 2025 we received 3,122,832
shares at an estimated fair value of $224 million.
In July 2025, we received an additional 368,651 shares at an
estimated fair value of $26 million, representing the final amount of shares
to be received under this accelerated
share repurchase program.
As of December 27, 2025, we had repurchased approximately $6.0
billion of common stock (107,876,628) shares
under these initiatives,
with $780 million available for future common stock share repurchases.
The following table summarizes repurchases of our common stock
under our stock repurchase program during the
fiscal quarter ended December 27, 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)
9/28/2025 through 11/1/2025
1,020,000
$
64.28
1,020,000
14,467,711
11/2/2025 through 11/29/2025
488,067
70.55
488,067
11,799,992
11/30/2025 through 12/27/2025
1,304,805
76.64
1,304,805
10,244,654
2,812,872
2,812,872
(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.
Dividend Policy
We have not declared any cash or stock dividends on our common stock during fiscal years 2025 or 2024.
We
currently do not anticipate declaring any cash or stock dividends on our common
stock in the foreseeable future.
We intend to retain earnings to finance the expansion of our business and for general corporate purposes, including
our share repurchase program.
Any declaration of dividends will be at the discretion of our Board and
will depend
upon the earnings, financial condition, capital requirements, level
of indebtedness, contractual restrictions with
respect to payment of dividends and other factors.
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47
$50
$100
$150
$200
$250
December 2020
December 2021
December 2022
December 2023
December 2024
December 2025
Henry Schein, Inc.
Dow Jones US Health Care Index
NASDAQ Composite Index
Stock Performance Graph
The graph below compares the cumulative total stockholder return
on $100 invested, assuming the reinvestment of
all dividends, on December 26, 2020, the last trading day before the
beginning of our 2021 fiscal year, through the
end of our 2025 fiscal year with the cumulative total return on $100 invested
for the same period in the Dow Jones
U.S. Health Care Index and the Nasdaq Stock Market Composite Index.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL
RETURN
ASSUMES $100 INVESTED ON DECEMBER 26, 2020
ASSUMES DIVIDENDS REINVESTED
December 26,
December 25,
December 31,
December 30,
December 28,
December 27,
2020
2021
2022
2023
2024
2025
Henry Schein, Inc.
$
100.00
$
113.81
$
121.30
$
114.96
$
106.92
$
115.57
Dow Jones U.S. Health
Care Index
100.00
124.30
119.60
121.86
126.18
144.40
NASDAQ Stock Market
Composite Index
100.00
123.04
82.97
120.01
158.80
191.20
ITEM 6.
[Reserved]
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Index to Financial Statements
48
ITEM 7.
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 this Annual Report
on Form 10-K, and in particular the risks discussed under the caption
“Risk Factors” in Item 1A of this report and
those that may be discussed in other documents we file with
the Securities and Exchange Commission (“SEC”).
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 creation 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
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Index to Financial Statements
49
limitation, the transition to a new Chief Executive Officer), employee hiring and retention,
increases in labor 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
Chief Executive Officer
On January 12, 2026, we announced the appointment of Frederick
M. Lowery as our new CEO, effective March 2,
2026, at which time Mr. Lowery will join our Board of Directors.
Mr. Lowery succeeds Stanley M. Bergman, who
will remain as our CEO through March 1, 2026, at which time Mr. Bergman will retire as CEO, but will remain as
Chairman of the Board.
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 years ended December 28, 2024 and December 30, 2023, 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 had a $60 million insurance policy, following a $5 million
retention.
During the years ended December 27, 2025, December 28, 2024
and December 30, 2023, we incurred $0
million, $9 million and $11 million, respectively, of direct expenses related to the cyber incident, mostly consisting
of professional fees.
During the years ended December 27, 2025 and December
28, 2024, we received insurance
proceeds of $20 million and $40 million, respectively, representing 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 consolidated statements of income.
Tariffs and Related Economic Conditions
The U.S. has adopted new and increased tariffs on imports from countries, which
tariffs remain subject to
frequently evolving exemptions and modifications, as well as to court
challenges, including a recent invalidation in
the Supreme Court of many of the tariffs.
Some countries have imposed retaliatory tariffs and other restrictions on
imports from the U.S.
These developments, and anticipated future developments,
have created a volatile
environment for global trade, and new trade policies with individual countries.
It is unclear whether, or the extent
to which, the current tariffs on trade with numerous countries will remain in place,
or change, the exceptions that
may apply, and their timing.
The tariffs did not have a material impact on our results of operations during fiscal
year 2025, although sales of
U.S. dental equipment were temporarily impacted by market uncertainty
related to tariffs in the second half of the
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50
quarter ended June 28, 2025.
It is unclear whether, or the extent to which, the current tariffs on trade with
numerous countries will remain in place, or change, 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 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 likely have an adverse impact on
utilization, Medicaid
payment and cost of production (if foreign components are used).
The OBBBA also includes changes to corporate tax rates, limitations
on certain deductions and modifications to
international tax provisions.
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51
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 94 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 34 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.
Our reportable segments 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
the potential to favorably affect demand for technology solutions, including software, which
can enhance the
efficiency and facilitation of practice management.
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52
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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53
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 $5.3 trillion in 2024, or 18.0% 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
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.
See “
Item
- Business – Governmental Regulations
” for a discussion of laws, regulations and governmental activity
that may
affect our results of operations and financial condition.
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54
Results of Operations
Refer to Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations in
our 2024 Annual Report on Form 10-K for management’s discussion and analysis of financial condition and results
of operations for the fiscal year 2024 compared to fiscal year 2023.
The following tables summarize the significant components of our operating
results and cash flows for each of the
three years ended December 27, 2025, December 28, 2024, and December
30, 2023 (in millions):
Years
Ended
December 27,
December 28,
December 30,
2025
2024
2023
Operating results:
Net sales
$
13,184
$
12,673
$
12,339
Cost of sales
9,079
8,657
8,479
Gross profit
4,105
4,016
3,860
Operating expenses:
Selling, general and administrative
3,084
3,034
2,956
Depreciation and amortization
263
251
209
Restructuring and related costs
105
110
80
Operating income
$
653
$
621
$
615
Other expense, net
$
(120)
$
(108)
$
(73)
Income taxes
(126)
(128)
(120)
Net income
419
398
436
Net income attributable to Henry Schein, Inc.
398
390
416
Years
Ended
December 27,
December 28,
December 30,
2025
2024
2023
Cash flows:
Net cash provided by operating activities
$
712
$
848
$
500
Net cash used in investing activities
(400)
(430)
(1,135)
Net cash provided by (used in) financing activities
(188)
(510)
701
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55
Plans of Restructuring and Related Costs
On August 6, 2024, we committed to a restructuring plan (the “2024
Plan”) to integrate our acquisitions, right-size
operations and further increase efficiencies.
We currently expect this plan to be completed at the end of 2027.
During the years ended December 27, 2025 and December 28, 2024, we recorded
restructuring and related charges
associated with the 2024 Plan of $105 million and $73 million, respectively.
The restructuring and related costs for
these periods 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 and related charges associated with
the 2024 Plan through the end of 2027; however, an estimate of the amount of these charges for 2026 through 2027
has not yet been determined.
During the year ended December 27, 2025, in connection with the 2024 Plan,
we recorded a loss of $1 million and
$12 million related to the disposal of businesses in the Global Distribution
and Value
-Added Services and Global
Specialty Product segments, respectively, and a net gain related to disposal of a business in the Global Technology
segment.
These amounts are included in the $105 million of restructuring and
related charges discussed above.
During the year ended December 28, 2024, in connection with the 2024 Plan,
we recorded an impairment of
goodwill and intangible assets of $13 million related to the disposal of a portion
of a business in the Global
Specialty Products segment.
This impairment is included in the $73 million of restructuring and
related charges
discussed above.
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 was
completed as of July 31, 2024.
During the years ended December 28, 2024 and December 30, 2023, in
connection
with our 2022 Plan, we recorded restructuring and related costs of $37 million
and $80 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.
During the year ended December 30, 2023, in connection with the 2022 Plan,
we recorded an impairment of an
intangible asset of $12 million related to disposal of a U.S. business in
the Global Specialty Products segment.
This
impairment is included in the $80 million of restructuring and related costs discussed
above.
The disposal was
completed during the first quarter of 2024.
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56
2025 Compared to 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.
Our reportable segments are determined based on how our Chairman
and Chief Executive Officer manages the
business, assesses performance and allocates resources.
We have three reportable segments: (i) Global Distribution
and Value
-Added Services; (ii) Global Specialty Products; and (iii) Global
Technology.
Net Sales
Net sales by reportable segment and by major product or service type were
as follows:
% of
% of
Increase / (Decrease)
2025
Total
2024
Total
$
%
Global Distribution and Value
-Added Services
Global Dental Merchandise
(1)
$
4,831
36.6
%
$
4,723
37.3
%
$
108
2.2
%
Global Dental Equipment
(2)
1,799
13.6
1,723
13.6
76
4.4
Global Value
-Added Services
(3)
238
1.8
233
1.8
5
2.2
Global Dental
6,868
52.0
6,679
52.7
189
2.8
Global Medical
(4)
4,270
32.5
4,081
32.2
189
4.6
Total Global Distribution and Value
-Added Services
11,138
84.5
10,760
84.9
378
3.5
Global Specialty Products
(5)
1,544
11.7
1,446
11.4
98
6.7
Global Technology
(6)
675
5.1
630
5.0
45
7.1
Eliminations
(173)
(1.3)
(163)
(1.3)
(10)
n/a
Total
$
13,184
100.0
%
$
12,673
100.0
%
$
511
4.0
(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, home solutions products, 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 the development and distribution of practice management software, e-services and other technology-enabled products
for health care providers.
The components of our sales growth/(decline) were as follows:
Constant Currency
Growth/(Decline)
Total Constant
Currency Growth
Foreign
Exchange
Impact
Total Sales
Growth
Local Internal
Growth/(Decline)
Acquisition
Growth
Global Distribution and Value
-Added Services
Global Dental Merchandise
1.4
%
0.2
%
1.6
%
0.6
%
2.2
%
Global Dental Equipment
2.7
0.5
3.2
1.2
4.4
Global Value
-Added Services
(2.0)
4.0
2.0
0.2
2.2
Global Dental
1.6
0.4
2.0
0.8
2.8
Global Medical
3.1
1.5
4.6
-
4.6
Total Global Distribution and Value
-Added Services
2.2
0.8
3.0
0.5
3.5
Global Specialty Products
3.3
2.4
5.7
1.0
6.7
Global Technology
6.7
-
6.7
0.4
7.1
Total
2.6
0.9
3.5
0.5
4.0
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Index to Financial Statements
57
Global Sales
Global net sales for the year ended December 27, 2025 increased 4.0%,
attributable to internal growth of 2.6%,
acquisition growth of 0.9%, and an increase in foreign exchange of 0.5%.
The components of our sales increase are
presented in the table above.
Global Distribution and Value-Added Services Sales
Global Distribution and Value-Added Services net sales for the year ended December 27, 2025 increased 3.5%.
The components of our sales increase are presented in the table
above.
The 1.6% increase in internally generated local currency dental sales was
primarily due to sales growth in U.S
dental merchandise and international dental merchandise,
as well as growth in traditional dental equipment in the
U.S. and growth in traditional and digital dental equipment in international
markets.
The 3.1% increase in internally generated local currency medical sales was
attributable to growth of our Home
Solutions business,
dialysis products and pharmaceuticals.
The 2.0% decrease in internally generated local currency value-added services
sales was attributable primarily to
lower sales in our practice transitions business, partially offset by sales growth from our international
businesses.
Global Specialty Products
Global Specialty Products net sales for the year ended December 27, 2025
increased 6.7%.
The components of our
sales increase are presented in the table above.
The 3.3% increase in internally generated local currency sales was attributable
to growth in our implant and
biomaterial businesses, and orthopedics, partially offset by a decline in orthodontic
sales.
Global Technology
Global Technology net sales for the year ended December 27, 2025 increased 7.1%.
The components of sales
growth are presented in the table above.
The internally generated local currency increase of 6.7% in Global Technology sales was primarily attributable to
the adoption of our core practice management solutions, particularly
our cloud-based platforms, as well as an
increase in revenue cycle management solutions.
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58
Gross Profit
Gross profit and gross margin percentages by segment and in total were as follows:
Gross
Gross
Increase
2025
Margin %
2024
Margin %
$
%
Global Distribution and Value
-Added Services
$
2,786
25.0
%
$
2,776
25.8
%
$
10
0.4
%
Global Specialty Products
847
54.8
802
55.4
45
5.5
Global Technology
457
67.7
424
67.4
33
7.6
Corporate
15
n/a
14
n/a
1
n/a
Total
$
4,105
31.1
$
4,016
31.7
$
89
2.2
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 products we develop
and manufacture within our Global Specialty Products segment compared
to products distributed 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 fluctuate between the
periods as a result of the changes in product mix and customer mix.
With respect to customer mix, sales to our
large-group customers are typically completed at lower gross margins as a result of
higher sales volumes, while
sales to office-based practitioners generally carry higher gross margins due to lower volumes.
The increase in Global Distribution and Value-Added Services gross profit for the year ended December 27, 2025
compared to the prior-year-period is due primarily to increased internally generated sales volume as described
above.
The decrease in gross margin rates was attributable primarily to the impact
of targeted promotional
programs and product mix.
The increase in Global Specialty Products gross profit primarily reflects
increased internally generated sales
volume and gross profit from acquisitions.
The decrease in gross margin rates was due to product mix and pricing.
The increase in Global Technology gross profit is the result primarily of higher internally generated sales.
The
increase in gross margin rates was due to product mix.
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59
Operating Expenses
Operating expenses (consisting of selling, general and administrative
expenses; depreciation and amortization; and
restructuring and related costs) by segment were as follows:
% of
% of
Respective
Respective
Increase / (Decrease)
2025
Sales
2024
Sales
$
%
Global Distribution and Value
-Added Services
$
2,106
18.9
%
$
2,080
19.3
%
$
26
1.3
%
Global Specialty Products
605
39.2
624
43.2
(19)
(3.1)
Global Technology
277
41.0
272
43.2
5
1.5
Corporate
145
n/a
91
n/a
54
60.8
3,133
23.8
3,067
24.2
66
2.1
Adjustments
(1)
319
n/a
328
n/a
(9)
n/a
Total operating expenses
$
3,452
26.2
$
3,395
26.8
$
57
1.7
(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 4 – Segment and Geographic Data
.
These
adjustments (current year vs. prior year) consist of (i) acquisition intangible amortization ($179 million vs. $184 million), (ii)
restructuring and related costs ($105 million vs. $110 million), (iii) change in contingent consideration ($(2) million vs. $45
million), (iv) litigation settlements ($5 million vs. $6 million), (v) cyber incident-insurance proceeds, net of
third-party advisory
expenses ($(20) million net proceeds vs. $(31) million net proceeds), (vi) impairment of intangible assets ($16 million vs. $0
million), (vii) impairment of capitalized assets ($0 million vs. $12 million), and (viii) costs associated with shareholder advisory
matters and select value creation consulting costs ($36 million vs. $2 million).
The net increase in operating expenses was attributable to the following:
Operating Costs
(excluding
acquisitions)
Acquisitions
Adjustments
Total
Global Distribution and Value
-Added Services
$
3
$
23
$
-
$
26
Global Specialty Products
(23)
4
-
(19)
Global Technology
5
-
-
5
Corporate
54
-
-
54
39
27
-
66
Adjustments
-
-
(9)
(9)
Total operating expenses
$
39
$
27
$
(9)
$
57
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 year ended December 27,
2025 was attributable to an increase in
Corporate investments in technology supporting the launch of our Global E-Commerce
Platform
(www.henryschein.com), depreciation expense,
the impact of certain compensation related costs and timing of
certain non-income tax credits during the year ended December 28, 2024,
partially offset by cost savings from our
restructuring activities, certain changes in estimates and other operating
cost efficiencies.
In addition, during the
year ended December 27, 2025,
our operating costs were impacted by recognition of a benefit related
to the
remeasurement to fair value of previously held equity investments of $29
million within our Global Specialty
Products segment and $9 million within our Global Distribution and Value-Added Services segment.
During the
year ended December 28, 2024,
our operating costs were impacted by recognition of a remeasurement gain
related
to the remeasurement to fair value of a previously held equity investments of $18
million within our Global
Distribution and Value-Added Services segment.
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60
Other Expense, Net
Other expense, net was as follows:
Variance
2025
2024
$
%
Interest income
$
33
$
24
$
9
37.1
%
Interest expense
(150)
(131)
(19)
(14.2)
Other, net
(3)
(1)
(2)
n/a
Other expense, net
$
(120)
$
(108)
$
(12)
10.9
Interest income increased primarily due to increased interest rates.
Interest expense increased primarily due to
increased borrowings.
Income Taxes
Our effective tax rate was 23.7% for the year ended December 27, 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, as well as the tax treatment associated with
the acquisition of a controlling
interest of a previously held non-controlling equity investment.
On July 4, 2025, President Trump signed the reconciliation tax bill, commonly known as the “One Big Beautiful
Bill Act” (OBBBA), into law.
Corporate provisions in the OBBBA include immediate expensing of domestic
research and experimental expenditures, limitations on certain deductions,
and modifications to international tax
provisions.
The changes resulting from the OBBBA did not have a significant impact
to the total tax provision.
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 December 27, 2025, the impact of the Pillar Two
rules to our financial statements was immaterial.
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Index to Financial Statements
61
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 14 – 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.
Our acquisition strategy is focused on investments in companies, including
high growth high margin businesses
aligned with our BOLD+1 strategy, 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.
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.
Net cash provided by operating activities was $712 million for the
year ended December 27, 2025, compared to net
cash provided by operating activities of $848 million for the prior year.
The net change of $136 million was
primarily attributable to changes in working capital accounts (primarily
accounts receivable, inventory, and
accounts payable and accrued expenses),
partially offset by an increase in operating income.
Our operating cash
flows during the year ended December 28, 2024 were positively
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
second half of the year ended December 28, 2024.
Net cash used in investing activities was $400 million for the year ended
December 27, 2025, compared to net cash
used in investing activities of $430 million for the prior year.
The net change of $30 million was primarily
attributable to lower acquisition activity.
Net cash used in financing activities was $188 million for the year
ended December 27, 2025, compared to net cash
used in financing activities of $510 million for the prior year.
The net change of $322 million was primarily due to
increased net borrowings from debt,
proceeds received from the issuance of common stock, and a
reduction in
acquisitions of noncontrolling interests in subsidiaries, partially offset by increased
repurchases of common stock.
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Index to Financial Statements
62
The following table summarizes selected measures of liquidity and capital
resources:
December 27,
December 28,
2025
2024
Cash and cash equivalents
$
156
$
122
Working
capital
(1)
1,236
1,180
Debt:
Bank credit lines
$
764
$
650
Current maturities of long-term debt
33
56
Long-term debt
2,310
1,830
Total debt
$
3,107
$
2,536
Leases:
Current operating lease liabilities
$
78
$
75
Non-current operating lease liabilities
251
259
(1)
Includes $491 million and $241 million of certain accounts receivable which serve as security for U.S. trade accounts receivable
securitization at December 27, 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 44.8 days as of December 27, 2025
from 47.3 days as of December 28, 2024, which was primarily attributable
to the impact that the cyber incident had
on the cash collections during the first half of 2024.
During the years ended December 27, 2025 and December 28,
2024, we wrote off approximately $18 million and $12 million, respectively, of fully reserved accounts receivable
against our trade receivable reserve.
Our inventory turns from operations decreased to 4.8 as of December
27, 2025
from 5.0 as of December 28, 2024.
Our working capital accounts may be impacted by current and
future economic
conditions.
Contractual obligations
The following table summarizes our contractual obligations related
to fixed and variable rate long-term debt and
finance lease obligations, including interest (assuming a weighted
average interest rate of 4.62%), as well as
inventory purchase commitments and operating lease obligations
as of December 27, 2025:
Payments due by period
< 1 year
2 - 3 years
4 - 5 years
> 5 years
Total
Contractual obligations:
Long-term debt, including interest
$
133
$
942
$
1,066
$
656
$
2,797
Inventory purchase commitments
8
1
-
-
9
Operating lease obligations
91
133
84
63
371
Finance lease obligations, including interest
3
3
1
-
7
Total
$
235
$
1,079
$
1,151
$
719
$
3,184
For information relating to our debt please see
Note 14 – Debt
.
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Index to Financial Statements
63
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 23 years, some of
which may include options to extend the leases for up to 10 years.
As of December 27, 2025, our right-of-use
assets related to operating leases were $301 million and our current and
non-current operating lease liabilities were
$78 million and $251 million, respectively.
Please see
Note 8 – Leases
for further information.
Stock Repurchases
On January 27, 2025, our Board 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.
In May 2025, we received 3,122,832
shares at an estimated fair value of $224 million.
In July 2025, we received an additional 368,651 shares at an
estimated fair value of $26 million, representing the final amount of shares
to be received under this accelerated
share repurchase program.
On September 8, 2025, our Board authorized the repurchase of up to
an additional $750 million in shares of our
common stock.
From March 3, 2003 through December 27, 2025, we repurchased $6.0
billion, or 107,876,628 shares, under our
common stock repurchase programs, with $780 million available
as of December 27, 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
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 December 27, 2025 and December 28, 2024, our balance
for
redeemable noncontrolling interests was $895 million and $806 million,
respectively.
Please see
Note 20 –
Redeemable Noncontrolling Interests
for further information.
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Index to Financial Statements
64
Critical Accounting Estimates
Our accounting policies are described in
Note 1 – Basis of Presentation and Significant Accounting Policies
of the
consolidated financial statements.
The preparation of consolidated financial statements requires us
to make
estimates and judgments that affect the reported amounts of assets, liabilities, revenues
and expenses and related
disclosures of contingent assets and liabilities.
We base our estimates on historical data, when available,
experience, industry and market trends, and on various other assumptions
that are believed to be reasonable under
the circumstances, the combined results of which form the basis for
making judgments about the carrying values of
assets and liabilities that are not readily apparent from other sources.
We believe that the estimates, judgments and
assumptions upon which we rely are reasonable based upon information
available to us at the time that these
estimates, judgments and assumptions are made.
However, by their nature, estimates are subject to various
assumptions and uncertainties.
Therefore, reported results may differ from estimates and any such differences may
be material to our consolidated financial statements.
We believe that the following critical accounting estimates, which have been discussed with the Audit Committee
of our Board, affect the significant estimates and judgments used in the preparation
of our consolidated financial
statements:
Inventories and Reserves
Inventories consist primarily of finished goods, raw materials and
work-in-process and are stated at the lower of
cost or net realizable value.
Cost is determined by the weighted average method for merchandise
and actual cost
for large equipment, high-technology equipment and drop-shipments.
Inventory costs for manufactured products
include direct materials, labor, and an allocation of related fixed and variable overhead.
The determination of
inventory carrying values requires management to make significant
estimates and judgments.
In assessing the need
for inventory reserves and evaluating net realizable value, we consider
multiple factors, including inventory
condition, on-hand quantities, historical and forecasted sales, product
life cycles, and prevailing market and
economic conditions.
Business Combinations
The estimated fair value of acquired identifiable intangible assets (i.e., customer
relationships and lists, trademarks
and trade names, product development and non-compete agreements)
is based on critical judgments and
assumptions derived from analysis of market conditions, including discount
rates, projected revenue growth rates
(which are based on historical trends and assessment of financial projections),
estimated customer attrition and
projected cash flows.
These assumptions are forward-looking and could be affected by future economic
and market
conditions.
Please see
Note 5 – Business Acquisitions
for further discussion of our acquisitions.
Goodwill
Goodwill is subject to impairment assessment at least once annually
as of the first day of our fourth quarter, or if an
event occurs or circumstances change that would more likely than
not reduce a reporting unit’s fair value below
carrying value.
We conduct our goodwill impairment testing at the reporting unit level.
We identify our reporting
units by assessing whether two or more components are economically
similar and therefore should be aggregated.
Our reporting units are identified as our operating segments.
Goodwill is allocated to such reporting units for the
purposes of our impairment assessment.
For the year ended December 27, 2025, our reporting structure was:
(i)
Global Distribution and Value-Added Services reportable segment, which included the following
operating segments (a) US Distribution Group; (b) Europe, Middle East,
and Africa Distribution Group;
(c) Americas Non-US Distribution Group; and (d) Asia-Pacific and Australia
Distribution Group;
(ii)
Global Specialty Products reportable segment, which included the following
operating segments (a) Global
Oral Reconstruction Group; and (b) Healthcare Specialty Group; and
(iii)
Global Technology,
which is both a reportable segment and an operating segment.
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Index to Financial Statements
65
Application of the goodwill impairment test requires judgment, including
the identification of reporting units,
assignment of assets and liabilities that are considered shared services
to the reporting units, and ultimately the
determination of the fair value of each reporting unit.
The fair value of each reporting unit is calculated by
applying the discounted cash flow methodology and confirming with
a market approach.
There are inherent
uncertainties, however, related to fair value models, the inputs and our judgments in applying them to
this analysis.
The most significant inputs include estimation of detailed future cash flows based
on budget expectations, and
determination of comparable companies to develop a weighted average
cost of capital for each reporting unit.
In performing the annual goodwill impairment assessment, we prepare forward-looking
financial projections for
each reporting unit based on input from our leadership and approved operating
plans.
These projections incorporate
assumptions related to planned strategic initiatives, the continued integration
of recent acquisitions, and prevailing
macroeconomic and market conditions.
Changes in these assumptions could materially affect the estimated fair
values of the reporting units.
Our third-party valuation specialists provide inputs into our determination
of the discount rate.
The rate is
dependent on a number of underlying assumptions, including the risk-free rate,
tax rate, equity risk premium, debt
to equity ratio and pre-tax cost of debt.
Long-term growth rates are applied to our estimation of future cash flows.
The long-term growth rates are tied to
growth rates we expect to achieve beyond the years for which we have
forecasted operating results.
We also
consider external benchmarks, and other data points which we believe are
applicable to our industry and the
composition of our global operations.
We performed our annual quantitative goodwill assessment, and the estimated fair value of each of our reporting
units sufficiently exceeded its respective carrying value.
As a result, no goodwill impairments were recorded
during the years ended December 27, 2025, December 28, 2024, and December
30, 2023.
For the year ended December 28, 2024, in connection with our restructuring
initiatives, we recorded an $11 million
impairment of goodwill in the Global Specialty Products segment, relating
to the disposal of a portion of a business;
such impairment was calculated based on the relative fair value of goodwill.
Definite-Lived Intangible Assets
Annually or if we identify an impairment indicator, definite-lived intangible assets such as customer
relationships
and lists, trademarks, trade names, product development and non-compete
agreements are reviewed for impairment
indicators.
If any impairment indicators exist, quantitative testing is performed
on the asset.
The quantitative impairment model is a two-step test under which we
first calculate the recoverability of the
carrying value by comparing the undiscounted projected cash flows associated
with the asset or asset group,
including its estimated residual value, to the carrying amount.
If the cash flows associated with the asset or asset
group are less than the carrying value, we perform a fair value assessment
of the asset, or asset group.
If the
carrying amount is found to be greater than the fair value, we record an
impairment loss for the excess of book
value over the fair value.
In addition, in all cases of an impairment review, we re-evaluate the remaining useful
lives of the assets and modify them, as appropriate.
Although we believe our judgments, estimates and/or
assumptions used in estimating cash flows and determining fair value
are reasonable, making material changes to
such judgments, estimates and/or assumptions could materially affect such impairment
analyses and our financial
results.
During the year ended December 27, 2025, we recorded $16 million of
impairment charges related to businesses in
our Global Distribution and Value-Added Services segment.
The impairment charges included $14 million
primarily related to customer lists and relationships attributable
to lower than anticipated operating margins in these
businesses.
The remaining impairment charges of $2 million related to trade names
and non-compete agreements.
During the year ended December 28, 2024, we recorded $4 million of
impairment charges related to businesses in
our Global Distribution and Value-Added Services segment.
It included $2 million of a trade name impairment,
calculated using the relative fair value, related to a disposal of a business,
and $1 million related to trade name
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Index to Financial Statements
66
impairment due to business integration in connection with our restructuring
initiatives.
The remaining $1 million
impairment charges related to trade names and non-compete agreements.
During the year ended December 30, 2023, we recorded $19 million of
impairment charges related to businesses in
our Global Distribution and Value-Added Services segment, consisting of $7 million primarily related to customer
lists and relationships attributable to lower than anticipated operating
margins in certain businesses, and a $12
million charge related to the planned exit of a business in connection with our restructuring
initiatives.
The impairment charges for the years ended December 27, 2025, December 28, 2024,
and December 30, 2023 were
measured as the excess of the carrying values over the estimated fair values
of the related intangible assets,
determined using discounted estimates of future cash flows and the
relief-from-royalty method.
Please see
Note 16 – Plans of Restructuring and Related Costs
for additional details.
Redeemable Noncontrolling Interests
Some minority stockholders in certain of our consolidated subsidiaries have
the right, at certain times, to require us
to acquire their ownership interest in those entities at fair value.
The redemption amounts have been estimated
based on recent transactions and/or implied multiples of earnings
and, if such earnings and cash flows are not
achieved, the value of the redeemable noncontrolling interests might be impacted.
See
Note 1 – Basis of
Presentation and Significant Accounting Policies
and
Note 20 – Redeemable Noncontrolling Interests
for additional
information.
Income Tax
Determining whether a deferred tax asset will be realized requires significant
estimates and judgment to assess
whether a valuation allowance is necessary.
We
consider all available evidence, both positive and negative,
including estimated future taxable earnings, ongoing planning strategies,
future reversals of existing temporary
differences and historical operating results.
Additionally, changes to tax laws and statutory tax rates can have an
impact on our determination.
We
evaluate the realizability of our deferred tax assets quarterly.
Accounting Standards Codification Topic 740 prescribes the accounting for uncertainty in income taxes recognized
in the financial statements in accordance with provisions contained within
its guidance.
This topic prescribes a
recognition threshold and a measurement attribute for the financial statement
recognition and measurement of tax
positions taken or expected to be taken in a tax return.
For those benefits to be recognized, a tax position must be
more likely than not to be sustained upon examination by the taxing authorities.
The amount recognized is
measured as the largest amount of benefit that has a greater than 50% likelihood of being realized
upon ultimate
audit settlement.
In the normal course of business, our tax returns are subject
to examination by various taxing
authorities.
Such examinations may result in future tax and interest assessments
by these taxing authorities for
uncertain tax positions taken in respect of certain tax matters.
Please see
Note 15 – Income Taxes
for further
discussion.
Accounting Standards Update
For a discussion of accounting standards updates that have been adopted
or will be adopted in the future, please see
Note 1 – Basis of Presentation and Significant Accounting Policies
included under Item 8.
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Index to Financial Statements
67
ITEM 7A.
Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks, interest rate risks as well as changes in foreign currency exchange rates as
measured against the U.S. dollar and each other, and changes to the credit markets.
We attempt to minimize these
risks primarily by using foreign currency forward contracts and by
maintaining counter-party credit limits.
These
hedging activities provide only limited protection against currency exchange
and credit risks.
Factors that could
influence the effectiveness of our hedging programs include currency markets and
availability of hedging
instruments and liquidity of the credit markets.
All foreign currency forward contracts that we enter into are
components of hedging programs and are entered into for the sole purpose
of hedging an existing or anticipated
currency exposure.
We do not enter into such contracts for speculative purposes and we manage our credit risks by
diversifying our investments, maintaining a strong balance sheet and having
multiple sources of capital.
Foreign Currency
The value of certain foreign currencies compared to the U.S. dollar may
affect our financial results.
Fluctuations in
exchange rates may positively or negatively affect our revenues, gross margins, operating expenses
and retained
earnings, all of which are expressed in U.S. dollars.
Where we deem it prudent, we engage in hedging programs
using primarily foreign currency forward contracts aimed at limiting
the impact of foreign currency exchange rate
fluctuations on earnings.
We purchase short-term (i.e., generally 18 months or less) foreign currency forward
contracts to protect against currency exchange risks associated with intercompany
loans due from our international
subsidiaries and the payment of merchandise purchases to foreign
suppliers.
We do not hedge the translation of
foreign currency profits into U.S. dollars, as we consider foreign
currency translation to be an accounting exposure,
not an economic exposure.
A hypothetical 5% change in the average value of the U.S. dollar in 2025 compared
to
foreign currencies would have changed our 2025 reported Net income
attributable to Henry Schein, Inc. by
approximately $6 million.
As of December 27, 2025, our forward foreign currency exchange agreements,
which expire through November 3,
2028, had a fair value of $(20) million as determined by quoted
market prices.
Included in the forward foreign
currency exchange agreements, Henry Schein, Inc. had net investment designated
EUR/USD forward contracts
with notional values of approximately €300 million and reported fair values
of $(20) million.
A 5% increase in the
value of the Euro to the USD from December 27, 2025 would decrease the fair
value of these forward contracts by
$18 million.
Total
Return Swaps
On March 20, 2020, we entered into a total return swap for the purpose of economically
hedging our unfunded non-
qualified supplemental retirement plan and our deferred compensation plan obligation.
At inception, the notional value of the investments in these plans was $43
million.
At December 27, 2025, the
notional value of the investments in these plans was $117 million.
At December 27, 2025, the financing blended
rate for this swap was based on the Secured Overnight Financing Rate
(“SOFR”) of 3.79% plus 0.75%, for a
combined rate of 4.54%.
For the years ended December 27, 2025, December 28, 2024, and December
30, 2023 we
have recorded a gain within selling, general and administrative expense, of approximately
$11 million, $8 million
and $10 million, respectively, net of transaction costs, related to this undesignated swap.
This swap is expected to
be renewed on an annual basis and is expected to result in a neutral impact to our
results of operations.
Credit Risk Monitoring
We limit our credit risk with respect to our cash equivalents, short-term investments and derivative instruments by
monitoring the credit worthiness of the financial institutions who are
the counterparties to such financial
instruments.
As a risk management policy, we limit the amount of credit exposure by diversifying and utilizing
numerous investment grade counterparties.
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Index to Financial Statements
68
Interest Rate Risk
As of December 27, 2025, we had variable interest rate exposure for certain
of our revolving credit facilities and
our U.S. trade accounts receivable securitization.
Our revolving credit facility,
which we entered into on July 11,
2023 and expires on July 11, 2028,
has a variable
interest rate that is based on the SOFR plus a spread based on our leverage
ratio at the end of each financial
reporting quarter.
As of December 27, 2025, there was $100 million outstanding under
this revolving credit
facility.
During the year ended December 27, 2025, the average outstanding
balance was approximately $203
million.
Based upon our average outstanding balances, for each hypothetical
increase of 25 basis points, our
interest expense thereunder would have increased by $0.5 million.
Our U.S. trade accounts receivable securitization, which we entered
into on April 17, 2013 and expires on
December 6, 2027, has a variable interest rate that is based upon the asset-backed
commercial paper rate.
As of
December 27, 2025, the commercial paper rate was 4.06% plus 0.75%,
for a combined rate of 4.81%,
and the
outstanding balance under this securitization facility was $390 million.
During the year ended December 27, 2025,
the average outstanding balance was approximately $363 million.
Based upon our average outstanding balances,
for each hypothetical increase of 25 basis points, our interest expense thereunder
would have increased by $1
million.
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.
After renewing the Term Credit
Agreement in June of 2025, our hedged portion of the Term Credit Agreement was approximately 90% of the
notional total.
As of December 27, 2025, the effective fixed rate was 5.69% and the floating
rate was 5.01%,
resulting in a weighted average rate of 5.62%.
On July 11, 2023, we entered into interest rate swap agreements to hedge the cash flow of our variable
rate $750
million floating debt term loan facility, with three years maturity, effectively changing the floating rate portion of
our obligation to a fixed rate.
Under the terms of the interest rate swap agreements, we receive variable
interest
payments based on the one-month Term SOFR rate and pay interest at a fixed rate.
As of December 27, 2025, the
notional value of the interest rate swap agreements was $675 million.
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69
ITEM 8.
Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
HENRY SCHEIN, INC.
Page
Number
Report of Independent Registered Public Accounting Firm
(BDO USA, P.C.;
New York,
New York;
PCAOB
ID#
243
)
70
Consolidated Financial Statements
:
Balance Sheets as of December 27, 2025 and December 28, 2024
72
Statements of Income for the years ended December 27, 2025,
December 28, 2024 and December 30, 2023
73
Statements of Comprehensive Income for the years ended December 27, 2025,
December 28, 2024 and December 30, 2023
74
Statements of Changes in Stockholders’ Equity for the years ended
December 27, 2025, December 28, 2024 and December 30, 2023
75
Statements of Cash Flows for the years ended December 27, 2025,
December 28, 2024 and December 30, 2023
76
Notes to Consolidated Financial Statements
77
Note 1 – Basis of Presentation and Significant Accounting Policies
77
Note 2 – Cyber Incident
89
Note 3 – Net Sales from Contracts with Customers
89
Note 4 – Segment and Geographic Data
90
Note 5 – Business Acquisitions
93
Note 6 – Inventories, Net
101
Note 7 – Property and Equipment, Net
101
Note 8 – Leases
102
Note 9 – Goodwill and Other Intangibles, Net
104
Note 10 – Investments and Other
106
Note 11 – Fair Value Measurements
107
Note 12 – Concentrations of Risk
110
Note 13 – Derivatives and Hedging Activities
111
Note 14 – Debt
113
Note 15 – Income Taxes
117
Note 16 – Plans of Restructuring and Related Costs
122
Note 17 – Commitments and Contingencies
124
Note 18 – Stock-Based Compensation
125
Note 19 – Employee Benefit Plans
128
Note 20 – Redeemable Noncontrolling Interests
131
Note 21 – Comprehensive Income
131
Note 22 – Earnings Per Share
133
Note 23 – Supplemental Cash Flow Information
134
Note 24 – Related Party Transactions
135
Note 25 – KKR Investment and Accelerated Share Repurchase Program
136
Table of Contents
Index to Financial Statements
70
Report of Independent Registered Public Accounting Firm
Shareholders and Board of Directors
Henry Schein, Inc.
Melville, New York
Opinion on the Consolidated Financial Statements
We
have
audited
the
accompanying
consolidated
balance
sheets
of
Henry
Schein,
Inc.
(the
“Company”)
as
of
December
27,
2025
and
December
28,
2024,
the
related
consolidated
statements
of
income
and
comprehensive
income, changes in
stockholders’ equity,
and cash
flows for
each of
the three
years in
the period
ended December
27, 2025, and
the related notes
(collectively referred to
as the
“consolidated financial statements”).
In our opinion,
the consolidated financial statements present fairly, in all material respects, the financial position of the Company at
December 27, 2025 and December 28, 2024, and the results of its operations and its cash flows for each of the three
years in
the period
ended December
27, 2025,
in conformity
with accounting
principles generally
accepted in
the
United States of America.
We
also
have
audited,
in
accordance
with
the
standards
of
the
Public
Company
Accounting
Oversight
Board
(United States) (PCAOB),
the Company's internal
control over financial reporting
as of December
27, 2025, based
on criteria
established in
Internal Control
– Integrated
Framework (2013)
issued by
the Committee
of Sponsoring
Organizations
of
the
Treadway
Commission
(COSO)
and
our
report
dated
February
24,
2026
expressed
an
unqualified opinion thereon.
Basis for Opinion
These consolidated financial statements are
the responsibility of the
Company’s management. Our
responsibility is
to
express
an
opinion
on
the
Company’s
consolidated
financial
statements
based
on
our
audits.
We
are
a
public
accounting
firm
registered with
the
Public
Company Accounting
Oversight Board
(United
States)
(PCAOB)
and
are required to be independent with
respect to the Company in accordance
with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform
the
audit
to
obtain
reasonable
assurance
about
whether
the
consolidated
financial
statements
are
free
of
material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether
due to
error or
fraud, and
performing procedures
that respond
to those
risks. Such
procedures
included examining,
on a
test basis,
evidence regarding
the amounts
and disclosures
in the
consolidated financial
statements.
Our audits
also included
evaluating the
accounting principles
used
and significant
estimates made
by
management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that
our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical
audit matter
communicated below is
a matter
arising from
the current period
audit of
the consolidated
financial statements
that was
communicated or
required to
be communicated to
the Audit
Committee and that:
(1)
relates
to
accounts
or
disclosures
that
are
material
to
the
consolidated
financial
statements
and
(2)
involved
our
especially challenging, subjective,
or complex
judgments. The
communication of the
critical audit
matter does
not
alter
in
any
way
our
opinion
on
the
consolidated
financial
statements,
taken
as
a
whole,
and
we
are
not,
by
communicating the
critical audit
matter below,
providing a
separate opinion
on the
critical audit
matter or
on the
accounts or disclosures to which it relates.
Business Acquisition - Valuation of Acquired Intangible Assets
As described in Notes 1 and 5 of the consolidated financial statements,
the Company acquired entities within the
Table of Contents
Index to Financial Statements
71
Global Distribution and Value-Added Services, Global Specialty Products and Global Technology segments during
the year ended December 27, 2025 for total consideration of $392
million.
The purchase price was allocated to the
assets acquired and liabilities assumed based on their respective
fair values on the date of acquisition.
The
Company estimated the fair value of identifiable intangible assets using
the relief-from-royalty method and the
multi-period excess earnings method which required the Company
to make significant estimates and assumptions,
including discount rates and projected revenue growth rates.
We identified the revenue growth rates for certain periods and the discount rates used in estimating the fair value of
certain trade name and customer relationships as a critical audit
matter.
The principal considerations for our
determination were the subjective judgement required by management
in formulating the revenue growth rates and
assessing the appropriateness of the discount rates used in developing
the fair value of the applicable acquired
identifiable intangible assets. Auditing these considerations involved
especially subjective and challenging auditor
judgement due to the nature and extent of audit effort required to address these
matters, including the extent of
specialized skill or knowledge needed.
The primary procedures we performed to address
this critical audit matter included:
●
Evaluating the reasonableness of
the revenue growth rates
used in estimating the
fair value of
certain trade
name
and
customer
relationships
by:
(i)
reviewing
the
historical
performance
of
the
acquired
entity
utilizing its audited
financial statements, and (ii)
assessing the revenue projections against
industry metrics
for certain periods.
●
Utilizing
specialists with
skill
and
knowledge in
valuation to
evaluate the
reasonableness of
the
discount
rates
used
in
estimating
the
fair
value
of
certain
trade
name
and
customer
relationships
by
assessing
the
source information
underlying the
determination of
the discount
rates, developing
a range
of independent
estimates for the discount rates, and comparing those to the discount
rates selected by the Company.
/s/
BDO USA, P.C.
We have served as the Company's auditor since 1984.
New York, New York
February 24, 2026
Table of Contents
Index to Financial Statements
See accompanying notes.
72
HENRY SCHEIN, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
December 27,
December 28,
2025
2024
ASSETS
Current assets:
Cash and cash equivalents
$
156
$
122
Accounts receivable, net of allowance for credit losses of $
90
and $
78
(1)
1,651
1,482
Inventories, net
2,002
1,810
Prepaid expenses and other
655
569
Total current assets
4,464
3,983
Property and equipment, net
621
531
Operating lease right-of-use assets
301
293
Goodwill
4,213
3,887
Other intangibles, net
1,018
1,023
Investments and other
598
501
Total assets
$
11,215
$
10,218
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
1,154
$
962
Bank credit lines
764
650
Current maturities of long-term debt
33
56
Operating lease liabilities
78
75
Accrued expenses:
Payroll and related
340
303
Taxes
179
139
Other
680
618
Total current liabilities
3,228
2,803
Long-term debt (1)
2,310
1,830
Deferred income taxes
146
102
Operating lease liabilities
251
259
Other liabilities
486
387
Total liabilities
6,421
5,381
Redeemable noncontrolling interests
895
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,
115,771,149
issued and outstanding on December 27, 2025 and
124,155,884
issued and outstanding on December 28, 2024
1
1
Additional paid-in capital
177
-
Retained earnings
3,293
3,771
Accumulated other comprehensive loss
(226)
(379)
Total Henry Schein, Inc. stockholders' equity
3,245
3,393
Noncontrolling interests
654
638
Total stockholders' equity
3,899
4,031
Total liabilities, redeemable noncontrolling
interests and stockholders' equity
$
11,215
$
10,218
(1)
Amounts presented include balances held by our consolidated variable interest entity (“VIE”).
At December 27, 2025 and
December 28, 2024, includes trade accounts receivable of $
491
million and $
241
million, respectively, and long-term debt of $
390
million and $
150
million, respectively.
See
Note 1 – Basis of Presentation and Significant Accounting Policies
for further
information.
Table of Contents
Index to Financial Statements
See accompanying notes.
73
HENRY SCHEIN, INC.
CONSOLIDATED STATEMENTS
OF INCOME
(in millions, except share and per share data)
Years
Ended
December 27,
December 28,
December 30,
2025
2024
2023
Net sales
$
13,184
$
12,673
$
12,339
Cost of sales
9,079
8,657
8,479
Gross profit
4,105
4,016
3,860
Operating expenses:
Selling, general and administrative
3,084
3,034
2,956
Depreciation and amortization
263
251
209
Restructuring and related costs
105
110
80
Operating income
653
621
615
Other income (expense):
Interest income
33
24
17
Interest expense
(150)
(131)
(87)
Other, net
(3)
(1)
(3)
Income before taxes, equity in earnings of affiliates and
noncontrolling interests
533
513
542
Income taxes
(126)
(128)
(120)
Equity in earnings of affiliates, net of tax
12
13
14
Net income
419
398
436
Less: Net income attributable to noncontrolling interests
(21)
(8)
(20)
Net income attributable to Henry Schein, Inc.
$
398
$
390
$
416
Earnings per share attributable to Henry Schein, Inc.:
Basic
$
3.29
$
3.07
$
3.18
Diluted
$
3.27
$
3.05
$
3.16
Weighted-average common
shares outstanding:
Basic
120,813,977
126,788,997
130,618,990
Diluted
121,717,876
127,779,228
131,748,171
Table of Contents
Index to Financial Statements
See accompanying notes.
74
HENRY SCHEIN, INC.
CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME
(in millions)
Years
Ended
December 27,
December 28,
December 30,
2025
2024
2023
Net income
$
419
$
398
$
436
Other comprehensive income, net of tax:
Foreign currency translation gain (loss)
207
(207)
53
Unrealized gain (loss) from hedging activities
(24)
13
(18)
Pension adjustment gain (loss)
2
(3)
(3)
Other comprehensive income (loss), net of tax
185
(197)
32
Comprehensive income
604
201
468
Comprehensive income attributable to noncontrolling interests:
Net income
(21)
(8)
(20)
Foreign currency translation loss (gain)
(32)
24
(5)
Comprehensive loss (income) attributable to noncontrolling interests
(53)
16
(25)
Comprehensive income attributable to Henry Schein, Inc.
$
551
$
217
$
443
Table of Contents
Index to Financial Statements
See accompanying notes.
75
HENRY SCHEIN, INC.
CONSOLIDATED STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY
(in millions, except share data)
Accumulated
Common Stock
Additional
Other
Total
$.01 Par Value
Paid-in
Retained
Comprehensive
Noncontrolling
Stockholders'
Shares
Amount
Capital
Earnings
Income (Loss)
Interests
Equity
Balance, December 31, 2022
131,792,817
$
1
$
-
$
3,678
$
(233)
$
649
$
4,095
Net income (excluding $
6
attributable to Redeemable
noncontrolling interests)
-
-
-
416
-
14
430
Foreign currency translation gain (excluding gain of $
5
attributable to Redeemable noncontrolling interests)
-
-
-
-
48
-
48
Unrealized loss from hedging activities,
including tax benefit of $
7
-
-
-
-
(18)
-
(18)
Pension adjustment loss, including tax benefit of $
0
-
-
-
-
(3)
-
(3)
Distributions to noncontrolling shareholders
-
-
-
-
-
(27)
(27)
Change in fair value of redeemable securities
-
-
11
-
-
-
11
Noncontrolling interests and adjustments related to
business acquisitions
-
-
-
-
-
(2)
(2)
Repurchase and retirement of common stock
(3,214,136)
-
(33)
(219)
-
-
(252)
Stock issued upon exercise of stock options
21,068
-
1
-
-
-
1
Stock-based compensation expense
1,065,319
-
39
-
-
-
39
Shares withheld for payroll taxes
(416,605)
-
(34)
-
-
-
(34)
Settlement of stock-based compensation awards
(698)
-
1
-
-
-
1
Transfer of charges in excess of
capital
-
-
15
(15)
-
-
-
Balance, December 30, 2023
129,247,765
1
-
3,860
(206)
634
4,289
Net income (excluding loss of $
1
attributable to Redeemable
noncontrolling interests)
-
-
-
390
-
9
399
Foreign currency translation loss (excluding loss of $
24
attributable to Redeemable noncontrolling interests)
-
-
-
-
(183)
-
(183)
Unrealized gain from hedging activities,
including tax of $
5
-
-
-
-
13
-
13
Pension adjustment loss, including tax benefit of $
2
-
-
-
-
(3)
-
(3)
Distributions to noncontrolling shareholders
-
-
-
-
-
(6)
(6)
Purchase of noncontrolling interests
-
-
(7)
-
-
(1)
(8)
Change in fair value of redeemable securities
-
-
(119)
-
-
-
(119)
Noncontrolling interests and adjustments related to
business acquisitions
-
(1)
-
-
2
1
Repurchase and retirement of common stock
(5,419,649)
-
(52)
(336)
-
-
(388)
Stock issued upon exercise of stock options
98,755
-
6
-
-
-
6
Stock-based compensation expense
340,722
-
39
-
-
-
39
Shares withheld for payroll taxes
(111,815)
-
(9)
-
-
-
(9)
Settlement of stock-based compensation awards
106
-
-
-
-
-
-
Transfer of charges in excess of
capital
-
-
143
(143)
-
-
-
Balance, December 28, 2024
124,155,884
1
-
3,771
(379)
638
4,031
Net income (excluding loss of $
5
attributable to Redeemable
noncontrolling interests)
-
-
-
398
-
26
424
Foreign currency translation gain (excluding gain of $
30
attributable to Redeemable noncontrolling interests)
-
-
-
-
175
2
177
Unrealized loss from hedging activities,
including tax benefit of $
9
-
-
-
-
(24)
-
(24)
Pension adjustment gain, net of tax of $
3
-
-
-
-
2
-
2
Net distributions to noncontrolling shareholders
-
-
-
-
-
(11)
(11)
Purchase of noncontrolling interests
-
-
(1)
-
-
(1)
(2)
Change in fair value of redeemable securities
-
-
(72)
-
-
-
(72)
Noncontrolling interests and adjustments related to
business acquisitions and contingent consideration
-
-
(46)
-
-
-
(46)
Issuance of common stock
3,285,151
-
250
-
-
-
250
Repurchase and retirement of common stock
(12,062,174)
-
(94)
(762)
-
-
(856)
Stock issued upon exercise of stock options
24,172
-
2
-
-
-
2
Stock-based compensation expense
578,536
-
39
-
-
-
39
Shares withheld for payroll taxes
(203,951)
-
(15)
-
-
-
(15)
Settlement of stock-based compensation awards
(6,469)
-
-
-
-
-
-
Transfer of charges in excess of
capital
-
-
114
(114)
-
-
-
Balance, December 27, 2025
115,771,149
$
1
$
177
$
3,293
$
(226)
$
654
$
3,899
Table of Contents
Index to Financial Statements
See accompanying notes.
76
HENRY SCHEIN, INC.
CONSOLIDATED STATEMENTS
OF CASH FLOWS
(in millions)
Years Ended
December 27,
December 28,
December 30,
2025
2024
2023
Cash flows from operating activities:
Net income
$
419
$
398
$
436
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
311
297
248
Impairment charge on intangible assets
16
-
7
Impairment of capitalized software
-
12
27
Non-cash restructuring and related charges
8
32
27
Stock-based compensation expense
39
39
39
Provision for losses on trade and other accounts receivable
16
14
18
Provision for (benefit from) deferred income taxes
5
(61)
(20)
Equity in earnings of affiliates
(12)
(13)
(14)
Distributions from equity affiliates
11
12
15
Changes in unrecognized tax benefits
4
5
10
Other
(57)
(27)
(3)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable
(124)
315
(327)
Inventories
(95)
(59)
231
Other current assets
(45)
47
(138)
Accounts payable and accrued expenses
216
(163)
(56)
Net cash provided by operating activities
712
848
500
Cash flows from investing activities:
Purchases of property and equipment
(139)
(148)
(147)
Payments related to equity investments and business acquisitions,
net of cash acquired
(199)
(230)
(955)
Proceeds from loan to affiliate
3
4
6
Settlements for net investment hedges
-
-
22
Capitalized software costs
(52)
(39)
(40)
Other
(13)
(17)
(21)
Net cash used in investing activities
(400)
(430)
(1,135)
Cash flows from financing activities:
Net change in bank credit lines
108
387
153
Proceeds from issuance of long-term debt
489
120
1,368
Principal payments for long-term debt
(44)
(318)
(468)
Debt issuance costs
(2)
-
(3)
Issuance of common stock
250
-
-
Proceeds from issuance of stock upon exercise of stock options
2
6
1
Payments for repurchases and retirement of common stock
(850)
(385)
(250)
Payments for taxes related to shares withheld for employee taxes
(15)
(9)
(34)
Distributions to noncontrolling shareholders
(30)
(54)
(47)
Payments for contingent consideration
(19)
(2)
-
Acquisitions of noncontrolling interests in subsidiaries
(77)
(255)
(19)
Net cash provided by (used in) financing activities
(188)
(510)
701
Effect of exchange rate changes on cash and cash equivalents
(90)
43
(12)
Net change in cash and cash equivalents
34
(49)
54
Cash and cash equivalents, beginning of period
122
171
117
Cash and cash equivalents, end of period
$
156
$
122
$
171
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
77
Note 1 – Basis of Presentation and Significant Accounting Policies
Nature of Operations
We distribute health care products and value-added services primarily to office-based dental and medical
practitioners, across dental practices, laboratories, physician practices,
and ambulatory surgery centers, as well as
government, institutional health care clinics, home health providers, and alternate
care clinics.
We also provide
software and technology services to health care practitioners.
Our dental businesses serve office-based dental
practitioners, dental laboratories, schools, government and other institutions.
Our medical businesses serve
physician offices, urgent care centers, ambulatory care sites, emergency medical technicians, dialysis centers,
home
health, federal and state governments and large enterprises, such as group practices
and integrated delivery
networks, among other providers across a wide range of specialties.
We have significant operations in the United States, Germany, France, Canada, and Brazil.
We also have
meaningful market presence in several other European countries and the Asia-Pacific
region.
Basis of Presentation
Our consolidated financial statements include the accounts of Henry
Schein, Inc. and all of our controlled
subsidiaries and VIE.
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 consolidated financial condition, results of operations
or cash flows.
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 14 – 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 December 27, 2025 and December 28, 2024, certain trade
accounts receivable that can
only be used to settle obligations of this VIE were $
491
million and $
241
million, respectively, and the liabilities of
this VIE where the creditors have recourse to us were $
390
million and $
150
million, respectively.
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.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
78
•
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.
See
Note 11 – Fair Value Measurements
for additional information.
Use of Estimates
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.
Our 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; fair value of contingent
consideration; hedging activity; supplier
rebates; measurement of compensation cost for certain share-based
performance awards and cash bonus plans; and
pension plan assumptions.
Fiscal Year
We report our results of operations and cash flows on a
52
or
53
weeks per fiscal year basis ending on the last
Saturday of December.
The years ended December 27, 2025, December 28, 2024 and December
30, 2023
consisted of
52
weeks.
Revenue Recognition
Revenue is recognized when a customer obtains control of promised goods
or services in an amount that reflects the
consideration that we expect to receive for those goods or services.
To recognize revenue, we:
•
identify the contract(s) with a customer;
•
identify the performance obligations in the contract;
•
determine the transaction price;
•
allocate the transaction price to the performance obligations in the contract;
and
•
recognize revenue when, or as, we satisfy a performance obligation.
We generate revenue from the sale of dental and medical consumable products, equipment, and services such as
equipment repair and financial services (Global Distribution and Value-Added Services revenues), company-
manufactured specialty products (Global Specialty Products revenue), and software
products and related services
(Global Technology revenues).
Provisions for discounts, rebates to customers, customer
returns and other contra
revenue adjustments are included in the transaction price at contract
inception by estimating the most likely amount
based upon historical data and estimates and are provided for in the
period in which the related sales are
recognized.
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Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
79
Revenue derived from the sale of consumable products and company-manufactured
specialty products is
recognized at the point in time when control transfers to the customer, (e.g. when legal title and risks and
rewards
of ownership transfer to the customer, we have no post-shipment obligations, and we have an enforceable
right to
payment).
Sales of consumable products typically entail high-volume, low-dollar
orders shipped using third-party
common carriers.
Revenue derived from the sale of equipment is recognized when control
transfers to the customer.
This occurs
when the equipment is delivered.
Such sales typically entail scheduled deliveries of large equipment primarily
by
equipment service technicians.
Most equipment requires minimal installation, which is
typically completed at the
time of delivery.
Our merchandise and equipment products generally carry standard warranty
terms provided by the manufacturer;
however, in instances where we provide a warranty on company-manufactured products or labor services,
the
warranty costs are accrued in accordance with Accounting Standards Codification
(“ASC”) Topic 460 Guarantees.
At December 27, 2025 and December 28, 2024, we had accrued approximately
$
8
million and $
8
million,
respectively, for warranty costs.
Revenue derived from the sale of software products is recognized when
products are delivered to customers or
made available electronically.
Such software is generally installed by customers and does
not require extensive
training.
Revenue derived from post-contract customer support for software,
including annual support and/or
training, is generally recognized over time using time elapsed as the input method
that best depicts the transfer of
control to the customer.
Revenue derived from software sold on a Software-as-a-Service
basis is recognized ratably
over the subscription period as control is transferred to the customer.
Revenue derived from other sources, including freight charges, equipment repairs
and financial services, is
recognized when the related product revenue is recognized or when
the services are provided.
We apply the
practical expedient to treat shipping and handling activities performed after
the customer obtains control as
fulfillment activities, rather than a separate performance obligation in the
contract.
Sales, value-add and other taxes we collect concurrent with revenue-producing
activities are excluded from
revenue.
Some of our revenue is derived from bundled arrangements that include
multiple distinct performance obligations,
which are accounted for separately.
When we sell software products together with related services (i.e.,
training
and technical support), we allocate the transaction price to each
distinct performance obligation based on the
estimated standalone selling price for each performance obligation.
Bundled arrangements that include elements
that are not considered software consist primarily of equipment and the related
installation service.
We allocate
revenue for such arrangements based on the relative selling prices of the goods
or services.
If an observable selling
price is not available (i.e., because we or others do not sell the goods or
services separately), we use one of the
following techniques to estimate the standalone selling price: adjusted
market approach; cost-plus-margin
approach; or the residual method.
There is no specific hierarchy for the use of these methods, but
the estimated
selling price reflects our best estimate of what the selling prices of each deliverable
would be if it were sold
regularly on a standalone basis taking into consideration the cost structure
of our business, technical skill required,
customer location and other market conditions.
See
Note 3 – Net Sales from Contracts with Customers
for additional disclosures of disaggregated net sales and
Note 4 – Segment and Geographic Data
for disclosures of net sales by segment and geographic data.
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Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
80
Sales Returns
Sales returns are recognized as a reduction of revenue by the amount
of expected returns and are recorded as refund
liability within accrued expenses-other within our consolidated balance sheets.
We estimate the sales return
liability based on historical data for specific products, adjusted as necessary
for new products.
The allowance for
returns is presented gross as a refund liability and we record a right of
return asset (and a corresponding adjustment
to cost of sales) for any products that we expect to be returned and resaleable.
Cost of Sales
The primary components of cost of sales include the cost of the product
(net of purchase discounts, supplier
chargebacks and rebates) and inbound and outbound freight charges.
Costs related to purchasing, receiving, inspections, warehousing,
internal inventory transfers and other costs of our
distribution network are included in selling, general and administrative
expenses along with other operating costs.
Total distribution network costs were $
107
million, $
105
million and $
105
million for the years ended December
27, 2025, December 28, 2024 and December 30, 2023, respectively.
Supplier Rebates
Supplier rebates are included as a reduction of cost of sales and are recognized
over the period they are earned.
The
factors we consider in estimating supplier rebate accruals include forecasted
inventory purchases,
sales, supplier
rebate contract terms, which generally provide for increasing rebates based
on either increased purchase or sales
volumes.
Direct Shipping and Handling Costs
Freight and other direct shipping costs are included in cost of sales.
Direct handling costs, which represent
primarily direct compensation costs of employees who pick, pack and otherwise
prepare, if necessary, merchandise
for shipment to our customers are reflected in selling, general and administrative
expenses.
Direct handling costs
were $
105
million, $
106
million and $
98
million for the years ended December 27, 2025, December 28, 2024
and
December 30, 2023, respectively.
Advertising and Promotional Costs
We expense advertising and promotional costs as incurred.
Total advertising and promotional expenses were $
46
million, $
43
million and $
47
million for the years ended December 27, 2025, December 28, 2024 and
December
30, 2023, respectively.
Stock-Based Compensation Costs
We
measure stock-based compensation at the grant date, based on the estimated
fair value of the award, and
recognize the cost (net of estimated forfeitures) as compensation expense on
a straight-line basis over the requisite
service period for certain time-based restricted stock units with cliff vesting and on a accelerated
basis for the
option awards and certain time-based restricted stock units with graded
vesting.
For performance-based awards, at
each reporting date, we reassess whether achievement of the performance condition
is probable and accrue
compensation expense when achievement of the performance condition is
probable.
Our stock-based compensation
expense is reflected in selling, general and administrative expenses.
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Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
81
Employment Benefit Plans and other Postretirement Benefit Plans
Some of our employees in our international markets participate
in various noncontributory defined benefit plans.
We recognize the funded status, measured as the difference between the fair value of plan assets and the projected
benefit obligation.
Each unfunded plan is recognized as a liability and each funded
plan is recognized as either an
asset or liability based on its funded status.
We measure our plan assets and liabilities at the end of our fiscal year.
Net periodic pension costs and valuations are dependent on assumptions
used by third-party actuaries in calculating
those amounts.
These assumptions include discount rates, expected return on plan
assets, rate of future
compensation levels, retirement rates, mortality rates, and other factors.
We record the service cost component of
net pension cost in selling, general and administrative expenses within
our consolidated statements of income.
Gains and losses that result from changes in actuarial assumptions or
from actual experience that differs from
actuarial assumptions are recognized in and then amortized from accumulated
other comprehensive income (loss).
Cash and Cash Equivalents
We consider all highly liquid short-term investments with an original maturity of three months or less to be cash
equivalents.
Due to the short-term maturity of such investments,
the carrying amounts are a reasonable estimate of
fair value.
Outstanding checks in excess of funds on deposit of $
25
million and $
33
million, primarily related to
payments for inventory, were classified as accounts payable as of December 27, 2025 and December 28, 2024.
Accounts Receivable and Allowance for Credit Losses
Accounts receivable are generally recognized when revenues are recognized.
In accordance with the “expected
credit loss” model, the carrying amount of accounts receivable is reduced
by a valuation allowance that reflects our
best estimate of the amounts that we do not expect to collect.
In addition to reviewing delinquent accounts
receivable, we consider many factors in estimating our reserve, including
types of customers and their credit
worthiness, experience and historical data adjusted for current conditions
and reasonable supportable forecasts.
We
record allowances for credit losses based upon a specific review of all
significant outstanding invoices.
For
those invoices not specifically reviewed, provisions are provided at differing rates,
based upon the age of the
receivable, the collection history associated with the geographic region
that the receivable was recorded in, current
economic trends and reasonable supportable forecasts.
We
write off accounts receivable and charge it against its
recorded allowance when we deem it uncollectible.
Our net accounts receivable balance was $
1,651
million, $
1,482
million, and $
1,863
million, at December 27, 2025,
December 28, 2024 and December 30, 2023, respectively.
The following table presents our allowances for credit losses:
As of
Description
December 27,
2025
December 28,
2024
December 30,
2023
Balance at beginning of year
$
78
$
83
$
65
Provision for credit losses
20
14
17
Adjustments to existing allowances for late fees, foreign currency
exchange rates, and write-offs
(8)
(19)
1
Balance at end of year
$
90
$
78
$
83
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Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
82
Contract Assets
Contract assets include amounts related to any conditional right to consideration
for work completed but not billed
as of the reporting date.
Contract assets are transferred to accounts receivable when the
right becomes
unconditional.
The contract assets primarily relate to our bundled arrangements for the
sale of equipment and
consumables and sales of term software licenses.
Current contract assets are included in prepaid expenses and
other and the non-current contract assets are included in investments and other
within our consolidated balance
sheets.
Current and non-current contract asset balances as of December 27,
2025 and December 28, 2024 were not
material.
Contract Liabilities
Contract liabilities are comprised of advance payments and upfront payments
for service arrangements provided
over time that are accounted for as deferred revenue amounts.
Contract liabilities are transferred to revenue once
the performance obligation has been satisfied.
Current contract liabilities are included in accrued expenses: other
and the non-current contract liabilities are included in other liabilities
within our consolidated balance sheets.
During the years ended December 27, 2025, December 28, 2024, and December
30, 2023, we recognized
substantially all of the current contract liability amounts that were previously
deferred at the beginning of each
year.
The following table presents our contract liabilities:
As of
Description
December 27,
2025
December 28,
2024
December 30,
2023
Current contract liabilities
$
81
$
81
$
89
Non-current contract liabilities
9
8
9
Total contract
liabilities
$
90
$
89
$
98
Inventories and Reserves
Inventories consist primarily of finished goods, raw materials and
work-in-process and are stated at the lower of
cost or net realizable value.
Cost is determined by the weighted average method for merchandise
and actual cost
for large equipment, high-technology equipment and drop-shipments.
Inventory costs for manufactured products
include direct materials, labor, and an allocation of related fixed and variable overhead.
The determination of
inventory carrying values requires management to make significant
estimates and judgments.
In assessing the need
for inventory reserves and evaluating net realizable value, we consider
multiple factors, including inventory
condition, on-hand quantities, historical and forecasted sales, product
life cycles, and prevailing market and
economic conditions.
Property and Equipment
Property and equipment are stated at cost, net of accumulated depreciation or
amortization.
Depreciation is
computed under the straight-line method using estimated useful lives
(See
Note 7 – Property and Equipment, Net
for estimated useful lives).
Amortization of leasehold improvements is computed using the straight-line
method
over the lesser of the useful life of the assets or the remaining lease term.
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Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
83
Capitalized Software Development Costs
Capitalized software costs consist of costs to purchase and develop
software for internal use and for sale or use by
customers.
For software to be used solely to meet internal needs, we capitalize
costs incurred during the
application development stage and include such costs within property
and equipment, net within our consolidated
balance sheets.
For software to be sold, leased, or marketed to external users, we capitalize
software development
costs when technological feasibility is reached, and for cloud-based applications
used to deliver our services we
capitalize costs incurred during the application development stage,
and include such costs within investments and
other within our consolidated balance sheets.
Leases
We
determine if an arrangement contains a lease at inception.
An arrangement contains a lease if it implicitly or
explicitly identifies an asset to be used and conveys the right to control
the use of the identified asset in exchange
for consideration.
As a lessee, we include operating leases in operating lease right-of-use
(“ROU”) assets,
operating lease liabilities, and non-current operating lease liabilities in
our consolidated balance sheets.
Finance
leases are included in property and equipment, current maturities of
long-term debt, and long-term debt in our
consolidated balance sheets.
ROU assets represent our right to use an underlying asset for the lease
term and lease liabilities represent our
obligation to make lease payments arising from the lease.
Operating lease ROU assets and liabilities are recognized
upon commencement of the lease based on the present value of the lease payments
over the lease term.
As most of
our leases do not provide an implicit interest rate, we generally use our incremental
borrowing rate based on the
estimated rate of interest for fully collateralized and fully amortizing borrowings
over a similar term of the lease
payments at commencement date to determine the present value of
lease payments.
When readily determinable, we
use the implicit rate.
Our lease terms may include options to extend or terminate the lease when it is reasonably
certain that we will exercise that option.
Lease expense for lease payments is recognized on a straight-line basis
over the lease term.
Expenses associated with operating leases and finance leases
are included in selling, general
and administrative and interest expense, respectively within our consolidated
statement of income.
Short-term
leases with a term of 12 months or less are not capitalized.
We
have lease agreements with lease and non-lease components, which are
generally accounted for as a single
lease component, except non-lease components for leases of vehicles, which
are accounted for separately.
When a
vehicle lease contains both lease and non-lease components, we allocate the
transaction price based on the relative
standalone selling price.
Business Acquisitions
We account for business acquisitions under the acquisition method of accounting, under which the net assets of
acquired businesses are recorded at their fair value at the acquisition
date and our consolidated financial statements
include the acquired businesses’ results of operations from that date.
Certain prior owners of acquired subsidiaries are eligible to receive additional
purchase price cash consideration, or
we may be entitled to recoup a portion of purchase price cash consideration
if certain financial targets or negotiated
goals are met.
We have accrued liabilities for the estimated fair value of additional purchase price consideration at
the time of the acquisition, using the income approach, including a probability-weighted
discounted cash flow
method or an option pricing method, where applicable.
Any adjustments to these accrual amounts are recorded in
selling, general and administrative within our consolidated statements of
income.
While we use our best estimates and assumptions to accurately value
consideration transferred, assets acquired and
liabilities assumed at the acquisition date, our estimates are inherently uncertain
and subject to refinement.
As a
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Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
84
result, within
12 months
following the date of acquisition, or the measurement period, we
may record adjustments
to consideration transferred, assets acquired and liabilities assumed with
the corresponding offset to goodwill
within our consolidated balance sheets.
At the end of the measurement period or final determination of
the values
of such assets acquired or liabilities assumed, whichever comes first,
any subsequent adjustments are recognized in
our consolidated statements of operations.
Goodwill
Any excess of acquisition consideration over the fair value of identifiable
net assets acquired is recorded as
goodwill.
Goodwill is an asset representing the future economic benefits
arising from other assets acquired in a
business combination that are not individually identified and separately
recognized, such as future customers and
technology, as well as the assembled workforce.
Goodwill is subject to impairment analysis at least once annually as
of the first day of our fourth quarter, or if an
event occurs or circumstances change that would more likely than
not reduce a reporting unit’s fair value below
carrying value.
We conduct our goodwill impairment testing at the reporting unit level.
We identify our reporting
units by assessing whether two or more components are economically
similar and therefore should be aggregated.
Our reporting units are identified as our operating segments.
Goodwill is allocated to such reporting units for the
purposes of our impairment analyses.
For the year ended December 27, 2025, our reporting structure was:
(i)
Global Distribution and Value-Added Services reportable segment, which included the following
operating segments (a) US Distribution Group; (b) Europe, Middle East,
and Africa Distribution Group;
(c) Americas Non-US Distribution Group; and (d) Asia-Pacific and Australia
Distribution Group;
(ii)
Global Specialty Products reportable segment, which included the following
operating segments (a) Global
Oral Reconstruction Group; and (b) Healthcare Specialty Group;
and
(iii)
Global Technology,
which is both a reportable segment and an operating segment.
Application of the goodwill impairment test requires judgment, including
the identification of reporting units,
assignment of assets and liabilities that are considered shared services
to the reporting units, and ultimately the
determination of the fair value of each reporting unit.
The fair value of each reporting unit is calculated by
applying the discounted cash flow methodology and confirming with
a market approach.
There are inherent
uncertainties, however, related to fair value models, the inputs and our judgments in applying them
to this analysis.
The most significant inputs include estimation of detailed future cash flows
based on budget expectations, and
determination of comparable companies to develop a weighted average
cost of capital for each reporting unit.
In January 2025, we performed a geographical realignment within
the Global Distribution and Value-Added
Services reportable segment intended to provide increased transparency
into the performance of our global
distribution businesses and to reflect evolving management oversight
and decision-making.
As a result of the
realignment and the change in reporting units, we reallocated goodwill to each
of our new reporting units using a
relative fair value approach.
The relative fair values of the new reporting units were determined based on
a
quantitative valuation analysis that considered projected cash flows,
market assumptions, and other relevant
valuation inputs.
Reporting units under the former and new structures
of the Global Distribution and Value-Added
Services reportable segment were tested for impairment as of January 1,
2025, and it was determined that the fair
values of our reporting units more likely than not exceeded their carrying
values, resulting in no impairment as of
January 1, 2025 under both structures.
In connection with our restructuring initiatives, during the year ended
December 28, 2024, we recorded an $
11
million impairment of goodwill in the Global Specialty Products segment,
relating to the disposal of a portion of a
business; such impairment was calculated based on the relative fair value
of goodwill.
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Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
85
Intangible Assets
In connection with our business acquisitions, we recognize assets acquired
and liabilities assumed based on fair
value estimates as of the date of acquisition.
The estimated fair value of identifiable intangible assets
(i.e.,
customer relationships and lists, trademarks and trade names, product development
and non-compete agreements) is
based on critical judgments and assumptions derived from analysis of
market conditions, including discount rates,
projected revenue growth rates (which are based on historical trends
and assessment of financial projections),
estimated customer attrition and projected cash flows.
We have calculated the value of these intangible assets using
the multi-period excess earnings method, the relief-from-royalty method,
and the with and without method, where
applicable.
These assumptions are forward-looking and could be affected by future economic
and market
conditions.
Intangible assets, other than goodwill, are evaluated for impairment whenever
events or changes in circumstances
indicate that the carrying amount of the assets may not be recoverable
through the undiscounted future cash flows
expected to be derived from such asset or asset group.
Definite and indefinite-lived intangible assets primarily consist of customer
relationships, customer lists,
trademarks, trade names, product development and non-compete agreements.
For long-lived assets used in
operations, impairment losses are only recorded if the asset or asset groups
carrying amount is not recoverable
through its undiscounted future cash flows.
We measure the impairment loss based on the difference between the
carrying amount and the estimated fair value.
When an impairment exists, the related assets are written down to
fair value.
During the years ended December 27, 2025, December 28, 2024
and December 30, 2023, we recorded total
impairment charges within the selling, general and administrative line of our consolidated statements
of income on
intangible assets of $
16
million, $
0
million and $
7
million, respectively, as more fully discussed in
Note 9 –
Goodwill and Other Intangibles, Net
.
During the years ended December 27, 2025, December 28, 2024
and
December 30, 2023, we recorded impairment charges, within the restructuring and related
costs line of our
consolidated statements of income, of $
0
million, $
14
, million, and $
12
million, respectively.
See
Note 16 – Plans
of Restructuring and Related Costs
for additional information.
Income Taxes
We account for income taxes under an asset and liability approach that requires the recognition of deferred income
tax assets and liabilities for the expected future tax consequences of events
that have been recognized in our
financial statements or tax returns.
In estimating future tax consequences, we generally consider all expected
future
events other than expected enactments of changes in tax laws or rates.
The effect on deferred income tax assets and
liabilities of a change in tax rates is recognized as income or expense in
the period that includes the enactment date.
We file a consolidated U.S. federal income tax return with our 80% or greater owned U.S. subsidiaries.
Redeemable Noncontrolling Interests
Some minority stockholders in certain of our consolidated subsidiaries have
the right, at certain times, to require us
to acquire their ownership interest in those entities at fair value.
Their interests in these subsidiaries are classified
outside permanent equity on our consolidated balance sheets and are
carried at the estimated redemption amounts.
The redemption amounts have been estimated based on recent transactions
and/or implied multiples of earnings
and, if such earnings and cash flows are not achieved, the value of the
redeemable noncontrolling interests might be
impacted.
Changes in the estimated redemption amounts of the noncontrolling
interests subject to put options are
reflected at each reporting period with a corresponding adjustment
to Additional paid-in capital.
Future reductions
in the carrying amounts are subject to a “floor” amount that is equal
to the fair value of the redeemable
noncontrolling interests at the time they were originally recorded.
The recorded value of the redeemable
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Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
86
noncontrolling interests cannot go below the floor level.
Adjustments to the carrying amount of noncontrolling
interests to reflect a fair value redemption feature do not impact the
calculation of earnings per share.
Our net
income is reduced by the portion of the subsidiaries’ net income
that is attributable to redeemable noncontrolling
interests.
Noncontrolling Interests
Noncontrolling interest represents the ownership interests of certain
minority owners of our consolidated
subsidiaries.
Our net income is reduced by the portion of the subsidiaries’
net income that is attributable to
noncontrolling interests.
Comprehensive Income
Comprehensive income includes certain gains and losses that, under accounting
principles generally accepted in the
United States, are excluded from net income as such amounts are recorded
directly as an adjustment to
stockholders’ equity.
Our comprehensive income is primarily comprised of net income,
foreign currency
translation gain (loss), unrealized gain (loss) from hedging activities
and unrealized pension adjustment gain (loss).
Risk Management and Derivative Financial Instruments
We use derivative instruments to minimize our exposure to fluctuations in foreign currency exchange rates, interest
rates, and our unfunded non-qualified supplemental retirement plan (“SERP”)
and our deferred compensation plan
(“DCP”).
Our objective is to manage the impact that foreign currency
exchange rate fluctuations could have on
recognized asset and liability fair values, earnings and cash flows, as well
as our net investments in foreign
subsidiaries, the interest rate risk on variable rate debt, and the returns on
our SERP and DCP.
Our risk
management policy requires that derivative contracts used as hedges be
effective at reducing the risks associated
with the exposure being hedged and be designated hedges at inception
of the contracts.
We do not enter into
derivative instruments for speculative purposes.
Our derivative instruments primarily include foreign currency
forward contracts, total return swaps, and interest rate swaps.
Foreign currency forward agreements related to forecasted inventory
purchase commitments with foreign suppliers,
foreign currency swaps related to foreign currency denominated debt, and
interest rate swaps related to variable rate
debt are designated as cash flow hedges.
For derivatives that are designated and qualify as cash flow hedges,
the
changes in the fair value of the derivatives are recorded as a
component of Accumulated other comprehensive
income in stockholders’ equity and subsequently reclassified into
earnings in the period(s) during which the hedged
transactions affect earnings.
We classify the cash flows related to our hedging activities in the same category in our
consolidated statements of cash flows as the cash flows related
to the hedged item.
Foreign currency forward contracts related to our euro-denominated
foreign operations are designated as net
investment hedges.
For derivatives that are designated and qualify as net investment
hedges, changes in the fair
value of the derivatives are recorded in the foreign currency translation gain
(loss) component of Accumulated
other comprehensive income in stockholders’ equity until the net
investment is sold or substantially liquidated.
Interest swap agreements are entered into for the purpose of hedging
the cash flow of our variable interest rate term
loan.
Our foreign currency forward agreements related to foreign currency
balance sheet exposure provide economic
hedges but are not designated as hedges for accounting purposes.
For agreements not designated as hedges, changes in the value of the derivative,
along with the transaction gain or
loss on the hedged item, are recorded in other, net, within our consolidated statements of income.
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Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
87
Total return swaps are entered into for the purpose of economically hedging our SERP and DCP.
These swaps are
expected to be renewed on an annual basis.
Changes in the fair values of these total return swaps are recorded in
selling, general, and administrative expenses within our consolidated
statements of income and offset recognized
changes in the fair values of our SERP and DCP liabilities.
Foreign Currency Translation
and Transactions
The financial position and results of operations of our foreign subsidiaries
are determined using local currencies as
the functional currencies.
Assets and liabilities of foreign subsidiaries are translated at the exchange
rate in effect at
each year-end.
Income statement accounts are translated at the average rate
of exchange prevailing during the year.
Translation adjustments arising from the use of differing exchange rates from period to period are included
in
Accumulated other comprehensive income in stockholders’ equity.
Gains and losses resulting from foreign
currency transactions are included in earnings.
Accounting Pronouncements Recently Adopted
During the year ended December 27, 2025, we adopted Accounting Standards Update
(“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, this 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.
This 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.
This 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.
We adopted this ASU on a prospective
basis, which resulted in the required additional disclosures included
in
Note 15 – Income Taxes
.
During the year ended December 28, 2024, we adopted ASU 2023-07, “
Segment Reporting (Topic 280):
Improvements to Reportable Segments
” (“Topic 280”),
which aims to improve financial reporting by requiring
disclosure of incremental segment information on an annual and
interim basis for all public entities to enable
investors to develop more decision-useful financial analyses.
The amendments in Topic 280 do not change how a
public entity identifies its operating segments, aggregates those operating
segments, or applies the quantitative
thresholds to determine its reportable segments.
We adopted Topic
280 on a retrospective basis, which resulted in
the required additional disclosures included in our consolidated
financial statements.
Recently Issued Accounting Pronouncements
In December 2025, the Financial Accounting Standards Board (“FASB”) issued ASU 2025-11, “
Interim Reporting
(Topic 270): Narrow
-Scope Improvements
,” which is intended to improve navigability of the guidance
in Topic
270, Interim Reporting, and clarify when it applies.
The ASU also addresses the form and content of such financial
statements and interim disclosure requirements, and establishes a principle
under which an entity must disclose
events since the end of the last annual reporting period that have a
material impact on the entity.
This ASU is
effective for annual reporting periods beginning after December 15, 2027, and interim
reporting periods within
those annual reporting periods, with early adoption permitted.
We are currently evaluating the impact that ASU
2025-11 will have on our consolidated financial statements and related disclosures.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
88
In December 2025, the FASB issued ASU 2025-10, “
Government Grants (Topic 832) - Accounting for Government
Grants Received by Business Entities,
” which establishes guidance on the recognition, measurement, and
presentation of government grants received by business entities.
This ASU is effective for annual reporting periods
beginning after December 15, 2028, and interim reporting periods within
those annual reporting periods, with early
adoption permitted.
We are currently evaluating the impact that ASU 2025-10 will have on our consolidated
financial statements and related disclosures.
In November 2025, the FASB issued ASU 2025-09, “
Derivatives and Hedging (Topic 815): Hedge Accounting
Improvements,
” which is intended to more closely align financial reporting with
the economics of entities’ risk
management activities, including expanded eligibility of forecasted
transactions, additional flexibility in measuring
hedge effectiveness, and clarifications related to hedging non-financial items.
This ASU is effective for annual
reporting periods beginning June 1, 2027, and interim reporting
periods within those annual reporting periods, with
early adoption permitted, and should be applied prospectively.
We are currently evaluating the impact that ASU
2025-09 will have on our consolidated financial statements and related
disclosures.
In September 2025, the FASB issued ASU 2025-06, “
Intangibles - Goodwill and Other - Internal-Use Software
(Subtopic 350-40): Targeted Improvements
to the Accounting for Internal-Use Software
,” which removes all
references to software development project stages.
The ASU requires entities to begin capitalizing software costs
when management authorizes and commits to funding the software project,
and it is probable that the project will
be completed and the software will be used for its intended purpose.
This ASU is effective for annual reporting
periods beginning after December 15, 2027, and interim reporting periods
within those annual reporting periods,
with early adoption permitted.
Upon adoption, the guidance can be applied prospectively, retrospectively, or with a
modified transition approach.
We are currently evaluating the impact that ASU 2025-06 will have on our
consolidated financial statements.
In July 2025, the FASB issued ASU 2025-05, “
Financial Instruments - Credit Losses (Subtopic 326): Measurement
of Credit Losses for Accounts Receivable and Contract Assets,
” which introduces a practical expedient permitting
an entity to assume that conditions at the balance sheet date remain unchanged
throughout the remaining life of the
asset when estimating expected credit losses on current accounts
receivable and current contract asset under Topic
606 on revenue from contracts with customers. This ASU is effective for annual
reporting periods beginning after
December 15, 2025, with early adoption permitted.
We do not expect ASU 2025-05 to have a material impact on
our consolidated financial statements.
In November 2024, the FASB issued 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 consolidated financial
statements.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
89
Note 2 – 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 had a $
60
million insurance policy, following a $
5
million
retention.
During the years ended December 27, 2025, December 28, 2024
and December 30, 2023, we incurred $
0
million, $
9
million and $
11
million, respectively, of expenses related to the cyber incident, mostly consisting of
professional fees.
During the year ended December 28, 2024, we received insurance
proceeds of $
40
million,
representing a partial insurance recovery of losses related to the cyber incident.
During the year ended December
27, 2025, we received insurance proceeds of $
20
million under this policy, representing 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 consolidated
statements of income.
Note 3 – Net Sales from Contracts with Customers
Net sales are recognized in accordance with policies disclosed
in
Note 1 – Basis of Presentation and Significant
Accounting Policies
.
Disaggregation of Net Sales
The following table disaggregates our net sales by reportable segment:
Years
Ended
December 27,
2025
December 28,
2024
December 30,
2023
Net Sales:
Global Distribution and Value
-Added Services
Global Dental merchandise
$
4,831
$
4,723
$
4,783
Global Dental equipment
1,799
1,723
1,675
Global Value
-added services
238
233
191
Global Dental
6,868
6,679
6,649
Global Medical
4,270
4,081
3,912
Total Global Distribution
and Value
-Added Services
11,138
10,760
10,561
Global Specialty Products
1,544
1,446
1,331
Global Technology
675
630
602
Eliminations
(173)
(163)
(155)
Total
$
13,184
$
12,673
$
12,339
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
90
Note 4 – Segment and Geographic Data
We conduct our business through
three
reportable segments: (i) Global Distribution and Value-Added Services; (ii)
Global Specialty Products; and (iii) Global Technology.
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 and related
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.
The accounting policies of the reportable segments are generally
the same as those described in
Note 1 – Basis of
Presentation and Significant Accounting Policies
.
Sales and transfers between reportable segments are eliminated
in consolidation.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
91
Segment adjusted operating income is presented in the following
table to reconcile to operating income as
presented on the consolidated statement of operations.
The reconciliation from operating income to income before
taxes and equity in earnings of affiliates is presented on our consolidated statements
of income.
Years Ended
December 27,
December 28,
December 30,
2025
2024
2023
Gross Sales:
Global Distribution and Value
-Added Services
(1)
$
11,138
$
10,760
$
10,561
Global Specialty Products
(2)
1,544
1,446
1,331
Global Technology
(3)
675
630
602
Total Gross Sales
13,357
12,836
12,494
Less: Eliminations:
Global Distribution and Value
-Added Services
(18)
(31)
(36)
Global Specialty Products
(155)
(132)
(119)
Global Technology
-
-
-
Total Eliminations
(173)
(163)
(155)
Net Sales:
Global Distribution and Value
-Added Services
11,120
10,729
10,525
Global Specialty Products
1,389
1,314
1,212
Global Technology
675
630
602
Total Net Sales
$
13,184
$
12,673
$
12,339
Segment Cost of Sales:
(4)
Global Distribution and Value
-Added Services
$
8,352
$
7,984
$
7,862
Global Specialty Products
697
644
611
Global Technology
218
206
185
Segment Operating Expenses:
(5)
Global Distribution and Value
-Added Services
$
2,106
$
2,080
$
2,034
Global Specialty Products
605
624
545
Global Technology
277
272
275
Operating Income:
Global Distribution and Value
-Added Services
$
680
$
696
$
665
Global Specialty Products
242
178
175
Global Technology
180
152
142
Total Segment Operating Income
1,102
1,026
982
Corporate, net
(130)
(77)
(92)
Adjustments
(6)
(319)
(328)
(275)
Total Operating Income
$
653
$
621
$
615
Years Ended
December 27,
December 28,
December 30,
2025
2024
2023
Depreciation and Amortization:
Global Distribution and Value
-Added Services
$
27
$
25
$
26
Global Specialty Products
36
29
23
Global Technology
36
35
31
Total Segment Depreciation and Amortization
99
89
80
Corporate
33
24
18
Acquisition intangible amortization within adjustments
(6)
179
184
150
Total Depreciation and Amortization
$
311
$
297
$
248
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
92
(1)
Global Distribution and Value
-Added Services: Includes distribution of infection-control products, handpieces, preventatives,
impression materials, composites, anesthetics, teeth, gypsum, acrylics, articulators, abrasives, 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:
Years Ended
December 27,
December 28,
December 30,
2025
2024
2023
Adjustments:
Restructuring and related costs
$
(105)
$
(110)
$
(80)
Acquisition intangible amortization
(179)
(184)
(150)
Cyber incident-insurance proceeds, net of third-party advisory
expenses
20
31
(11)
Change in contingent consideration
2
(45)
-
Litigation settlements
(5)
(6)
-
Impairment of capitalized assets
-
(12)
(27)
Impairment of intangible assets
(16)
-
(7)
Costs associated with shareholder advisory matters and select value
creation consulting costs
(36)
(2)
-
Total adjustments
$
(319)
$
(328)
$
(275)
The following table presents information about our operations by geographic
area as of and for the years ended
December 27, 2025, December 28, 2024 and December 30, 2023.
Net sales by geographic area are based on the
respective locations of our subsidiaries.
No country, except for the United States, generated net sales greater than
10
% of consolidated net sales.
There were no material amounts of sales or transfers among geographic
areas and
there were no material amounts of export sales.
2025
2024
2023
Net Sales
Long-Lived
Assets
Net Sales
Long-Lived
Assets
Net Sales
Long-Lived
Assets
United States
$
9,096
$
4,033
$
8,825
$
3,683
$
8,662
$
3,479
Other
4,088
2,120
3,848
2,051
3,677
2,135
Consolidated total
$
13,184
$
6,153
$
12,673
$
5,734
$
12,339
$
5,614
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
93
Note 5 – Business Acquisitions
Our acquisition strategy is focused on investments in companies, including
high growth high margin businesses
aligned with our BOLD+1 strategy, 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 year ended December 27, 2025, we acquired companies within
the Global Distribution and Value-
Added Services,
Global Specialty Products and Global Technology segments.
Our acquired ownership interest in
these companies range from
60
% 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 year ended
December 27, 2025:
Preliminary
Allocation as of
December 27, 2025
Acquisition consideration:
Cash
$
194
Deferred consideration
3
Estimated fair value of contingent consideration payable
19
Fair value of previously held equity method investments
91
Redeemable noncontrolling interests
85
Total consideration
$
392
Identifiable assets acquired and liabilities assumed:
Current assets
$
59
Intangible assets
150
Other noncurrent assets
42
Current liabilities
(26)
Long-term debt
(1)
Deferred income taxes
(23)
Other noncurrent liabilities
(8)
Total identifiable
net assets
193
Goodwill
199
Total net assets acquired
$
392
The accounting for acquisitions in the year ended December 27, 2025 has not been
completed in several areas,
including, but not limited to, pending assessment of certain assets,
primarily including identifiable intangibles and
certain equity method investments, and certain liabilities, primarily
including deferred income taxes.
During the
year ended December 27, 2025, we did not record any material measurement
period adjustments.
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.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
94
The following table summarizes the intangible assets acquired during the year
ended December 27, 2025:
2025
Weighted Average
Useful
Lives (in years)
Customer relationships and lists
$
98
11
Trademarks / Tradenames
32
7
Product development
18
10
Non-compete agreements
2
5
Total
$
150
During the year ended December 27, 2025, in connection with acquisitions
of controlling interests of affiliates, we
recognized gains of approximately $
38
million, related to the remeasurement to fair value of our previously held
equity investments.
Such gains were calculated using a discounted cash flow model
based on Level 3 inputs, as
defined in
Note 11 – Fair Value Measurements
,
which was recorded in
selling, general and administrative
in the
consolidated statements of income.
The impact of these acquisitions, individually and in the aggregate, was
not considered material to our 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 consolidated financial statements.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
95
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.
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
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 consolidated
financial statements.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
96
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.
We completed the accounting for all other acquisitions that occurred during the year ended December 28, 2024 and
we did not record any material measurement period adjustments
related to these acquisitions during the year ended
December 27, 2025.
Goodwill is a result of the synergies and cross-selling opportunities that these acquisitions
are expected to provide
for us, as well as the expected growth potential.
The majority of the acquired goodwill is not deductible
for tax
purposes.
During the year ended December 28, 2024, in connection with the acquisition
of a controlling interest of an
affiliate, we recognized a gain of approximately $
19
million related to the remeasurement to fair value of our
previously held equity investment, using a discounted cash flow model based
on Level 3 inputs, as defined in
Note
11 – Fair Value Measurements
,
which was recorded in
selling, general and administrative
in the consolidated
statements of income.
Pro forma financial information for our 2024 acquisitions has not been
presented because the impact of the
acquisitions was immaterial to our consolidated financial statements.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
97
2023 Acquisitions
Acquisition of Shield Healthcare
On October 2, 2023, we acquired a
90
% voting equity interest in Shield Healthcare, Inc. (“Shield”), a
supplier of
homecare medical products delivered directly to patients in their homes,
for consideration of $
348
million.
This
acquisition is reported in our Global Distribution and Value-Added Services segment.
Shield expands our existing
medical business by delivering a diverse range of products, including
items such as incontinence, urology, ostomy,
enteral nutrition, advanced wound care and diabetes supplies.
Additionally, Shield offers continuous glucose
monitoring devices directly to patients in their homes.
The following table aggregates the final fair value, as of the date of the acquisition,
of consideration paid and net
assets acquired in the Shield acquisition:
Final Allocation
Acquisition consideration:
Cash
$
289
Deferred consideration
22
Redeemable noncontrolling interests
37
Total consideration
$
348
Identifiable assets acquired and liabilities assumed:
Current assets
$
41
Intangible assets
166
Other noncurrent assets
16
Current liabilities
(24)
Deferred income taxes
(43)
Other noncurrent liabilities
(7)
Total identifiable
net assets
149
Goodwill
199
Total net assets acquired
$
348
Goodwill is a result of synergies that are expected to originate from the acquisition as well as
the expected growth
potential of Shield.
The acquired goodwill is not deductible for tax purposes.
The following table summarizes the identifiable intangible assets acquired
as part of the acquisition of Shield:
2023
Weighted Average
Useful
Lives (in years)
Customer relationships and lists
$
156
12
Trademarks / Tradenames
10
5
Total
$
166
Pro forma financial information and Shield’s revenue and earnings from the acquisition date have
not been presented because the impact of the Shield acquisition was
immaterial to our consolidated financial
statements.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
98
Acquisition of S.I.N. Implant System
On July 5, 2023, we acquired a
100
% voting equity interest in S.I.N. Implant System (“S.I.N.”) for consideration
of
$
329
million.
This acquisition is reported in our Global Specialty Products segment.
Based in São Paulo, S.I.N.
manufactures an extensive line of products to perform dental implant procedures
and is focused on advancing the
development of value-priced dental implants.
In 2023, S.I.N. expanded the distribution of its products into the
United States and other international markets.
The following table aggregates the final fair value, as of the date of acquisition,
of consideration paid and net assets
acquired in the S.I.N. acquisition:
Final Allocation
Acquisition consideration:
Cash
$
329
Total consideration
$
329
Identifiable assets acquired and liabilities assumed:
Current assets
$
73
Intangible assets
87
Other noncurrent assets
48
Current liabilities
(33)
Long-term debt
(22)
Deferred income taxes
(38)
Other noncurrent liabilities
(27)
Total identifiable
net assets
88
Goodwill
241
Total net assets acquired
$
329
Goodwill is a result of synergies that are expected to originate from the acquisition as well as
the expected growth
potential of S.I.N.
The acquired goodwill is not deductible for tax purposes.
The following table summarizes the identifiable intangible assets acquired
as part of the acquisition of S.I.N.:
2023
Weighted Average
Useful
Lives (in years)
Customer relationships and lists
$
38
7
Product development
36
8
Trademarks / Tradenames
13
10
Total
$
87
Pro forma financial information and S.I.N.’s revenue and earnings from the acquisition date have not been
presented because the impact of the S.I.N. acquisition was immaterial
to our consolidated financial statements.
Acquisition of Biotech Dental
On April 5, 2023, we acquired a
57
% voting equity interest in Biotech Dental, a provider of dental implants,
clear
aligners, individualized prosthetics and innovative digital dental software based
in France, for preliminary
consideration of $
423
million.
This acquisition is reported in our Global Specialty Products
segment.
Biotech
Dental has several important solutions for dental practices and dental
labs, including Nemotec, a comprehensive,
integrated suite of planning and diagnostic software using open architecture
that connects disparate medical devices
to create a digital view of the patient, offering greater diagnostic accuracy and an
improved patient experience.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
99
The following table aggregates the final fair value, as of the date of acquisition,
of consideration paid and net assets
acquired in the Biotech Dental acquisition:
Final Allocation
Acquisition consideration:
Cash
$
216
Fair value of contributed equity share in a controlled subsidiary
25
Redeemable noncontrolling interests
182
Total consideration
$
423
Identifiable assets acquired and liabilities assumed:
Current assets
$
74
Intangible assets
189
Other noncurrent assets
69
Current liabilities
(60)
Long-term debt
(73)
Deferred income taxes
(53)
Other noncurrent liabilities
(20)
Total identifiable
net assets
126
Goodwill
297
Total net assets acquired
$
423
Goodwill is a result of synergies that are expected to originate from the acquisition as well as
the expected growth
potential of Biotech Dental.
The acquired goodwill is not deductible for tax purposes.
The following table summarizes the identifiable intangible assets acquired
as part of the acquisition of Biotech
Dental:
2023
Weighted Average
Useful
Lives (in years)
Product development
$
124
10
Customer relationships and lists
47
9
Trademarks / Tradenames
18
7
Total
$
189
Pro forma financial information and Biotech’s revenues and earnings from the acquisition date have not been
presented because the impact of the Biotech Dental acquisition was immaterial
to our consolidated financial
statements.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
100
Other 2023 Acquisitions
During the year ended December 30, 2023, in addition to those noted above,
we acquired companies within the
Global Distribution and Value-Added Services, Global Specialty Products, and Global Technology segments for
total consideration of $
284
million.
Our acquired ownership interest ranged between
51
% to
100
%.
During the
year ended December 30, 2023, in connection with the acquisition of
a controlling interest of an affiliate, we
recognized a gain of approximately $
18
million related to the remeasurement to fair value of our previously
held
equity investment, using a discounted cash flow model based on Level
3 inputs, as defined in
Note 11 – Fair Value
Measurements
.
Goodwill of $
171
million from these acquisitions is a result of the synergies and cross-selling opportunities
that
these acquisitions are expected to provide for us, as well as the expected
growth potential.
The majority of the
acquired goodwill is deductible for tax purposes.
Intangible assets of $
116
million, consisting of $
79
million of
customer relationships and lists, $
8
million of trademarks and tradenames, $
7
million of product development, and
other of $
22
million are being amortized over their weighted average useful lives that
range from
two years
to
ten
years
.
Pro forma financial information for our 2023 acquisitions has not been
presented because the impact of the
acquisitions was immaterial to our consolidated financial statements.
Acquisition Costs
During the years ended December 27, 2025, December 28, 2024
and December 30, 2023 we incurred $
6
million, $
6
million and $
22
million in acquisition costs, respectively.
These costs are included in selling, general and
administrative in our consolidated statements of income.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
101
Note 6 – Inventories, Net
Inventories, net consisted of the following as of:
Description
December 27,
2025
December 28,
2024
Finished goods
$
1,889
$
1,710
Raw materials
70
61
Work-in process
43
39
Inventories, net
$
2,002
$
1,810
Our inventory reserve was $
131
million and $
132
million as of December 27, 2025 and December 28, 2024,
respectively.
Note 7 – Property and Equipment, Net
Property and equipment, including related estimated useful lives, consisted
of the following as of:
December 27,
December 28,
2025
2024
Land
$
22
$
20
Buildings and permanent improvements
187
164
Leasehold improvements
125
109
Machinery and warehouse equipment
307
257
Furniture, fixtures and other
137
128
Computer equipment and software
602
523
1,380
1,201
Less accumulated depreciation and amortization
(759)
(670)
Property and equipment, net
$
621
$
531
Estimated Useful
Lives (in years)
Buildings and permanent improvements
40
Machinery and warehouse equipment
5
-
15
Furniture, fixtures and other
3
-
10
Computer equipment and software
3
-
10
Leasehold improvements are amortized on a straight-line basis over
the lesser of the useful life of the assets or the
remaining lease term.
Property and equipment related depreciation expense for the years
ended December 27, 2025, December 28, 2024
and December 30, 2023, was $
101
million, $
83
million and $
70
million, respectively.
Please see
Note 8 – Leases
for finance lease amounts included in property and equipment, net within our
consolidated balance sheets.
During the year ended December 30, 2023 we recorded a $
27
million impairment of capitalized software, related to
the Global Distribution and Value-Added Services segment.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
102
Note 8 – 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
23
years, some of
which may include options to extend the leases for up to
10
years.
The components of lease expense were as
follows:
Years
Ended
December 27,
December 28,
December 30,
2025
2024
2023
Operating lease cost:
$
94
$
107
$
99
Variable
lease cost
11
12
12
Short-term lease cost
10
11
10
Total operating lease cost
(1)
115
130
121
Finance lease cost
3
4
5
Total lease cost
$
118
$
134
$
126
(1)
Total operating lease cost for the years ended December 27, 2025, December 28, 2024 and December 30, 2023, included costs of $
3
million, $
17
million and $
11
million, respectively, related to facility leases recorded in restructuring and related costs within our
consolidated statements of income.
Further, for the year ended December 27, 2025 we recognized a gain of $
4
million on early lease termination
related to facility leases which was recorded in restructuring and related costs
within our consolidated statement of
income.
For the years ended December 28, 2024 and December
30, 2023, we recognized a net impairment of
operating lease right-of-use assets of $
0
million and $
3
million respectively, related to facility leases recorded in
restructuring and related costs within our consolidated statement of
income.
Supplemental balance sheet information related to leases is as follows:
Years
Ended
December 27,
December 28,
2025
2024
Operating Leases:
Operating lease right-of-use assets
$
301
$
293
Current operating lease liabilities
78
75
Non-current operating lease liabilities
251
259
Total operating lease liabilities
$
329
$
334
Finance Leases:
Property and equipment, at cost
$
14
$
16
Accumulated depreciation
(7)
(9)
Property and equipment, net of accumulated depreciation
$
7
$
7
Current maturities of long-term debt
$
3
$
3
Long-term debt
4
$
3
Total finance
lease liabilities
$
7
$
6
Weighted Average
Remaining Lease Term in
Years:
Operating leases
5.6
5.9
Finance leases
2.9
2.7
Weighted Average
Discount Rate:
Operating leases
4.5
%
4.2
%
Finance leases
4.5
%
4.4
%
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
103
Supplemental cash flow information related to leases is as follows:
Years
Ended
December 27,
December 28,
2025
2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases
$
99
$
94
Financing cash flows for finance leases
3
4
Right-of-use assets obtained in exchange for lease obligations:
Operating leases
$
71
$
76
Finance leases
3
2
Maturities of lease liabilities are as follows:
December 27, 2025
Operating
Finance
Leases
Leases
2026
$
91
$
3
2027
74
2
2028
59
1
2029
47
1
2030
37
-
Thereafter
63
-
Total future
lease payments
371
7
Less imputed interest
42
-
Total
$
329
$
7
As of December 27, 2025, we have additional operating leases that have
not yet commenced with total lease
payments of $
23
million for buildings and vehicles.
These operating leases will commence after December 27,
2025, with lease terms of less than one year to
ten years
.
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
12 years
.
As of December 27, 2025, current and non-current liabilities associated
with related party operating leases were $
5
million and $
22
million, respectively.
At December 27, 2025, related party leases represented
6.6
% and
8.7
% of
the total current and non-current operating lease liabilities, respectively.
As of December 28, 2024, current and
non-current liabilities associated with related party operating leases were
$
6
million and $
20
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
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
104
Note 9 – Goodwill and Other Intangibles, Net
Changes in the carrying amounts
of goodwill for the years ended December 27, 2025 and December
28, 2024 were
as follows:
Global
Distribution and
Value-Added
Services
Global Specialty
Products
Global
Technology
Total
Balance as of December 30, 2023
$
2,007
$
1,077
$
791
$
3,875
Adjustments to goodwill:
Acquisitions
41
107
-
148
Impairment
-
(11)
(2)
(13)
Foreign currency translation
(39)
(80)
(4)
(123)
Balance as of December 28, 2024
2,009
1,093
785
3,887
Adjustments to goodwill:
Acquisitions
49
124
26
199
Disposal
(1)
-
(2)
(3)
Foreign currency translation
49
74
7
130
Balance as of December 27, 2025
$
2,106
$
1,291
$
816
$
4,213
In January 2025, we performed a geographical realignment within
the Global Distribution and Value-Added
Services reportable segment intended to provide increased transparency
into the performance of our global
distribution businesses and to reflect evolving management oversight
and decision-making.
As a result of the
realignment and the change in reporting units, we reallocated goodwill
to each of our new reporting units using a
relative fair value approach.
The relative fair values of the new reporting units were determined based on
a
quantitative valuation analysis that considered projected cash flows,
market assumptions, and other relevant
valuation inputs.
Reporting units under the former and new structures of
the Global Distribution and Value-Added
Services reportable segment were tested for impairment as of January 1,
2025, and it was determined that the fair
values of our reporting units more likely than not exceeded their carrying
values, resulting in no impairment as of
January 1, 2025 under both structures.
In connection with our restructuring initiatives, during the year ended
December 28, 2024, we recorded an $
11
million impairment of goodwill in the Global Specialty Products segment,
relating to the disposal of a portion of a
business; such impairment was calculated based on the relative fair value
of goodwill.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
105
Other intangible assets consisted of the following:
December 27, 2025
Accumulated
Weighted Average
Cost
Amortization
Net
Life (in years)
Customer relationships and lists
$
971
$
(408)
$
563
10
Trademarks / Tradenames
205
(96)
109
8
Product development
438
(120)
318
9
Non-compete agreements
18
(5)
13
5
Other
24
(9)
15
15
Total
$
1,656
$
(638)
$
1,018
December 28, 2024
Accumulated
Weighted Average
Cost
Amortization
Net
Life (in years)
Customer relationships and lists
$
915
$
(356)
$
559
10
Trademarks / Tradenames
188
(89)
99
8
Product development
403
(71)
332
9
Non-compete agreements
21
(6)
15
4
Other
28
(10)
18
15
Total
$
1,555
$
(532)
$
1,023
Trademarks, trade names, customer lists and customer relationships were established through
business acquisitions
and are amortized on a straight-line basis over their respective asset life.
Non-compete agreements represent
amounts paid primarily to prior owners of acquired businesses and certain
sales persons, in exchange for placing
restrictions on their ability to pose a competitive risk to us.
Such amounts are amortized, on a straight-line basis
over the respective non-compete period, which generally commences upon
termination of employment or
separation from us.
Amortization expense, excluding impairment charges, related to definite-lived intangible assets
for the years ended
December 27, 2025, December 28, 2024 and December 30, 2023, was $
180
million, $
185
million and $
152
million,
respectively.
During the year ended December 27, 2025, we recorded $
16
million of impairment charges related to businesses in
our Global Distribution and Value-Added Services segment.
The impairment charges included $
14
million
primarily related to customer lists and relationships attributable
to lower than anticipated operating margins in these
businesses.
The remaining impairment charges of $
2
million related to trade names and non-compete agreements.
During the year ended December 28, 2024, we recorded $
4
million of impairment charges related to businesses in
our Global Distribution and Value-Added Services segment.
It included $
2
million of a trade name impairment,
calculated using the relative fair value, related to a disposal of a business, and
$
1
million related to trade name
impairment due to business integration in connection with our restructuring
initiatives.
The remaining $
1
million
impairment charges related to trade names and non-compete agreements.
During the year ended December 30, 2023, we recorded $
19
million of impairment charges related to businesses in
our Global Distribution and Value-Added Services segment, consisting of $
7
million primarily related to customer
lists and relationships attributable to lower than anticipated operating
margins in certain businesses, and a $
12
million charge related to the planned exit of a business in connection with our restructuring
initiatives.
The impairment charges for the years ended December 27, 2025, December 28, 2024,
and December 30, 2023 were
measured as the excess of the carrying values over the estimated fair values
of the related intangible assets,
determined using discounted estimates of future cash flows and the
relief-from-royalty method.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
106
Please see
Note 16 – Plans of Restructuring and Related Costs
for additional details.
The above intangible asset impairment charges were recorded within selling, general
and administrative expenses
and in restructuring and related costs in our consolidated statement of
income.
The annual amortization expense expected to be recorded for existing
intangibles assets for the years 2026 through
2030 is $
172
million, $
159
million, $
142
million, $
128
million and $
118
million.
Note 10 – Investments and Other
Investments and other consisted of the following:
December 27,
December 28,
2025
2024
Investments in unconsolidated affiliates
$
174
$
170
Non-current deferred foreign, state and local income taxes
92
47
Notes receivable
(1)
56
63
Capitalized costs for software and cloud based applications for external use
112
90
Security deposits
4
4
Acquisition-related indemnification assets
39
39
Non-current pension assets
11
9
Non-current inventory
38
27
Other
72
52
Total
$
598
$
501
(1)
Long-term notes receivable carry interest rates ranging from
3.0
% to
11.8
% and are due in varying installments through
May 31, 2031
.
Amortization expense, related to capitalized costs for software to be sold,
leased or marketed to external users, and
for cloud-based applications used to deliver our services, for the years
ended December 27, 2025, December 28,
2024 and December 30, 2023, was $
30
million, $
29
million and $
26
million, respectively, and is included in the
selling, general and administrative line within our consolidated statements
of income.
During the year ended December 28, 2024 we recorded a $
12
million impairment of capitalized software costs,
related to the Global Technology segment.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
107
Note 11 – Fair Value
Measurements
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 December 27, 2025 and December 28, 2024 was
estimated at $
3,107
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
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 20 – 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.
See
Note 1 – Basis of Presentation and Significant Accounting
Policies
and
Note 9 – Goodwill and Other Intangibles, Net
for additional information.
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.
See
Note 19 – Employee Benefit Plans
for additional information.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
108
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
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 consolidated statements of income
(see
Note 5 – Business Acquisitions
).
For transactions involving changes in our ownership in consolidated
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 consolidated
balance sheet.
We measure contingent
consideration at the fair value on a recurring basis using significant unobservable
inputs classified as Level 3 of the
fair value hierarchy.
We use various valuation techniques, including the Monte Carlo simulation and probability-
weighted scenarios, to determine the fair value of the contingent consideration
liabilities on the acquisition date and
at each reporting period.
Our fair value measurement inputs include expected operating
performance, discount and
risk-free rates, and credit spread.
Contingent consideration is remeasured to fair value at each reporting
period.
During the year ended December 27,
2025, we updated the fair value of contingent consideration in connection
with 2025 and 2023 business
acquisitions, which resulted in expense of $
9
million and income of $
11
million, respectively.
During the year
ended December 28, 2024, we updated the fair value of contingent
consideration in connection with 2023 and 2022
business acquisitions, which resulted in expense of $
38
million and $
7
million, respectively.
These changes were
recorded in selling, general and administrative in the consolidated
statements of income.
During the year ended
December 27, 2025, we also updated the fair value of contingent consideration
related to changes in ownership.
These changes were recorded within additional paid-in-capital in the consolidated
balance sheets.
The components of the change in the fair value of contingent consideration
for the year ended December 27, 2025
and December 28, 2024 are presented in the following table:
Years
Ended
December 27,
December 28,
2025
2024
Balance, beginning of period
$
30
$
6
Increase in contingent consideration due to business acquisitions and acquisitions of
noncontrolling interests in subsidiaries
103
10
Decrease in contingent consideration due to payments
(19)
(31)
Change in fair value of contingent consideration in connection with business acquisitions
(2)
45
Change in fair value of contingent consideration in connection with changes in ownership in
consolidated subsidiaries
(15)
-
Balance, end of period
$
97
$
30
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
109
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
December 27, 2025 and December 28,
2024:
December 27, 2025
Level 1
Level 2
Level 3
Total
Assets:
Derivative contracts designated as hedges
$
-
$
1
$
-
$
1
Derivative contracts undesignated
-
1
-
1
Total return
swap
-
1
-
1
Total assets
$
-
$
3
$
-
$
3
Liabilities:
Derivative contracts designated as hedges
$
-
$
23
$
-
$
23
Derivative contracts undesignated
-
2
-
2
Contingent consideration
-
-
97
97
Total liabilities
$
-
$
25
$
97
$
122
Redeemable noncontrolling interests
$
-
$
-
$
895
$
895
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
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
110
Note 12 – Concentrations of Risk
Certain financial instruments potentially subject us to concentrations of
credit risk.
These financial instruments
consist primarily of cash equivalents, trade receivables, long-term investments,
notes receivable and derivative
instruments.
In all cases, our maximum exposure to loss from credit
risk equals the gross fair value of the financial
instruments.
We routinely maintain cash balances at financial institutions in excess of insured amounts.
We have
not experienced any loss in such accounts and we manage this risk through
maintaining cash deposits and other
highly liquid investments in high quality financial institutions.
We continuously assess the need for reserves for
such losses, which have been within our expectations.
We do not require collateral or other security to support
financial instruments subject to credit risk, except for long-term notes receivable.
We limit credit risk with respect to our cash equivalents, short-term and long-term investments and derivative
instruments, by monitoring the credit worthiness of the financial institutions
who are the counter-parties to such
financial instruments.
As a risk management policy, we limit the amount of credit exposure by diversifying and
utilizing numerous investment grade counterparties.
With respect to our trade receivables, credit risk is somewhat limited due to a relatively large customer base
and its
dispersion across different types of health care professionals and geographic areas.
No single customer accounted
for more than
2
% of our net sales in each of the years ended December 27, 2025,
December 28, 2024 or December
30, 2023.
With respect to our sources of supply, our top 10 Global Distribution and Value
-Added Services
suppliers and our single largest supplier accounted for approximately
24
% and
4
%, respectively, of our aggregate
purchases for the year ended December 27, 2025 and approximately
25
% and
4
%, respectively, of our aggregate
purchases for the year ended December 28, 2024.
Our long-term notes receivable primarily represent strategic financing arrangements
with certain affiliates.
Generally, these notes are secured by certain assets of the counterparty; however, in most cases our security is
subordinate to the rights of other commercial financial institutions.
While we have exposure to credit loss in the
event of non-performance by these counterparties, we conduct ongoing assessments
of their financial and
operational performance.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
111
Note 13 – Derivatives and Hedging Activities
We are exposed to market risks and changes in foreign currency exchange rates against the U.S. dollar and each
other, and changes to the credit risk of the derivative counterparties.
We attempt to minimize these risks using
foreign currency forward contracts and by maintaining counter-party credit limits.
Our hedging activities provide
only limited protection against currency exchange and credit risks.
Factors that could influence the effectiveness of
our hedging programs include currency markets and availability of hedging
instruments and liquidity of the credit
markets.
All foreign currency forward contracts that we enter are for the sole
purpose of hedging an existing or
anticipated currency exposure.
We do not enter into foreign currency forward contracts for speculative purposes
and we manage our credit risks by diversifying our counterparties,
maintaining a strong balance sheet and having
multiple sources of capital.
Our derivative instruments primarily include foreign currency forward contracts,
total
return swaps, and interest rate swaps.
During 2019 we entered foreign currency forward contracts that we
designated as net investment hedges to hedge a
portion of our euro-denominated foreign operations.
These net investment hedges offset changes in the U.S. dollar
value of our investments in certain euro-functional currency subsidiaries due
to fluctuating foreign exchange rates.
Gains and losses related to these net investment hedges are recorded
in accumulated other comprehensive loss
within our consolidated balance sheets.
Amounts excluded from the assessment of hedge effectiveness are
included
in interest expense within our consolidated statements of income.
The aggregate notional value of these net
investment hedges, which matured on
November 16, 2023
, was approximately €
200
million.
On November 3,
2023 we entered into new foreign currency forward contracts to
hedge a portion of our euro-denominated foreign
operations which are designated as net investment hedges.
The aggregate notional value of this net investment
hedge, which matures on
November 3, 2028
, is approximately €
300
million.
During the years ended December 27,
2025, December 28, 2024, and December 30, 2023, we recorded an
increase/(decrease) of $
(33)
million, $
10
million, and $
(32)
million, respectively, within other comprehensive income related to these foreign currency
forward contracts.
See
Note 11 – Fair Value Measurements
for additional information.
On
March 20, 2020
, we entered a total return swap to economically hedge our unfunded
non-qualified SERP and
our DCP.
This swap will offset changes in our SERP and DCP liabilities.
At the swap’s inception, the notional
value of the investments in these plans was $
43
million.
At December 27, 2025, the notional value of the
investments in these plans was $
117
million.
At December 27, 2025, the financing blended rate for this swap
was
based on the Secured Overnight Financing Rate (“SOFR”) of
3.79
% plus
0.75
%, for a combined rate of
4.54
%.
For
the years ended December 27, 2025, December 28, 2024,
and December 30, 2023, we recorded within selling,
general and administrative expenses in our consolidated statement of income,
a gain of $
11
million,
8
million, and
$
10
million, respectively, net of transaction costs, related to this undesignated swap.
See
Note 19 – Employee
Benefit Plans
for additional information.
On July 11, 2023, we entered into interest rate swap agreements to hedge the cash flow of our variable
rate $
750
million floating debt term loan facility, with
three years
maturity, effectively changing the floating rate portion of
our obligation to a fixed rate.
Under the terms of the interest rate swap agreements, we receive variable
interest
payments based on the one-month Term SOFR rate and pay interest at a fixed rate.
As of December 27, 2025, the
notional value of the interest rate swap agreements was $
675
million.
For the years ended December 27, 2025 and
December 28, 2024, we recorded, within accumulated other comprehensive
loss within our consolidated balance
sheets, a loss of $
3
million and $
3
million, respectively, related to the change in the fair value of these interest rate
swap agreements, since we have designated these swap agreements as cash
flow hedges.
Fluctuations in the value of certain foreign currencies as compared
to the U.S. dollar may positively or negatively
affect our revenues, gross margins, operating expenses and retained earnings, all of which are expressed
in U.S.
dollars.
Where we deem it prudent, we engage in hedging programs using primarily
foreign currency forward
contracts aimed at limiting the impact of foreign currency exchange
rate fluctuations on earnings.
We purchase
short-term (i.e., generally 18 months or less) foreign currency forward contracts
to protect against currency
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
112
exchange risks associated with intercompany loans due from our international
subsidiaries and the payment of
merchandise purchases to our foreign suppliers.
We do not hedge the translation of foreign currency profits into
U.S. dollars, as we consider foreign currency translation to be an accounting
exposure, not an economic
exposure.
Amounts related to our hedging activities are recorded in prepaid
expenses and other and/or accrued
expenses: other within our consolidated balance sheets.
The following table summarizes the terms and fair value of our outstanding derivative
financial instruments as of
December 27, 2025 and December 28, 2024:
December 27, 2025
Notional
Amount
Classification
Fair
Value
Maturity Date
Derivatives used in cash flow hedges:
Foreign currency forward contracts
$
98
Prepaid expenses and other
$
-
December 24, 2026
Interest rate swaps
675
Accrued expenses, other
(3)
July 13, 2026
Derivatives used in net investment hedges:
Foreign currency forward contracts
365
Accrued expenses, other
(19)
November 3, 2028
Undesignated hedging relationships:
Total return
swaps
116
Prepaid expenses and other
1
December 30, 2025
Total
$
1,254
$
(21)
December 28, 2024
Notional
Amount
Classification
Fair
Value
Maturity Date
Derivatives used in cash flow hedges:
Foreign currency forward contracts
$
84
Prepaid expenses and other
$
-
October 30, 2025
Interest rate swaps
713
Accrued expenses, other
(3)
July 13, 2026
Derivatives used in net investment hedges:
Foreign currency forward contracts
336
Prepaid expenses and other
9
November 3, 2028
Undesignated hedging relationships:
Total return
swaps
106
Accrued expenses, other
(3)
December 30, 2024
Total
$
1,239
$
3
The following table summarizes the effect of cash flow hedges and net investment hedges
on our consolidated
statements of income for the years ended December 27, 2025, December
28, 2024 and December 30, 2023:
Years
Ended
December 27,
December 28,
December 30,
2025
2024
2023
Derivatives used in cash flow hedges:
Foreign currency forward contracts
$
-
$
-
$
(1)
Interest rate swaps
-
6
(7)
Derivatives used in net investment hedges:
Foreign currency forward contracts
(24)
7
(10)
Total
$
(24)
$
13
$
(18)
The amount of gains or losses reclassified from accumulated other comprehensive
loss into income were not
material for the years ended December 27, 2025, December 28, 2024,
and December 30, 2023.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
113
Note 14 – Debt
Bank Credit Lines
Bank credit lines consisted of the following:
December 27,
December 28,
2025
2024
Revolving credit agreement
$
100
$
-
Other short-term bank credit lines
664
650
Total
$
764
$
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
December 27, 2025 the interest rate on this revolving credit facility
was
3.78
% plus
1.08
% for a combined rate of
4.86
%.
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 December
27, 2025 and December 28, 2024, we had $
100
million and $
0
million in borrowings, respectively, under this
revolving credit facility.
During the year ended December 27, 2025, the average outstanding balance
under the
Revolving Credit Agreement was approximately $
203
million.
As of December 27, 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 December 27, 2025 and December 28, 2024, we had various other
short-term bank credit lines available, in
various currencies, with a maximum borrowing capacity of $
787
million and $
790
million, respectively.
As of
December 27, 2025 and December 28, 2024, $
664
million and $
650
million, respectively, were outstanding.
During the year ended December 27, 2025, the average outstanding balances
under our various other short-term
bank credit lines was approximately $
680
million.
As of December 27, 2025 and December 28, 2024, borrowings
under other short-term bank credit lines had weighted average interest
rates of
4.68
% and
5.35
%, respectively.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
114
Long-term debt
Long-term debt consisted of the following:
December 27,
December 28,
2025
2024
Private placement facilities
$
1,149
$
975
Term loan
749
712
U.S. trade accounts receivable securitization
390
150
Various
collateralized and uncollateralized loans payable with interest,
in varying installments through 2031 at interest rates
from
0.00
% to
6.75
% at December 27, 2025 and
from
0.00
% to
9.42
% at December 28, 2024
48
43
Finance lease obligations
7
6
Total
2,343
1,886
Less current maturities
(33)
(56)
Total long-term debt
$
2,310
$
1,830
As of December 27, 2025,
the aggregate amounts of long-term debt, including finance lease obligations
and net of
deferred debt issuance costs, maturing in each of the next five years
and thereafter are as follows:
2026
$
33
2027
534
2028
221
2029
143
2030
810
Thereafter
602
Total
$
2,343
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
December 19, 2028
.
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.
On December 19, 2025, we amended and restated our private placement
facilities to, among
other things, (i) extend the scheduled facility termination dates to
December 19, 2028
and (ii) modify certain
financial definitions and covenants.
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.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
115
The components of our private placement facility borrowings as of December
27, 2025, which have a weighted
average interest rate of
3.93
% 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
December 15, 2025
100
5.23
December 15, 2032
December 15, 2025
75
5.28
December 15, 2032
Less: Deferred debt issuance costs
(1)
Total
$
1,149
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
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
116
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 December 27, 2025, the borrowings outstanding under this
term loan were $
749
million.
At December
27, 2025, the interest rate under the Term Credit Agreement was
3.76
% plus
1.25
% for a combined rate of
5.01
%.
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
6.04
%.
After renewing
the Term Credit Agreement in June of 2025, our hedged portion of the Term Credit Agreement is now
approximately
90
% of the notional total.
As of December 27, 2025, the effective fixed rate was
5.69
% and the
floating rate was
5.01
%, resulting in a weighted average rate of
5.62
%.
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 December 27, 2025 and December 28, 2024, the borrowings outstanding
under this securitization facility
were $
390
million and $
150
million, respectively.
At December 27, 2025, the interest rate on borrowings under
this facility was based on the
asset-backed commercial paper rate
of
4.06
% plus
0.75
%, for a combined rate of
4.81
%.
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
%.
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.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
117
Note 15 – Income Taxes
Income before taxes and equity in earnings of affiliates was as follows:
Years
ended
December 27,
December 28,
December 30,
2025
2024
2023
Domestic
$
384
$
338
$
424
Foreign
149
175
118
Total
$
533
$
513
$
542
The provisions for income taxes were as follows:
Years
ended
December 27,
December 28,
December 30,
2025
2024
2023
Current income tax expense:
U.S. Federal
$
42
$
100
$
72
State and local
15
33
28
Foreign
64
56
40
Total current
121
189
140
Deferred income tax expense (benefit):
U.S. Federal
33
(29)
9
State and local
3
(12)
(3)
Foreign
(31)
(20)
(26)
Total deferred
5
(61)
(20)
Total provision
$
126
$
128
$
120
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
118
The tax effects of temporary differences that give rise to our deferred income tax asset (liability) were
as follows:
Years
Ended
December 27,
December 28,
2025
2024
Deferred income tax asset:
Net operating losses
$
105
$
91
Other carryforwards
52
37
Inventory, premium
coupon redemptions and accounts receivable
valuation allowances
38
37
Operating lease liability
75
76
Capitalization of research and development costs
10
27
Other asset
62
49
Total deferred income
tax asset
342
317
Valuation
allowance for deferred tax assets
(1)
(53)
(38)
Net deferred income tax asset
289
279
Deferred income tax liability
Intangibles amortization
(266)
(260)
Operating lease right-of-use asset
(70)
(67)
Property and equipment
(7)
(7)
Total deferred tax
liability
(343)
(334)
Net deferred income tax asset (liability)
$
(54)
$
(55)
(1)
Primarily relates to operating losses, the benefits of which are uncertain.
Any future reductions of such valuation allowances will be
reflected as a reduction of income tax expense.
The assessment of the amount of value assigned to our deferred tax assets under
the applicable accounting rules is
judgmental.
We
are required to consider all available positive and negative evidence
in evaluating the likelihood
that we will be able to realize the benefit of our deferred tax assets in the future.
Such evidence includes reversals
of deferred tax liabilities and projected future taxable income.
Since this evaluation requires consideration of
events that may occur some years into the future, there is an element of
judgment involved.
Realization of our
deferred tax assets is dependent on generating sufficient taxable income in future periods.
We
believe that it is
more likely than not that future taxable income will be sufficient to allow us to recover
substantially all of the value
assigned to our deferred tax assets.
However, if future events cause us to conclude that it is not more likely than
not that we will be able to recover the value assigned to our deferred tax assets, we
will be required to adjust our
valuation allowance accordingly.
As of December 27, 2025, we had federal, state and foreign net operating
loss carryforwards of approximately $
86
million, $
62
million and $
366
million, respectively.
The federal, state and foreign net operating loss carryforwards
will begin to expire in various years from 2026 through 2045.
The amounts of federal, state and foreign net
operating losses that can be carried-forward indefinitely are $
86
million, $
21
million and $
358
million,
respectively.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
119
The effective income tax rate for the year ended December 27, 2025 differs from the statutory federal
income tax
rate as follows:
Year
ended December 27, 2025
$
%
Income tax provision at federal statutory rate
$
112
21.0
%
State income tax provision, net of federal income tax effect
(1)
10
2.0
Foreign Tax effects
Cayman Islands:
Foreign partnership loss
8
1.5
Other
(1)
(0.1)
Other foreign jurisdictions:
Equity investment remeasurement gain
(6)
(1.1)
Notional interest deduction
(6)
(1.1)
Other
19
3.5
Effects of changes in tax laws or rates enacted in current period
-
-
Cross-border tax laws
1
0.1
Tax credits
(2)
(0.4)
Changes in valuation allowance
3
0.6
Nontaxable and nondeductible items
3
0.5
Worldwide changes
in unrecognized tax benefits
4
0.7
Other adjustments:
Previously held non-controlling equity investment
(9)
(1.7)
Other
(10)
(1.8)
Effective tax rate
$
126
23.7
%
(1)
State taxes in California, Illinois, Massachusetts, New Jersey, and New York
make up the majority (greater than 50%) of the tax effect
in this category.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
120
As previously disclosed for the years ended December 28, 2024 and December
20, 2023, prior to the adoption of
ASU 2023-09, the tax provisions differ from the amount computed using the federal
statutory income tax rate as
follows:
Years
ended
December 28,
December 30,
2024
2023
Income tax provision at federal statutory rate
$
108
$
114
State income tax provision, net of federal income tax effect
11
15
Foreign income tax provision
10
5
Pass-through noncontrolling interest
1
(8)
Valuation
allowance
6
(3)
Unrecognized tax benefits and audit settlements
5
9
Interest expense related to loans
(14)
(13)
Effect of cross border tax laws
12
7
Other
(11)
(6)
Total income
tax provision
$
128
$
120
For the year ended December 27, 2025 our effective tax rate was
23.7
%, compared to
24.9
% for the prior year
period.
In 2023, our effective tax rate was
22.1
%.
The difference between our effective and federal statutory tax
rates primarily relates to state and foreign income taxes and interest expense,
as well as the tax treatment associated
with the acquisition of a controlling interest of a previously held non-controlling
equity investment.
On July 4, 2025, President Trump signed the reconciliation tax bill, commonly known as the “One Big Beautiful
Bill Act” (OBBBA), into law.
Corporate provisions in the OBBBA include immediate expensing of domestic
research and experimental expenditures, limitations on certain deductions
and modifications to international tax
provisions.
The changes resulting from the OBBBA did not have a significant impact
to the total tax provision.
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
December 27, 2025, the impact of the Pillar Two rules to our financial statements was immaterial.
Due to the one-time transition tax and the imposition of the GILTI provisions, all previously unremitted earnings
will no longer be subject to U.S. federal income tax; however, there could be U.S., state and/or foreign withholding
taxes upon distribution of such unremitted earnings.
Determination of the amount of unrecognized deferred tax
liability with respect to such earnings is not practicable.
ASC Topic 740 prescribes the accounting for uncertainty in income taxes recognized in accordance with other
provisions contained within its guidance.
This topic prescribes a recognition threshold and a measurement
attribute
for the financial statement recognition and measurement of tax positions taken or
expected to be taken in a tax
return.
For those benefits to be recognized, a tax position must be
more likely than not to be sustained upon
examination by the taxing authorities.
The amount recognized is measured as the largest amount of benefit that has
a greater than 50% likelihood of being realized upon ultimate audit settlement.
In the normal course of business,
our tax returns are subject to examination by various taxing authorities.
Such examinations may result in future tax
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
121
and interest assessments by these taxing authorities for uncertain tax positions
taken in respect of certain tax
matters.
The total amount of unrecognized tax benefits, which are included in “other
liabilities” within our consolidated
balance sheets, as of December 27, 2025 and December 28, 2024 was $
112
million and $
108
million, respectively,
of which $
104
million and $
100
million, respectively, would affect the effective tax rate if recognized.
All tax returns audited by the IRS are officially closed through 2021.
The tax years subject to examination by the
IRS include years 2022 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 $
4
million, $
2
million
and $
4
million during the years ended December 27, 2025, December 28, 2024
and December 30, 2023,
respectively.
The total amount of accrued interest is included in other liabilities
within our consolidated balance
sheets, and was $
22
million as of December 27, 2025 and $
18
million as of December 28, 2024.
The amount of
penalties accrued for during the periods presented was not material to our
consolidated financial statements.
The following table provides a reconciliation of unrecognized tax benefits:
December 27,
December 28,
December 30,
2025
2024
2023
Balance, beginning of period
$
89
$
98
$
82
Additions based on current year tax positions
5
5
9
Additions based on prior year tax positions
5
10
26
Reductions based on prior year tax positions
(2)
(14)
(2)
Reductions resulting from settlements with taxing authorities
-
-
(3)
Reductions resulting from lapse in statutes of limitations
(7)
(10)
(14)
Balance, end of period
$
90
$
89
$
98
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Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
122
Note 16 – Plans of Restructuring and Related Costs
On August 6, 2024, we committed to a restructuring plan (the “2024
Plan”) to integrate our acquisitions, right-size
operations and further increase efficiencies.
We currently expect this plan to be completed at the end of 2027.
During the years ended December 27, 2025 and December 28, 2024, we recorded
restructuring and related charges
associated with the 2024 Plan of $
105
million and $
73
million, respectively.
The restructuring and related costs for
these periods 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 and related charges associated with
the 2024 Plan through the end of 2027; however, an estimate of the amount of these charges for 2026 through 2027
has not yet been determined.
During the year ended December 27, 2025, in connection with the 2024 Plan,
we recorded a loss of $
1
million and
$
12
million related to the disposal of businesses in the Global Distribution and Value-Added Services and Global
Specialty Product segments, respectively, and a net gain related to disposal of a business in the Global Technology
segment.
These amounts are included in the $
105
million of restructuring and related charges discussed above.
During the year ended December 28, 2024, in connection with the 2024 Plan,
we recorded an impairment of
goodwill and intangible assets of $
13
million related to the disposal of a portion of a business in the Global
Specialty Products segment.
This impairment is included in the $
73
million of restructuring and related charges
discussed above.
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 was
completed as of July 31, 2024.
During the years ended December 28, 2024 and December 30, 2023, in
connection
with our 2022 Plan, we recorded restructuring and related costs of $
37
million and $
80
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.
During the year ended December 30, 2023, in connection with the 2022 Plan,
we recorded an impairment of an
intangible asset of $
12
million related to disposal of a U.S. business in the Global Specialty Products
segment.
This
impairment is included in the $
80
million of restructuring and related costs discussed above.
The disposal was
completed during the first quarter of 2024.
Restructuring and related costs recorded for the fiscal years ended 2025,
2024 and 2023 in connection with the
2024 Plan and 2022 Plan, respectively, consisted of the following:
Year Ended
December 27, 2025
Global Distribution
and Value-Added
Services
Global
Specialty
Products
Global
Technology
Corporate
Total
2024 Plan
Severance and employee-related costs
$
40
$
22
$
4
$
20
$
86
Impairment and accelerated depreciation and
amortization of right-of-use lease assets and other
long-lived assets
(3)
6
(1)
-
2
Exit and other related costs
5
4
-
-
9
Loss/(Gain) on disposal of a business
1
12
(5)
-
8
Restructuring and related costs-2024 Plan
$
43
$
44
$
(2)
$
20
$
105
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Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
123
Year Ended
December 28, 2024
Global Distribution
and Value-Added
Services
Global
Specialty
Products
Global
Technology
Corporate
Total
2024 Plan
Severance and employee-related costs
$
31
$
5
$
6
$
2
$
44
Impairment and accelerated depreciation and
amortization of right-of-use lease assets and other
long-lived assets
5
3
4
-
12
Exit and other related costs
2
-
-
-
2
Loss on disposal of a business
-
15
-
-
15
Restructuring and related costs-2024 Plan
$
38
$
23
$
10
$
2
$
73
2022 Plan
Severance and employee-related costs
$
18
$
5
$
1
$
-
$
24
Accelerated depreciation and amortization
10
-
-
(3)
7
Exit and other related costs
2
2
-
2
6
Loss on disposal of a business
-
-
-
-
-
Restructuring and related costs-2022 Plan
$
30
$
7
$
1
$
(1)
$
37
Total restructuring and related costs
$
68
$
30
$
11
$
1
$
110
Year Ended
December 30, 2023
Global Distribution
and Value-Added
Services
Global
Specialty
Products
Global
Technology
Corporate
Total
2022 Plan
Severance and employee-related costs
$
29
$
5
$
5
$
7
$
46
Impairment and accelerated depreciation and
amortization of right-of-use lease assets and other
long-lived assets
13
-
2
-
15
Exit and other related costs
3
1
-
2
6
Loss on disposal of a business
-
13
-
-
13
Restructuring and related costs-2022 Plan
$
45
$
19
$
7
$
9
$
80
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 year ended December
27, 2025.
The remaining accrued
balance of restructuring and related costs as of December 27, 2025, which
primarily relates to severance and
employee-related costs, is included in accrued expenses: other within
our consolidated balance sheets.
Liabilities
related to exited leased facilities are recorded within our current and non-current
operating lease liabilities within
our consolidated balance sheets.
2022 Plan
2024 Plan
Total
Balance, December 30, 2023
$
23
$
-
$
23
Restructuring and related costs
37
73
110
Non-cash impairment, accelerated depreciation and
amortization
(7)
(12)
(19)
Non-cash impairment on disposal of a business
-
(13)
(13)
Cash payments and other adjustments
(41)
(20)
(61)
Balance, December 28, 2024
12
28
40
Restructuring and related costs
-
105
105
Non-cash impairment, accelerated depreciation and
amortization
-
(2)
(2)
Non-cash charges related to disposal of a business
-
(6)
(6)
Cash payments and other adjustments
(11)
(77)
(88)
Balance, December 27, 2025
$
1
$
48
$
49
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Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
124
Note 17 – Commitments and Contingencies
Purchase Commitments
In our Global Distribution and Value-Added Services business, we sometimes enter into long-term purchase
commitments to ensure the availability of products for distribution.
Future minimum annual payments for
inventory purchase commitments as of December 27, 2025 were:
2026
$
8
2027
1
2028
-
2029
-
2030
-
Thereafter
-
Total minimum
inventory purchase commitment payments
$
9
Employment, Consulting and Non-Compete Agreements
We have employment, consulting and non-compete agreements that have varying base aggregate annual payments
for the years 2026 through 2030 and thereafter of approximately $
13
million, $
3
million, $
0
million, $
0
million, $
0
million, and $
0
million, respectively.
We also have lifetime consulting agreements that provide for current
compensation of
four-hundred thousand
dollars per year, with small scheduled increases every fifth year with the
next increase in 2027.
In addition, some agreements have provisions for additional
incentives and compensation.
Legal Proceedings
Henry Schein, Inc. was named as a defendant in multiple opioid related
lawsuits (currently less than ten (
10
); one or
more of Henry Schein, Inc.’s subsidiaries was 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.
The actions that remain 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.
Of Henry Schein’s 2025 net sales of approximately $
13.2
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 December 27, 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
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
125
Note 18 – 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
(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.
Our non-employee
directors receive equity-based awards solely in the form of time-based RSUs with
12
-month cliff vesting.
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).
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.
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.
As of December 27, 2025, there were
75,742,657
shares authorized and
9,081,164
shares available to be granted
under the 2025 Stock Incentive Plan and
2,075,000
shares authorized and
324,753
shares available to be granted
under the 2023 Non-Employee Director Stock Incentive Plan.
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
repurchases), differences in budgeted average outstanding shares (other
than those resulting from capital
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
126
transactions referred to above), restructuring and related 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 year
ended December 27, 2025, we did
no
t grant any stock options.
Our consolidated statements of income reflect pre-tax share-based compensation
expense of $
39
million, $
39
million and $
39
million for the years ended December 27, 2025, December 28, 2024
and December 30, 2023,
respectively.
Total unrecognized compensation cost related to unvested awards as of December 27, 2025 was $
63
million, which
is expected to be recognized over a weighted-average period of approximately
2.5
years.
The weighted-average grant date fair value of stock-based awards granted
was $
75.78
, $
75.12
and $
76.43
per share
during the years ended December 27, 2025, December 28, 2024 and December
30, 2023, respectively.
We
record deferred income tax assets for awards that will result in
future income tax deductions based on the
amount of compensation cost recognized and our statutory tax rate in the
jurisdiction in which we will receive a
deduction.
Our 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 years ended
December 27, 2025, December 28, 2024 and December 30, 2023.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
127
The following table summarizes the stock option activity for the year
ended December 27, 2025:
Stock Options
Weighted Average
Aggregate
Weighted Average
Remaining Contractual
Intrinsic
Shares
Exercise Price
Life (in years)
Value
Outstanding at beginning of year
963,491
$
72.16
Granted
-
-
Exercised
(24,945)
62.71
Forfeited
(15,831)
81.75
Outstanding at end of year
922,715
$
72.26
5.6
$
7
Options exercisable at end of year
922,715
$
72.26
5.6
$
7
The following tables summarize the activity of our unvested RSUs for
the year ended December 27, 2025:
Time-Based Restricted Stock Units
Performance-Based Restricted Stock Units
Weighted Average
Weighted Average
Grant Date Fair
Grant Date Fair
Shares/Units
Value Per Share
Shares/Units
Value Per Share
Outstanding at beginning of period
1,685,550
$
72.90
389,111
$
75.98
Granted
592,716
75.18
251,287
75.30
Performance adjustment
n/a
n/a
(31,313)
76.20
Vested
(564,037)
66.54
(14,499)
84.04
Forfeited
(107,687)
77.10
(206,626)
77.33
Outstanding at end of period
1,606,542
$
75.69
387,960
$
75.89
The fair value of time and performance RSUs that vested was $
38
million and $
1
million, respectively, for the year
ended December 27, 2025; $
21
million and $
1
million, respectively, for the year ended December 28, 2024; and
$
27
million and $
38
million, respectively, for the year ended December 30, 2023.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
128
Note 19 – Employee Benefit Plans
Defined benefit plans
Certain of our employees in our international markets participate
in various noncontributory defined benefit plans.
These plans are managed to provide pension benefits to covered employees
in accordance with local regulations
and practices.
Our net unfunded liability for these plans are recorded
in accrued expenses: other; and other
liabilities within our consolidated balance sheets.
The following table presents the changes in projected benefit
obligations, plan assets, and the funded status of our defined benefit
pension plans:
Years
Ended
December 27,
December 28,
2025
2024
Obligation and funded status:
Change in benefit obligation
Projected benefit obligation, beginning of period
$
129
$
125
Service costs
4
4
Interest cost
3
3
Past service cost (credit)
-
(1)
Actuarial gain (loss)
(2)
6
Benefits paid
1
-
Participant contributions
2
2
Settlements and curtailments
(7)
(1)
Effect of foreign currency translation
16
(9)
Projected benefit obligation, end of period
$
146
$
129
Change in plan assets
Fair value of plan assets at beginning of period
$
90
$
86
Actual return on plan assets
1
3
Employer contributions
3
3
Plan participant contributions
2
2
Expected return on plan assets
3
3
Benefit received
4
1
Settlements
(6)
(2)
Effect of foreign currency translation
9
(6)
Fair value of plan assets at end of period
$
106
$
90
Unfunded status at end of period
$
40
$
39
The majority of our defined benefit plans are unfunded, with the exception
of one plan in one country where the
amount of assets exceeds the projected benefit obligation by approximately
$
8
million and $
8
million as of
December 27, 2025 and December 28, 2024, respectively.
At December 27, 2025 and December 28, 2024 the
accumulated benefit obligations were $
142
million and $
125
million, respectively.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
129
The following table provides the amounts recognized in our consolidated
balance sheets for our defined benefit
pension plans:
Years
Ended
December 27,
December 28,
2025
2024
Non-current assets
$
37
$
28
Current liabilities
(1)
(1)
Non-current liabilities
(76)
(68)
Accumulated other comprehensive loss, pre-tax
8
10
The following table provides the components of net periodic pension cost
for our defined benefit plans:
Years
Ended
December 27,
December 28,
December 30,
2025
2024
2023
Service cost
$
4
$
4
$
3
Interest cost
3
3
3
Expected return on plan assets
(3)
(3)
(3)
Employee contributions
(1)
(1)
(1)
Settlements
(1)
-
-
Net periodic pension cost
$
2
$
3
$
2
The following tables present the weighted-average actuarial assumptions
used to determine our pension benefit
obligation and our net periodic pension cost for the periods presented:
Years
Ended
December 27,
December 28,
Pension Benefit Obligation
2025
2024
Weighted average
discount rate
2.75
%
2.23
%
Years
Ended
December 27,
December 28,
December 30,
Net Periodic Pension Cost
2025
2024
2023
Discount rate-pension benefit
2.05
%
1.70
%
1.50
%
Expected return on plan assets
0.92
%
1.13
%
0.51
%
Rate of compensation increase
2.00
%
1.98
%
1.64
%
Pension increase rate
0.74
%
0.63
%
0.80
%
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
130
The following table presents the estimated pension benefit payments that
are payable to the plan’s participants as of
December 27, 2025:
Year
2026
$
8
2027
9
2028
9
2029
7
2030
8
2031 to 2035
52
Total
$
93
401(k) Plans
We offer
qualified 401(k) plans to substantially all domestic full-time employees.
As determined by our Board,
matching contributions to these plans generally do not exceed
100
% of the participants’ contributions up to
5
% of
their base compensation, subject to applicable legal limits.
Matching contributions are made in cash and are
allocated consistent with the participants’ investment elections on file, subject
to a
20
% allocation limit to the
Henry Schein Stock Fund.
Forfeitures attributable to participants whose employment terminates
prior to becoming
fully vested are reallocated as part of our ongoing matching contributions
and to offset administrative expenses of
the 401(k) plans.
Assets of the 401(k) and other defined contribution plans are held
in self-directed accounts enabling participants to
choose from various investment fund options.
Matching contributions related to these plans charged to operations
during the years ended December 27, 2025, December 28, 2024 and December
30, 2023 amounted to $
42
million,
$
48
million and $
50
million, respectively.
Within our consolidated statements of income, $
36
million, $
40
million,
and $
42
million, is included in selling, general and administrative; and $
6
million, $
8
million, and $
8
million is
included in cost of goods sold for the years ended December 27, 2025, December
28, 2024, and December 30,
2023, respectively.
Supplemental Executive Retirement Plan
We offer
an unfunded, non-qualified SERP to eligible employees.
This plan generally covers officers and certain
highly compensated employees after they have reached the maximum
IRS allowed pre-tax 401(k) contribution
limit.
Our contributions to this plan are equal to the 401(k) employee-elected
contribution percentage applied to
base compensation for the portion of the year in which such employees are
not eligible to make pre-tax
contributions to the 401(k) plan.
The amounts charged to operations during the years ended December 27, 2025,
December 28, 2024 and December 30, 2023 amounted to $
3
million, $
2
million and $
3
million, respectively.
The
charges are included in selling, general and administrative within our consolidated
statements of income.
Please
see
Note 13 – Derivatives and Hedging Activities
for additional information.
Deferred Compensation Plan
We
offer DCP to a select group of management or highly compensated employees
of the Company and certain
subsidiaries.
This plan allows for the elective deferral of base salary, bonus and/or commission compensation by
eligible employees.
The amounts charged to operations during the years ended December
27, 2025, December 28,
2024 and December 30, 2023 were approximately $
12
million, $
12
million and $
12
million, respectively.
The
charges are included in selling, general and administrative within our consolidated
statements of income.
Please
see
Note 13 – Derivatives and Hedging Activities
for additional information.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
131
Note 20 – 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.
ASC 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
years ended December 27, 2025,
December 28, 2024 and December 30, 2023, are presented in the following table:
December 27,
December 28,
December 30,
2025
2024
2023
Balance, beginning of period
$
806
$
864
$
576
Decrease in redeemable noncontrolling interests due to acquisitions of
noncontrolling interests in subsidiaries
(76)
(273)
(19)
Increase in redeemable noncontrolling interests due to business
acquisitions
86
171
326
Net income (loss) attributable to redeemable noncontrolling interests
(5)
(1)
6
Distributions declared, net of capital contributions
(18)
(50)
(19)
Effect of foreign currency translation gain (loss) attributable
to
redeemable noncontrolling interests
30
(24)
5
Change in fair value of redeemable securities
72
119
(11)
Balance, end of period
$
895
$
806
$
864
Note 21 – 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:
December 27,
December 28,
December 30,
2025
2024
2023
Attributable to redeemable noncontrolling interests:
Foreign currency translation adjustment
$
(26)
$
(56)
$
(32)
Attributable to noncontrolling interests:
Foreign currency translation adjustment
$
1
$
(1)
$
(1)
Attributable to Henry Schein, Inc.:
Foreign currency translation adjustment
$
(196)
$
(371)
$
(188)
Unrealized gain loss from hedging activities
(24)
-
(13)
Pension adjustment loss
(6)
(8)
(5)
Accumulated other comprehensive loss
$
(226)
$
(379)
$
(206)
Total Accumulated
other comprehensive loss
$
(251)
$
(436)
$
(239)
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
132
The following table summarizes the components of comprehensive income, net
of applicable taxes as follows:
December 27,
December 28,
December 30,
2025
2024
2023
Net income
$
419
$
398
$
436
Foreign currency translation gain (loss)
207
(207)
53
Tax effect
-
-
-
Foreign currency translation gain (loss)
207
(207)
53
Unrealized gain (loss) from hedging activities
(33)
18
(25)
Tax effect
9
(5)
7
Unrealized gain (loss) from hedging activities
(24)
13
(18)
Pension adjustment gain (loss)
5
(5)
(3)
Tax effect
(3)
2
-
Pension adjustment gain (loss)
2
(3)
(3)
Comprehensive income
$
604
$
201
$
468
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 years ended December 27, 2025, December 28,
2024 and December 30, 2023 was
primarily due to changes in foreign currency exchange rates of the Brazilian
Real, British Pound, Euro, Swiss
Franc, Israel Shekel, Canadian Dollar, Australian Dollar, and New Zealand Dollar.
The hedging gain (loss) during the years ended December 27, 2025, December
28, 2024, and December 30, 2023
was attributable to a net investment hedge.
See
Note 13 – Derivatives and Hedging Activities
for further
information.
The following table summarizes our total comprehensive income, net of
applicable taxes as follows:
December 27,
December 28,
December 30,
2025
2024
2023
Comprehensive income attributable to
Henry Schein, Inc.
$
551
$
217
$
443
Comprehensive income attributable to
noncontrolling interests
28
9
14
Comprehensive income (loss) attributable to
Redeemable noncontrolling interests
25
(25)
11
Comprehensive income
$
604
$
201
$
468
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
133
Note 22 – 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:
Years
Ended
December 27,
December 28,
December 30,
2025
2024
2023
Basic
120,813,977
126,788,997
130,618,990
Effect of dilutive securities:
Stock options and restricted stock units
903,899
990,231
1,129,181
Diluted
121,717,876
127,779,228
131,748,171
The number of antidilutive securities that were excluded from the calculation
of diluted weighted average common
shares outstanding are as follows:
Years
Ended
December 27,
December 28,
December 30,
2025
2024
2023
Stock options
396,052
406,676
424,695
Restricted stock units
6,200
9,287
15,040
Total anti-dilutive
securities excluded from earnings per share
computation
402,252
415,963
439,735
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
134
Note 23 – Supplemental Cash Flow Information
Cash paid for interest and income taxes was:
Years
Ended
December 27,
December 28,
December 30,
2025
2024
2023
Cash paid for interest
$
151
$
132
$
84
Cash paid for income taxes, net of refunds:
U.S. Federal
$
67
U.S. State and local
15
Foreign:
Switzerland
8
Other
38
Total
$
128
Years
Ended
December 28,
December 30,
2024
2023
Cash paid during the period for income taxes (prior to ASU 2023-09)
$
144
$
218
For the years ended December 27, 2025, December 28, 2024 and December
30, 2023, we had $
(33)
million, $
18
million and $
(25)
million of non-cash net unrealized gains (losses) related to hedging activities,
respectively.
See
Note 13 – Derivatives and Hedging Activities
for additional information related to our total return swap and
our
interest rate swap agreements.
There was approximately $
3
million, $
0
million and $
143
million of debt assumed as a part of the acquisitions for
the years ended December 27, 2025, December 28, 2024 and December 30, 2023,
respectively.
Debt assumed
during the year ended December 30, 2023 primarily relates to the acquisitions
of Biotech Dental and S.I.N.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
135
Note 24 – 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 years ended December 27, 2025, December 28, 2024 and December
30, 2023,
we
recorded $
31
million, $
31
million and $
31
million, respectively, within selling, general and administrative in our
consolidated statements of income,
in connection with costs related to this royalty agreement.
As of December 27,
2025 and December 28, 2024, Henry Schein One, LLC had a net payable balance
to Internet Brands of $
9
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 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 years ended December 27, 2025, December 28, 2024
and December 30, 2023, we recorded net
sales of $
56
million, $
52
million, and $
47
million respectively, to such entities.
During the years ended December
27, 2025, December 28, 2024 and December 30, 2023, we purchased
$
19
million, $
10
million and $
10
million
respectively, from such entities.
At December 27, 2025 and December 28, 2024, we had an aggregate
$
39
million
and $
35
million, respectively, due from our equity affiliates, and $
6
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.
Please see
Note 8 – Leases
for further information.
Table of Contents
Index to Financial Statements
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(in millions, except share and per share data)
136
Note 25 – 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 entered into a Strategic Partnership Agreement
with KKR (the “Agreement”).
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.
In addition, under the Agreement,
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.
In May 2025 we received
3,122,832
shares at an estimated fair value of $
224
million.
In July 2025, we received an additional
368,651
shares at an
estimated fair value of $
26
million, representing the final amount of shares to be received under
this accelerated
share repurchase program.
On November 4, 2025, the Company and KKR entered into an amendment
to the Agreement that increased the
beneficial ownership limit from
14.9
% to
19.9
% of the outstanding shares of the Company’s common stock that
KKR is permitted to acquire during the standstill period.
The standstill provisions, including the increased
ownership limit, continue in effect for a period of six months following the later
of the expiration of the term of the
Agreement and the date on which no KKR director appointed pursuant
to the Agreement is serving on the Board of
Directors.
Table of Contents
Index to Financial Statements
137
ITEM 9.
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
ITEM 9A.
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 annual 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 December 27,
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 December 27, 2025, and carried over from
prior quarters, when considered in
the aggregate, represents a material change in our internal control
over financial reporting.
The full integration of
certain acquisitions completed in the current and prior quarters will extend
beyond year-end and, therefore, we
excluded these acquisitions, which represents approximately 0.10% of
our total net sales, from our annual
assessment of internal control over financial reporting as of December
27, 2025, as permitted by related SEC staff
interpretive guidance for newly acquired businesses.
During the quarter ended December 27, 2025, we completed the acquisition
of a controlling interest of a Global
Distribution and Value-Added Services segment affiliate in Canada as well as the acquisition of a Global
Specialties Products segment business in Brazil.
Also, post-acquisition integration related activities continued for
businesses acquired during prior quarters within our Global Specialties Products
segment.
These acquisitions, the
majority of which utilize separate information and financial accounting
systems, have been included in our
consolidated financial statements since their respective dates of acquisition.
Additionally, during the quarter ended December 27, 2025, we continued systems implementation activities for the
phased roll-out of a new e-commerce system for our Global Distribution
and Value
-Added Services segment in the
U.S. and Canada.
Also, we completed systems implementation activity for migrating
many of our Global
Distribution and Value-Added Services, Global Specialty Products and Global Technology segment businesses
Company-wide onto an existing Human Capital Management
system.
Finally, we continued systems
implementation activities for upgrading the ERP business system for our Global
Distribution and Value-Added
Services segment in Australia and New Zealand.
All acquisitions, continued acquisition integrations, and systems
implementation activities involve necessary and
appropriate change-management controls that are considered in our quarterly
assessment of the design and
operating effectiveness of our internal control over financial reporting.
Management’s
Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting,
as such term is defined in Exchange Act Rule 13a-15(f).
Our internal control system is designed to provide
reasonable assurance to our management and Board regarding the preparation
and fair presentation of published
financial statements.
Under the supervision and with the participation of our management,
including our principal
Table of Contents
Index to Financial Statements
138
executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal
control over financial reporting based on the framework in Internal Control-Integrated
Framework (2013), updated
and reissued by the Committee of Sponsoring Organizations, or the COSO Framework.
Based on our evaluation
under the COSO Framework, our management concluded that our
internal control over financial reporting was
effective at a reasonable assurance level as of December 27, 2025.
The effectiveness of our internal control over financial reporting as of December 27,
2025, has been independently
audited by BDO USA, P.C., an independent registered public accounting firm and their attestation is included
herein.
Limitations of the Effectiveness of Internal Control
A control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance
that the objectives of the internal control system are met.
Because of the inherent limitations of any internal control
system, no evaluation of controls can provide absolute assurance that
all control issues, if any, within a company
have been detected.
Table of Contents
Index to Financial Statements
139
Report of Independent Registered Public Accounting Firm
Shareholders and Board of Directors
Henry Schein, Inc.
Melville, New York
Opinion on Internal Control over Financial Reporting
We
have audited Henry
Schein, Inc.’s
(the “Company’s”)
internal control over
financial reporting as
of December
27, 2025, based on
criteria established in Internal Control
– Integrated Framework (2013) issued
by the Committee
of
Sponsoring
Organizations
of
the
Treadway
Commission
(the
“COSO
criteria”).
In
our
opinion,
the
Company
maintained,
in
all
material
respects,
effective
internal
control
over
financial
reporting
as
of
December
27,
2025,
based on the COSO criteria.
We
also
have
audited,
in
accordance
with
the
standards
of
the
Public
Company
Accounting
Oversight
Board
(United States) (PCAOB), the consolidated balance sheets of the Company as of December 27, 2025 and December
28,
2024,
the
related
consolidated
statements
of
income
and
comprehensive
income,
changes
in
stockholders’
equity, and cash
flows for each of the three years in the
period ended December 27, 2025, and the related
notes and
our report dated February 24, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s
management is
responsible for
maintaining effective
internal control
over financial
reporting and
for
its
assessment
of
the
effectiveness
of
internal
control
over
financial
reporting,
included
in
the
accompanying
Item
9A, Management’s
Report on
Internal Control
over
Financial Reporting.
Our responsibility
is
to
express an
opinion on the
Company’s internal
control over financial
reporting based on
our audit. We
are a public
accounting
firm
registered
with
the
PCAOB and
are
required
to
be
independent
with
respect
to
the
Company in
accordance
with
U.S.
federal
securities
laws
and
the
applicable
rules
and
regulations
of
the
Securities
and
Exchange
Commission and the PCAOB.
We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB.
Those standards require
that we plan
and perform the
audit to
obtain reasonable assurance
about whether effective
internal
control
over
financial
reporting
was
maintained
in
all
material
respects.
Our
audit
included
obtaining
an
understanding
of
internal
control
over
financial
reporting,
assessing
the
risk
that
a
material
weakness
exists,
and
testing
and
evaluating
the
design
and
operating
effectiveness
of
internal
control
based
on
the
assessed
risk.
Our
audit also included performing
such other procedures as we
considered necessary in the
circumstances. We
believe
that our audit provides a reasonable basis for our opinion.
As indicated in
the accompanying Item
9A, Controls and
Procedures, management’s
assessment of and
conclusion
on
the
effectiveness
of
internal
control
over
financial
reporting
did
not
include
the
internal
controls
of
certain
entities
acquired
in
2025
(“the
2025
Acquisitions”),
which
are
included
in
the
consolidated
balance
sheet
of
the
Company as of December 27,
2025, and the related consolidated
statements of income and comprehensive income,
changes
in
stockholders’
equity,
and
cash
flows
for
the
year
then
ended. The
2025
Acquisitions
constituted
approximately
0.10%
of
total
net
sales
for
the
year
ended
December
27,
2025.
Management
did
not
assess
the
effectiveness
of
internal
control
over
financial
reporting
of
the
2025
Acquisitions
because
of
the
timing
of
the
acquisitions
which
were
completed
during
the
2025
fiscal
year.
Our
audit
of
internal
control
over
financial
reporting of
the Company
also did
not include
an evaluation
of the
internal control
over financial
reporting of
the
2025 Acquisitions.
Definition and Limitations of Internal Control over Financial Reporting
A
company’s
internal
control
over
financial
reporting
is
a
process
designed
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
principles.
A
company’s
internal
control
over
financial
reporting
includes
those
policies
and
procedures
that
(1)
pertain
to
the
maintenance
of
records
that,
in
reasonable
detail,
accurately and
fairly reflect
the transactions
and dispositions
of the
assets of
the company;
(2) provide
reasonable
Table of Contents
Index to Financial Statements
140
assurance
that
transactions
are
recorded
as
necessary
to
permit
preparation
of
financial
statements
in
accordance
with generally
accepted accounting
principles, and
that receipts
and expenditures
of the
company are
being made
only
in
accordance with
authorizations of
management and
directors of
the
company; and
(3) provide
reasonable
assurance
regarding
prevention
or
timely
detection
of
unauthorized
acquisition,
use,
or
disposition
of
the
company’s assets that could have a material effect on the financial statements.
Because
of
its
inherent
limitations,
internal
control
over
financial
reporting
may
not
prevent
or
detect
misstatements.
Also,
projections
of
any
evaluation
of
effectiveness
to
future
periods
are
subject
to
the
risk
that
controls
may
become
inadequate
because
of
changes
in
conditions,
or
that
the
degree
of
compliance
with
the
policies or procedures may deteriorate.
/s/ BDO USA, P.C.
New York
,
New York
February 24, 2026
Table of Contents
Index to Financial Statements
141
ITEM 9B.
Other Information
No
t applicable.
ITEM 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART
III
ITEM 10.
Directors, Executive Officers and Corporate Governance
Information required by this item regarding our directors and executive
officers and our corporate governance is
hereby incorporated by reference to the Section entitled “Election of Directors,”
with respect to directors, and the
first paragraph of the Section entitled “Corporate Governance - Board
of Directors Meetings and Committees -
Audit Committee,” with respect to corporate governance, in each case
in our definitive 2026 Proxy Statement to be
filed pursuant to Regulation 14A and to the Section entitled “Information
about our Executive Officers” in Part I of
this report, with respect to executive officers.
There have been no changes to the procedures by which stockholders
may recommend nominees to our Board since
our last disclosure of such procedures, which appeared in our definitive
2025 Proxy Statement filed pursuant to
Regulation 14A on April 9, 2025.
Information required by this item concerning compliance with Section
16(a) of the Securities Exchange Act of
1934 is hereby incorporated by reference to the Section entitled
“Delinquent Section 16(a) Reports” in our
definitive 2026 Proxy Statement to be filed pursuant to Regulation 14A,
to the extent responsive disclosure is
required.
We have adopted a Code of Ethics that applies to our Chief Executive Officer, Chief Financial Officer, Chief
Accounting Officer and Controller.
We make available free of charge through our Internet website,
www.henryschein.com,
under the “About Henry Schein--Corporate Governance
Highlights” caption, our Code of
Ethics.
We intend to disclose on our Web
site any amendment to, or waiver of, a provision of the Code
of Ethics.
The Company
has
adopted an insider trading policy, and accompanying procedures, applicable to all of our TSMs
and members of our Board of Directors, which we believe is reasonably
designed to promote compliance with
insider trading laws, rules and regulations, and Nasdaq listing standards.
Our insider trading policy, which is filed
as Exhibit 19.1 to this Annual Report on Form 10-K, prohibits our TSMs from
trading in securities of the Company
while in possession of material, non-public information, and, among other
things, requires that designated
individuals holding certain positions only transact in Company securities
during an open window period (with
appropriate preclearance for members of our Executive Management
Committee and Board of Directors), subject to
limited exceptions.
The Company also requires periodic training for certain senior officers and others likely
to
learn material, non-public information in the course of their job duties.
The Company also has a practice that
requires that any transactions by the Company in its securities
are pre-cleared by appropriate members of its
General Counsel’s office.
ITEM 11.
Executive Compensation
The information required by this item is hereby incorporated by reference
to the Sections
entitled “Compensation
Discussion and Analysis,” “Compensation Committee Report” (which
information shall be deemed furnished in
this Annual Report on Form 10-K), “Executive and Director Compensation” and
“Compensation Committee
Interlocks and Insider Participation” in our definitive 2026 Proxy Statement
to be filed pursuant to Regulation 14A.
Table of Contents
Index to Financial Statements
142
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder
Matters
We maintain several stock incentive plans for the benefit of certain officers, directors and employees.
All active
plans have been approved by our stockholders.
Descriptions of these plans appear in the notes to our consolidated
financial statements.
The following table summarizes information relating to these plans as
of December 27, 2025:
Number of Common
Shares to be Issued Upon
Weighted-
Average
Number of Common
Exercise of Outstanding
Exercise Price of
Shares Available
for
Plan Category
Options and Rights
Outstanding Options
Future Issuances
Plans Approved by Stockholders
-
$
-
9,405,917
Plans Not Approved by Stockholders
-
-
-
Total
-
$
-
9,405,917
The other information required by this item is hereby incorporated by
reference to the Section entitled “Security
Ownership of Certain Beneficial Owners and Management” in our definitive 2026
Proxy Statement to be filed
pursuant to Regulation 14A.
ITEM 13.
Certain Relationships and Related Transactions, and Director Independence
The information required by this item is hereby incorporated by reference
to the Section entitled “Certain
Relationships and Related Transactions” and “Corporate Governance – Board of Directors Meetings and
Committees – Independent Directors” in our definitive 2026 Proxy Statement
to be filed pursuant to Regulation
14A.
ITEM 14.
Principal Accounting Fees and Services
The information required by this item is hereby incorporated by reference
to the Section entitled “Independent
Registered Public Accounting Firm Fees and Pre-Approval Policies and
Procedures” in our definitive 2026 Proxy
Statement to be filed pursuant to Regulation 14A.
PART
IV
ITEM 15.
Exhibits, Financial Statement Schedules
(a)
List of Documents Filed as a Part of This Report:
1.
Financial Statements:
Our Consolidated Financial Statements filed as a part of this report
are listed on the index on
Page 69.
2.
Index to Exhibits:
See exhibits listed under Item 15(b) below.
Table of Contents
Index to Financial Statements
143
(b) Exhibits
Second Amended and Restated Certificate of Incorporation of Henry Schein, Inc.
(Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on June
Fifth Amended and Restated By-Laws of Henry Schein, Inc., effective January 10, 2026.
(Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on
Third Amended and Restated Multicurrency Master Note Purchase Agreement, dated as of
October 20, 2021, by and among us, Metropolitan Life Insurance Company, MetLife
Investment Management, LLC and each MetLife affiliate which becomes party thereto.
(Incorporated by reference to Exhibit 4.4 to our Current Report on Form 8-K filed on
First Amendment to the Third Amended and Restated Multicurrency Master Note Purchase
Agreement, dated as of December 19, 2025, by and among us, Metropolitan Life Insurance
Company, MetLife Investment Management, LLC and each affiliate thereof party thereto.
(Incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K filed on
Third Amended and Restated Master Note Facility, dated as of October 20, 2021, by and
among us, NYL Investors LLC and each New York Life affiliate which becomes party
thereto. (Incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K filed
First Amendment to the Third Amended and Restated Master Note Facility, dated as of
December 19, 2025, by and among us, NYL Investors LLC and each affiliate thereof party
thereto. (Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed
Third Amended and Restated Multicurrency Private Shelf Agreement, dated as of October
20, 2021, by and among us, PGIM, Inc. and each Prudential affiliate which becomes party
thereto. (Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed
First Amendment to the Third Amended and Restated Multicurrency Private Shelf
Agreement, dated as of December 19, 2025, by and among us, PGIM, Inc. and each
affiliate thereof party thereto. (Incorporated by reference to Exhibit 4.1 to our Current
Report on Form 8-K filed on December 23, 2025.)*
Multicurrency Private Shelf Agreement, dated as of October 20, 2021, by and among us,
AIG Asset Management (U.S.), LLC and each AIG affiliate which becomes party thereto.
(Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed on
First Amendment to the Multicurrency Private Shelf Agreement, dated as of December 19,
2025, by and among us, Corebridge Institutional Investors (U.S.), LLC (formerly AIG) and
each affiliate thereof party thereto. (Incorporated by reference to Exhibit 4.4 to our
Current Report on Form 8-K filed on December 23, 2025.)*
Description of Securities. (Incorporated by reference to Exhibit 4.5 to our Annual Report
on Form 10-K for the fiscal year ended December 25, 2021 filed on February 15, 2022.)
Henry Schein, Inc. 2020 Stock Incentive Plan, as amended and restated effective as of May
21, 2020. (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K
Table of Contents
Index to Financial Statements
144
Form of 2021 Stock Option Agreement pursuant to the Henry Schein, Inc. 2020 Stock
Incentive Plan (as amended and restated effective as of May 21, 2020). (Incorporated by
reference to Exhibit 10.1 to our Current Report on Form 8-K filed on March 8, 2021.)**
Form of 2021 Restricted Stock Unit Agreement for time-based restricted stock unit awards
pursuant to the Henry Schein, Inc. 2020 Stock Incentive Plan (as amended and restated
effective as of May 21, 2020). (Incorporated by reference to Exhibit 10.1 to our Quarterly
Report on Form 10-Q for the fiscal quarter ended March 26, 2022 filed on May 3, 2022.)**
Form of 2022 Restricted Stock Unit Agreement for performance-based restricted stock unit
awards pursuant to the Henry Schein, Inc. 2020 Stock Incentive Plan (as amended and
restated effective as of May 21, 2020). (Incorporated by reference to Exhibit 10.2 to our
Quarterly Report on Form 10-Q for the fiscal quarter ended March 26, 2022 filed on May
Form of 2024 Restricted Stock Unit Agreement for time-based restricted stock unit awards
pursuant to the Henry Schein, Inc. 2020 Stock Incentive Plan (as amended and restated
effective as of May 21, 2020). (Incorporated by reference to Exhibit 10.2 to our Quarterly
Report on Form 10-Q for the fiscal quarter ended March 30, 2024 filed on May 7, 2024.)**
Form of 2024 Restricted Stock Unit Agreement for performance-based restricted stock unit
awards pursuant to the Henry Schein, Inc. 2020 Stock Incentive Plan (as amended and
restated effective as of May 21, 2020). (Incorporated by reference to Exhibit 10.3 to our
Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2024 filed on May
Henry Schein, Inc. 2024 Stock Incentive Plan, as amended and restated effective as of
May 21, 2024. (Incorporated by reference to Exhibit 10.1 to our Current Report on Form
Henry Schein, Inc. 2015 Non-Employee Director Stock Incentive Plan. (Incorporated by
reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended
June 27, 2015 filed on July 29, 2015.)**
Form of 2018 Restricted Stock Unit Agreement for time-based restricted stock unit awards
pursuant to the Henry Schein, Inc. 2015 Non-Employee Director Stock Incentive Plan (as
amended and restated effective as of June 22, 2015). (Incorporated by reference to Exhibit
10.6 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2018
Henry Schein, Inc. 2023 Non-Employee Director Stock Incentive Plan, as amended and
restated effective as of May 23, 2023. (Incorporated by reference to Exhibit 10.1 to our
Current Report on Form 8-K filed on May 25, 2023.)**
Form of 2024 Restricted Stock Unit Agreement for time-based restricted stock unit awards
pursuant to the Henry Schein, Inc. 2023 Non-Employee Director Stock Incentive Plan (as
amended and restated effective as of May 23, 2023). (Incorporated by reference to Exhibit
10.4 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2024
Henry Schein, Inc. Supplemental Executive Retirement Plan, amended and restated effective
September 1, 2025. (Incorporated by reference to Exhibit 10.3 to our Quarterly Report on
Form 10-Q for the fiscal quarter ended June 28, 2025 filed on August 5, 2025.)**
Henry Schein, Inc. 2004 Employee Stock Purchase Plan, effective as of May 25, 2004.
(Incorporated by reference to Exhibit D to our definitive 2004 Proxy Statement on
Schedule 14A, filed on April 27, 2004.)**
Table of Contents
Index to Financial Statements
145
Henry Schein, Inc. Non-Employee Director Deferred Compensation Plan, amended
and restated effective as of January 1, 2005. (Incorporated by reference to Exhibit
10.11 to our Annual Report on Form 10-K for the fiscal year ended December 27,
2008 filed on February 24, 2009.)**
Henry Schein, Inc. Deferred Compensation Plan, as amended and restated effective as of
November 14, 2023. (Incorporated by reference to Exhibit 10.1 to our Current Report on
Form 8-K filed on November 16, 2023.)**
Henry Schein, Inc. Incentive Plan and Plan Summary, effective as of January 1, 2025.
(Incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the
fiscal quarter ended March 29, 2025 filed on May 5, 2025.)**
Amended and Restated Employment Agreement dated as of November 28, 2022, by and
between Henry Schein, Inc. and Stanley M. Bergman. (Incorporated by reference to
Exhibit 10.1 to our Current Report on Form 8-K filed on November 29, 2022.)**
Letter Agreement dated December 23, 2025 to the Amended and Restated Employment
Agreement dated as of November 28, 2022, by and between Henry Schein, Inc. and
Stanley M. Bergman. (Incorporated by reference to Exhibit 10.1 to our Current Report on
Form 8-K filed on December 23, 2025.)**
Employment Agreement dated as of January 10, 2026, by and between Henry Schein, Inc.
and Frederick M. Lowery. (Incorporated by reference to Exhibit 10.1 to our Current
Report on Form 8-K filed on January 12, 2026.)**
Form of Restricted Stock Unit Agreement (CEO Sign-On RSU Award), by and between
Henry Schein, Inc. and Frederick M. Lowery, pursuant to the Henry Schein, Inc. 2024
Stock Incentive Plan. (Incorporated by reference to Exhibit 10.2 to our Current Report on
Form 8-K filed on January 12, 2026.)**
Form of Amended and Restated Change in Control Agreement dated December 12, 2008
between us and certain executive officers who are a party thereto (Michael S. Ettinger and
Mark Mlotek, respectively). (Incorporated by reference to Exhibit 10.15 to our Annual
Report on Form 10-K for the fiscal year ended December 27, 2008 filed on February 24,
Form of Amendment to Amended and Restated Change in Control Agreement effective
January 1, 2012 between us and certain executive officers who are a party thereto (Michael
S. Ettinger and Mark Mlotek, respectively). (Incorporated by reference to Exhibit 10.1 to
our Current Report on Form 8-K filed on January 20, 2012.)**
Amended and Restated Henry Schein, Inc. Executive Change in Control Plan (Andrea
Albertini and Ronald N. South). (Incorporated by reference to Exhibit 10.2 to our Current
Report on Form 8-K filed on April 15, 2025.)**
Form of Indemnification Agreement between us and certain directors and executive officers
who are a party thereto (Mohamed Ali, William K. “Dan” Daniel, Deborah Derby, Carole T.
Faig, Joseph L. Herring, Robert J. Hombach, Kurt P. Kuehn, Philip A. Laskawy, Max Lin,
Anne H. Margulies, Scott P. Serota, Bradley T. Sheares, Ph.D., Reed V. Tuckson, M.D.,
FACP, Andrea Albertini, Stanley M. Bergman, Michael S. Ettinger, Mark E. Mlotek and
Ronald N. South, respectively). (Incorporated by reference to Exhibit 10.1 to our Quarterly
Report on Form 10-Q for the fiscal quarter ended September 26, 2015 filed on November 4,
Table of Contents
Index to Financial Statements
146
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, 2025.)
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.)
Receivables Purchase Agreement, dated as of April 17, 2013, by and among us, as
servicer, HSFR, Inc., as seller, The Bank of Tokyo-Mitsubishi UFJ, Ltd., as agent and the
various purchaser groups from time to time party thereto. (Incorporated by reference to
Exhibit 10.1 to our Current Report on Form 8-K filed on April 19, 2013.)
Amendment No. 1 dated as of September 22, 2014 to the Receivables Purchase
Agreement, dated as of April 17, 2013, by and among us, as servicer, HSFR, Inc., as seller,
The Bank of Tokyo-Mitsubishi UFJ, LTD., New York Branch, as agent and the various
purchaser groups from time to time party thereto. (Incorporated by reference to Exhibit
10.2 to our Current Report on Form 8-K filed on September 26, 2014.)
Amendment No. 2 dated as of April 17, 2015 to Receivables Purchase Agreement, dated as
of April 17, 2013, by and among us, as performance guarantor, HSFR, Inc., as seller, The
Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as agent and the various
purchaser groups party thereto. (Incorporated by reference to Exhibit 10.1 to our Quarterly
Report on Form 10-Q for the fiscal quarter ended June 25, 2016 filed on August 4, 2016.)
Amendment No. 3 dated as of June 1, 2016 to Receivables Purchase Agreement, dated as
of April 17, 2013, by and among us, as performance guarantor, HSFR, Inc., as seller, The
Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as agent and the various
purchaser groups party thereto. (Incorporated by reference to Exhibit 10.2 to our Quarterly
Report on Form 10-Q for the fiscal quarter ended June 25, 2016 filed on August 4, 2016.)
Amendment No. 4 dated as of July 6, 2017 to Receivables Purchase Agreement, dated as
of April 17, 2013, by and among us, as performance guarantor, HSFR, Inc., as seller, The
Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as agent and the various
purchaser groups party thereto. (Incorporated by reference to Exhibit 10.1 to our Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 2017 filed on November
Amendment No. 5 dated as of May 13, 2019 to Receivables Purchase Agreement, dated as
of April 17, 2013, by and among us, as performance guarantor, HSFR, Inc., as seller, The
Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as agent and the various
purchaser groups party thereto. (Incorporated by reference to Exhibit 10.1 to our Quarterly
Report on Form 10-Q for the fiscal quarter ended June 29, 2019 filed on August 6, 2019.)
Limited Waiver dated as of May 22, 2020 to Receivables Purchase Agreement, dated as of
April 17, 2013, by and among us, as servicer, HSFR, Inc., as seller, lender, as agent and the
various purchaser groups from time to time party thereto, as amended. (Incorporated by
reference to Exhibit 10.7 to our Quarterly Report on Form 10-Q for the fiscal quarter ended
June 27, 2020 filed on August 4, 2020.)
Table of Contents
Index to Financial Statements
147
Amendment No. 6 dated as of June 22, 2020 to the Receivables Purchase Agreement,
dated as of April 17, 2013, by and among us, as servicer, HSFR, Inc., as seller, lender, as
agent and the various purchaser groups from time to time party thereto. (Incorporated by
reference to Exhibit 10.1 to our Current Report on Form 8-K filed on June 25, 2020.)
Amendment No. 7 dated as of October 20, 2021 to Receivables Purchase Agreement, dated
as of April 17, 2013, by and among us, as servicer, HSFR, Inc., as seller, lender, as agent
and the various purchaser groups from time to time party thereto. (Incorporated by
reference to Exhibit 10.1 to our Current Report on Form 8-K filed on October 21, 2021.)
Amendment No. 8 dated as of December 15, 2022 to Receivables Purchase Agreement,
dated as of April 17, 2013, by and among us, as servicer, HSFR, Inc., as seller, lender, as
agent and the various purchaser groups from time to time party thereto. (Incorporated by
reference to Exhibit 10.45 to our Annual Report on Form 10-K for the fiscal year ended
December 31, 2022 filed on February 21, 2023.)
Omnibus Amendment No. 1, dated July 22, 2013, to Receivables Purchase Agreement
dated as of April 17, 2013, by and among us, as servicer, HSFR, Inc., as seller, The Bank
of Tokyo-Mitsubishi UFJ, Ltd., as agent, and the various purchaser groups from time to
time party thereto and Receivables Sales Agreement, dated as of April 17, 2013, by and
among us, certain of our wholly-owned subsidiaries and HSFR, Inc., as
buyer. (Incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form 10-Q
for the fiscal quarter ended June 29, 2013 filed on August 6, 2013.)
Omnibus Amendment No. 2, dated April 21, 2014, to Receivables Purchase Agreement
dated as of April 17, 2013, as amended, by and among us, as servicer, HSFR, Inc., as
seller, The Bank of Tokyo-Mitsubishi UFJ, Ltd., as agent, and the various purchaser
groups from time to time party thereto and Receivables Sales Agreement, dated as of April
17, 2013, by and among us, certain of our wholly-owned subsidiaries and HSFR, Inc., as
buyer. (Incorporated by reference to Exhibit 10.8 to our Quarterly Report on Form 10-Q
for the fiscal quarter ended March 29, 2014 filed on May 6, 2014.)
Receivables Sale Agreement, dated as of April 17, 2013, by and among us, certain of our
wholly-owned subsidiaries and HSFR, Inc., as buyer. (Incorporated by reference to
Exhibit 10.2 to our Current Report on Form 8-K filed on April 19, 2013.)
Strategic Partnership Agreement, dated January 29, 2025, by and between us and KKR
Hawaii Aggregator L.P. (Incorporated by reference to Exhibit 10.1 to our Current Report
on Form 8-K filed on January 29, 2025.)
Letter Agreement on Voting Commitment by and between us and KKR Hawaii Aggregator
L.P. (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on
Letter Agreement to Remove Voting Commitment by and between us and KKR Hawaii
Aggregator L.P. (Incorporated by reference to Exhibit 10.1 to our Current Report on Form
Amendment No. 1 to the Strategic Partnership Agreement, dated November 4,2025, by and
between us and KKR Hawaii Aggregator L.P. (Incorporated by reference to Exhibit 10.1 to
our Quarterly Report on Form 10-Q for the fiscal quarter ended September 27, 2025 filed
Form of Registration Rights Agreement by and between us and KKR Hawaii Aggregator
L.P. (Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on
Table of Contents
Index to Financial Statements
148
Form of Offer Letter (Ronald N. South).**+
Employment Agreement dated as of August 23, 2023, by and between Henry Schein, Inc.
Global Mobility Letter dated as of August 23, 2023, by and between Henry Schein, Inc. and
Restrictive Covenant, Confidentiality and Inventions Agreement dated as of August 23,
2023, by and between Henry Schein, Inc. and Andrea Albertini.**+
Henry Schein, Inc. Insider Trading Policy (amended and restated as of January 1, 2025).
(Incorporated by reference to Exhibit 19.1 to our Annual Report on Form 10-K for the fiscal
year ended December 28, 2024 filed on February 25, 2025.)
Certification of our Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Certification of our Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Certification of our Chief Executive Officer and Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.+
Henry Schein, Inc. Dodd-Frank Clawback Policy, effective as of December 1, 2023.
(Incorporated by reference to Exhibit 97.1 to our Annual Report on Form 10-K for the
fiscal year ended December 30, 2023 filed on February 28, 2024.)**
Amendment No. 9 dated as of December 20, 2023 to Receivables Purchase Agreement,
dated as of April 17, 2013, by and among us, as servicer, HSFR, Inc., as seller, lender, as
agent and the various purchaser groups from time to time party thereto. (Incorporated by
reference to Exhibit 99.8 to our Annual Report on Form 10-K for the fiscal year ended
December 30, 2023 filed on February 28, 2024.)
Amendment No. 10 dated as of February 23, 2024 to Receivables Purchase Agreement,
dated as of April 17, 2013, by and among us, as servicer, HSFR, Inc., as seller, lender, as
agent and the various purchaser groups from time to time party thereto. (Incorporated by
reference to Exhibit 99.9 to our Annual Report on Form 10-K for the fiscal year ended
December 30, 2023 filed on February 28, 2024.)
Amendment No. 11 dated as of May 17, 2024 to Receivables Purchase Agreement, dated
as of April 17, 2013, by and among us, as servicer, HSFR, Inc., as seller, lender, as agent
and the various purchaser groups from time to time party thereto. (Incorporated by
reference to Exhibit 99.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended
June 29, 2024 filed on August 6, 2024.)
Amendment No. 12 dated as of December 6, 2024 to Receivables Purchase Agreement,
dated as of April 17, 2013, by and among us, as servicer, HSFR, Inc., as seller, lender, as
agent and the various purchaser groups from time to time party thereto. (Incorporated by
reference to Exhibit 99.4 to our Annual Report on Form 10-K for the fiscal year ended
December 28, 2024 filed on February 25, 2025.)
Amendment No. 1 to the Henry Schein, Inc. Supplemental Executive Retirement Plan,
amended and restated effective September 1, 2025.**+
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Index to Financial Statements
149
Form of 2025 Restricted Stock Unit Agreement for time-based restricted stock
unit awards pursuant to the Henry Schein, Inc. 2024 Stock Incentive Plan (as
amended and restated on May 21, 2024). (Incorporated by reference to Exhibit 99.2 to our
Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 2025 filed on May
Form of 2025 Restricted Stock Unit Agreement for performance-based
restricted stock unit awards pursuant to the Henry Schein, Inc. 2024 Stock
Incentive Plan (as amended and restated on May 21, 2024). (Incorporated by reference to
Exhibit 99.3 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 29,
Letter Agreement on Share Repurchases by and between us and KKR Hawaii
Aggregator L.P. (Incorporated by reference to Exhibit 99.1 to our Quarterly Report on
Form 10-Q for the fiscal quarter ended March 29, 2025 filed on May 5, 2025.)
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 Annual Report on Form 10-K for the year ended
December 27, 2025,
formatted in Inline XBRL (included within Exhibit 101
attachments).+
_________
+
Filed or furnished herewith.
*
Certain identified information has been excluded from the exhibit because
it is both (i) not material
and (ii) the type that the registrant treats as private or confidential.
**
Indicates management contract or compensatory plan or agreement.
ITEM 16.
Form 10-K Summary
None.
Table of Contents
Index to Financial Statements
150
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By: /s/ STANLEY M. BERGMAN
Stanley M. Bergman
Chairman and Chief Executive Officer
February 24, 2026
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Signature
Capacity
Date
/s/ STANLEY M. BERGMAN
Chairman, Chief Executive Officer
February 24, 2026
Stanley M. Bergman
and Director (principal executive officer)
/s/ RONALD N. SOUTH
Senior Vice President, Chief
Financial Officer
February 24, 2026
Ronald N. South
(principal financial and accounting officer)
/s/ MOHAMAD ALI
Director
February 24, 2026
Mohamad Ali
/s/ WILLIAM K. DANIEL
Director
February 24, 2026
William K. Daniel
/s/ DEBORAH DERBY
Director
February 24, 2026
Deborah Derby
/s/ CAROLE T. FAIG
Director
February 24, 2026
Carole T. Faig
/s/ JOSEPH L. HERRING
Director
February 24, 2026
Joseph L. Herring
/s/ ROBERT J. HOMBACH
Director
February 24, 2026
Robert J. Hombach
/s/ KURT P.
KUEHN
Director
February 24, 2026
Kurt P.
Kuehn
/s/ PHILIP A. LASKAWY
Director
February 24, 2026
Philip A. Laskawy
/s/ MAX LIN
Director
February 24, 2026
Max Lin
/s/ ANNE H. MARGULIES
Director
February 24, 2026
Anne H. Margulies
/s/ SCOTT SEROTA
Director
February 24, 2026
Scott Serota
/s/ BRADLEY T. SHEARES,
PH.D.
Director
February 24, 2026
Bradley T. Sheares,
Ph.D.
/s/ REED V.
TUCKSON, M.D., FACP
Director
February 24, 2026
Reed V.
Tuckson, M.D., FACP
HTML
Exhibit 10.45
[date]
[name]
[address]
Dear [name]:
On behalf of Henry Schein, Inc. (the “Company”), this letter will serve to confirm our offer to you of the position of [title], reporting to [name], the Company’s [title].
Below I have outlined the compensation and benefit components of our offer:
| 1. | Base salary of $[xx] per annum, payable on a bi-weekly basis. You will<br>be eligible for your first salary review as of the end of March 20[xx]. |
|---|---|
| 2. | For the balance of 20[xx], you will be eligible for an annual target bonus of up to [xx]% based on your<br>achievement of agreed upon goals and objectives established with [name]. [For 20[xx], we will guarantee $[xx] of the bonus which will be pro-rated based upon your start date. This bonus is payable in March<br>20[xx]. Thereafter, ] [y]our goals, objectives and performance bonus targets will be developed on an annual, ongoing basis. |
| --- | --- |
| 3. | You will also be eligible to participate immediately in the Company’s 401(k) Retirement Plan and other<br>benefit programs including medical, dental, vision, life insurance, disability and other plans. A Benefits Program Summary is enclosed for your review. |
| --- | --- |
| 4. | [You will be eligible for the Company’s relocation package (guidelines attached), which relocation should<br>be undertaken within a reasonable time period after commencement of your employment with the Company. The relocation must be coordinated through the Company’s authorized outside relocation assistance firm. All reimbursable costs and/or items<br>for direct payment must be substantiated by actual receipts or other similar documentation.] |
| --- | --- |
| 5. | [So long as you are actively employed with the Company, within [xx] of your start date, you will receive a<br>Sign-On Bonus of $[xx], less appropriate tax withholdings.] [You will be entitled to a Sign-On Bonus of $[xx], less appropriate tax withholding once you complete [xx] of service.] If you leave the Company<br>within [xx] months of your start date, you will reimburse the Company for the entire Sign-On amount. |
| --- | --- |
| 6. | You will also be eligible to participate in Henry Schein’s Long Term Incentive (LTl) program. The LTl<br>program currently consists of awards of [type of equity award(s)]. Your first award, which will be made following [date], will have a grant-date expected value of at least $[xx], provided in equal dollar amounts of [type of equity award(s)]. The<br>actual number of [type of equity award(s)] will be determined on the grant date. The grant date is [xx]. In the future, you will be eligible to participate in the Company’s LTl program, or any successor equity award program offered by the<br>Company. |
| --- | --- |
| 7. | By your execution of this letter agreement in the space provided, and in consideration of your employment with<br>the Company and the compensation and benefit elements comprising such employment offer as set forth above, you acknowledge, covenant, understand and agree as follows: |
| --- | --- |
| a. | The Company’s policy of employment prohibits you from taking any confidential or proprietary information<br>with you from your current or any former employer, and you acknowledge that you have not done so and that the Company has actively discouraged you from doing so. |
| --- | --- |
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| b. | The Company’s policy of employment prohibits you from using any such confidential information to the<br>detriment of any former employer in anticipation of, or when you are actually in, the employ of the Company, and, accordingly, you may not use any proprietary or confidential documents or information from any prior employer while employed by the<br>Company. |
|---|---|
| c. | You represent that to the best of your knowledge, you do not have any written or oral employment or other<br>agreements with any previous employer or other entity which would prevent you from (i) fully and openly being employed by the Company, or (ii) giving your full time and best efforts to such employment, or (iii) actively and<br>aggressively pursuing your duties and responsibilities on behalf of the Company. |
| --- | --- |
| d. | If at any time or for any reason, after joining the Company, you should leave its employ, then for a period of<br>12 months thereafter, you will not solicit, interfere with or endeavor to cause (i) any employee of the Company to leave his or her employment with the Company, or (ii) any customer or client of the Company to cease doing business with the<br>Company or to do business with any business enterprise or entity which provides products or services that are competitive with those provided by the Company. |
| --- | --- |
| e. | During your employment with the Company and for a period of 12 months after your departure from the Company,<br>whether by resignation or termination for “cause” (as used herein, “cause” is defined as being terminated for (i) committing an act of fraud, dishonesty, embezzlement or misappropriation, or (ii) committing a crime<br>involving an act of moral turpitude, or (iii) materially failing to perform your duties as an employee of the Company), you will not, directly or indirectly, individually or as an employee, agent, owner, partner, joint venturer, shareholder of<br>more than two (2%) percent of stock, officer or director, whether for financial remuneration or not, engage or act in or on behalf of any business or entity which provides products or services that are competitive with those provided by the Company.<br> |
| --- | --- |
It is important to understand that our Company does not offer employment on a fixed term or guaranteed basis and the representations in this letter and those discussed in our meetings and phone conversations with you should not be construed in any manner as a proposed contract for any fixed term of employment. In addition, please note that the Company has a policy, when, as and if the Company deems it appropriate, of: a) verifying compensation representations made to it by offerees by requesting substantiating documentation of an offeree’s recent total annual compensation; b) validating academic and professional credentials; and c) validating prior work experience. Finally, you should know that our employment application process entails drug screening and criminal background investigation elements, as well as reference checks with business and professional associates of yours, and this offer of employment is contingent on the Company’s obtaining satisfactory reports with respect thereto.
Please contact me at your earliest convenience when you are in a position to respond to our offer and to discuss an expected start date. If you have any questions or desire further information, feel free to contact me at [xx].
Please acknowledge your acceptance of this offer by signing a copy of this letter and returning it to me.
We look forward to having you join Team Schein.
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| Henry Schein, Inc. |
|---|
| By: |
| Name: |
| Title: |
| Accepted by: |
| --- |
| Date |
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Exhibit 10.46
August 23, 2023
Dear Andrea:
On behalf of Henry Schein, Inc. (the “Company”), this letter will serve to confirm our offer to you of the position of CEO, International Distribution Group, Global Dental Equipment and Lab based out of our Melville, New York headquarters, and reporting to Stanley Bergman, Chairman and Chief Executive Officer, Henry Schein, Inc., effective September 1, 2023 (“Transition Date”).
Below I have outlined the compensation and benefit components of our offer:
Base Salary: $575,000 per annum, payable on a bi-weekly basis. Salary reviews for exempt professional employees are generally conducted annually in March of each year. You will be considered for a salary review in March 2024. You recognize that the Company retains the right to establish and modify compensation, benefits and working conditions for its employees, and for its various categories of employees, in its sole discretion.
**Annual Bonus:**You will be eligible for an annual target bonus of $402,500 based on your achievement of agreed upon goals and objectives established within 60 days of your Transition Date. Your goals, objectives and performance bonus targets will be developed on an annual, ongoing basis. In order to earn any annual bonus, you must be continuously employed from the date hereof through the date such bonus is paid, except as expressly provided below in the event the Company terminates your employment without cause (as defined below) prior to the fifth year anniversary of the Transition Date, or you and the Company cannot agree on a new position as set forth in the section entitled “Reassignment” below.
Total Annual Cash: $977,500
Annual LTIP: You will also be eligible to participate in the Company’s Annual Long Term Incentive (LTI) program. Your 2024 grant will have an estimated value of $900,000 and is expected to be granted in March 2024, subject to your continued employment from the date hereof until the date of grant. The LTI program currently consists of equity issuable in accordance with the Company’s 2023 Stock Incentive Plan. Future eligibility to participate in the Company’s LTI program, or any successor equity award program offered by the Company, is subject to the sole and absolute discretion of the Compensation Committee. The actual equity award, if any, will be determined on the grant date. All awards shall be subject to the terms and conditions of the LTI program and the agreements incident thereto and the discretion and approval of the Compensation Committee.
TotalAnnual Compensation (cash & equity): $1,877,500
Sign-On Equity Award: Your award, which will be made following the next quarterly Compensation Committee meeting following your Transition Date (subject to your continued employment from the date hereof through such grant date), will have a grant-date expected value of at least $750,000. The LTI program currently consists of equity issuable in accordance with the Company’s 2023 Stock Incentive Plan. Future eligibility to participate in the Company’s LTI program, or any successor equity award program offered by the Company, is subject to the sole and absolute discretion of the Compensation Committee. The actual equity award, if any, will be determined on the grant date. All awards shall be subject to the terms and conditions of the LTI program and the agreements incident thereto and the discretion and approval of the Compensation Committee. The grant date will be the second Friday of the last month of the Company’s fiscal quarter end; provided, however, if the Compensation Committee approves a grant after the second Friday of the last month of a fiscal quarter but prior to such fiscal quarter end, then such grant shall have a grant date of the second Friday of the last month of the following fiscal quarter.
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Relocation Bonus: You will receive a cash Relocation Bonus in the total amount of $1,500,000 payable in equal monthly installments of $31,250 over forty-eight (48) months beginning in September 2023, subject to your continued employment from the date hereof through each applicable payment date.
Other Relocation Expenses: You will be eligible to receive reimbursement for other relocation expenses as set forth in the accompanying Global Mobility Letter, dated August 23, 2023, and Relocation Policy, inclusive of any tax gross up consistent with Company practice (guidelines attached).
Reassignment: You may request a reassignment back to Europe after the second anniversary of the Transition Date and before the five (5) year anniversary of the Transition Date. The Company will try to accommodate your request at a compensation level commensurate for the new position. If the parties cannot reasonably agree on a new position in Europe within 6 months after your request, you will receive severance following your termination as set forth in “Termination” section below.
Termination: You acknowledge and agree that you are an employee at-will and that the Company may terminate your employment at any time, with or without Cause (as defined below). Upon termination by the Company for any reason, the Company shall have no obligation to you for any form of compensation or benefits, except as otherwise required by law or as expressly set forth in this paragraph, other than (a) unpaid salary earned or accrued through the date of termination, and (b) reimbursement of appropriately documented expenses incurred by you before the termination, to the extent that you would have been entitled to such reimbursement under the Company’s policies but for the termination of employment.
In the event that the Company terminates your employment without Cause (as defined below) either: (a) solely prior to the 5 year anniversary of the Transition Date, if you and the Company cannot agree on a new position as set forth in the section entitled “Reassignment” above; or (b) on or after the 5 year anniversary of the Transition Date you shall receive as severance, subject to the conditions provided herein: (1) continued base salary for eighteen months (the “Severance Period”) following the effective date of such termination, which shall be payable, subject to the following paragraph concerning Section 409A Compliance, in equal installments in accordance with the Company’s payroll practices beginning on the first payroll date after the 60^th^ day following your termination; (2) provided that you continue to live in the United States and make a timely election under COBRA, waiver of the applicable premium otherwise payable for COBRA continuation coverage for you (and, to the extent covered immediately prior to the date of your termination, your spouse and eligible dependents) for a period equal to the Severance Period (but in no event longer than the maximum COBRA period under applicable law) or if the Company determines that the waiving of the COBRA premiums would result in a violation of the Affordable Care Act, the nondiscrimination rules of Section 105(h)(2) of the Code or any other statute or regulation, then, in lieu thereof, you will receive monthly payments equal to the monthly “applicable premium,” as that term is defined under COBRA; and (3) your annual bonus target amount, payable subject to the following paragraph concerning Section 409A Compliance, at the time the Company pays annual bonuses to its active employees. All amounts provided for in this paragraph are only payable provided that you timely execute (and do not revoke) a general waiver and release agreement agreed to by you in a form provided and approved by the Company. These severance payments will be subject to all regular and customary payroll deductions. You understand that in the event the Company reemploys you during the period which the severance benefits are being paid, severance payments will cease after you have received severance pay for all the weeks you were not employed by the Company. You also understand in the event that you breach any other agreement with the Company, including any non-competition or other restrictive covenant agreement with the Company, all severance payments will cease and the Company shall have the right to recover any severance payments previously paid to you.
In the event that your employment is terminated by the Company without Cause (as defined below) solely prior to the 5 year anniversary of the Transition Date, the Company also will apply special pro-rata vesting consistent with the Company’s Rule of 70 guidelines with respect to any of your outstanding equity awards, subject to the terms and conditions of the Company’s applicable standard form agreement.
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Notwithstanding anything herein to the contrary, if you seek employment with or retention by any other company on or after the 5 year anniversary of the Transition Date, you shall inform the Company of your intention and, if applicable, shall seek permission from the Company to waive the restrictions of your Non-Compete, Non-Solicitation, Confidentiality and Inventions Agreement. Nothing herein shall be construed to require the Company to waive any such restrictions. If permission is granted or you accept employment with or retention by any other company, the Company will continue to provide you with the payments and benefits described in the second paragraph above under the heading “Termination”, except that the severance as set forth therein shall be calculated as follows: the base salary severance payments shall be reduced by the weekly amount paid to you by your new company.
For purposes of this letter agreement, “Cause” shall mean your: (1) fraud, intentional and substantial misrepresentation or similar malfeasance, committed in connection with the performance of your duties hereunder; (2) theft of Company and/or one of the Company’s affiliates property; (3) conviction of a felony or a crime involving moral turpitude whether or not related to your employment or entering a plea of guilty or nolo contendere (or similar plea) to a charge of such an offense; (4) use of alcohol to an extent that it interferes with the performance of your duties under this letter agreement or any unlawful controlled substance; (5) material violation of any express, lawful written direction of the Executive Committee of the Company or your manager or material violation of any written rule, regulation, policy or plan established by the Company and/or one of the Company’s affiliates from time to time that is directly brought to your attention and about which you are given a warning regarding the conduct of its employees and/or its business and which material violation you failed to address or cure within a reasonable time; (6) gross insubordination; (7) repeated or continued absence (amounting to five full business days consecutively) from work during normal business hours for reasons other than disability, sickness, approved vacation or other approved time off; (8) written misrepresentation of a material fact or omission of information necessary to make the information supplied not materially misleading in any application or other information provided by you to the Company or any representative of the Company in connection with your employment with the Company and/or selection for the position contemplated hereby; (9) the unauthorized and intentional disclosure of Confidential Information (as defined in the accompanying confidentiality, non-solicitation, non-compete and/or inventions agreement); or (10) the existence of any knowing material conflict between the interests of the Company, including any of the Company’s affiliates, and you that is not disclosed in writing by you to the Executive Committee of the Company within a reasonable time of the discovery of such conflict and approved in writing by the authority of the Executive Committee of the Company; provided, however, that “Cause” shall not be deemed to have occurred unless you have first received written notice of conduct complained of by the Company which specifically sets forth the conduct complained of and refers to this paragraph, and if such conduct is capable of being cured, you have failed to cure such conduct within a period of 30 days from the date of such notice.
Section 409A Compliance: Although the Company does not guarantee you any particular treatment related to the payments hereunder, it is intended that the payments and benefits herein shall be exempt from, or comply with, Section 409A of the Internal Revenue Code and the regulations and guidance promulgated thereunder (collectively “Section 409A”), and all provisions of the Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A. Notwithstanding anything herein to the contrary, in no event whatsoever shall the Company be liable for any taxes or penalties that may be imposed on you by Section 409A or any damages for failing to comply with Section 409A. Notwithstanding anything contained herein to the contrary, to the extent applicable, each and every payment made hereunder shall be treated as a separate and distinct payment and not as a series of payments. In no event shall you designate the tax year of the commencement of any payments or benefits hereunder and the Company shall determine the actual commencement date of payment of any payments or benefits hereunder. Notwithstanding the foregoing or anything else contained herein to the contrary, if you are a “specified employee” (determined in accordance with Section 409A), and if any payment or benefit provided for herein constitutes a “deferral of compensation” under Section 409A, then any such payment or benefit that is payable during the first 6 months following the date of separation from service shall be paid or provided to you in a lump sum cash payment to be made on the earlier of (x) your death (solely to the extent that any payment is required to be made following death), or (y) the first payroll date of the seventh calendar month immediately following the month in which the separation from service occurs. A termination of employment shall not be deemed to have occurred for purposes of any provision of this letter providing for the payment of any amounts or benefits that are subject to Section 409A, upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Section 409A and, for purposes of any such provision in this letter, references to a “resignation,” “termination,” “termination of employment,” or like terms shall mean separation from service. To the extent that any reimbursements payable pursuant to this letter agreement are subject to the provisions of Section 409A, (i) any such reimbursements payable to you pursuant to this letter agreement shall be paid to you no later than December 31^st^ of the year following the year in which the expense was incurred, (ii) the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, and (iii) your right to reimbursement under this letter agreement will not be subject to liquidation or exchange for another benefit.
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Directors and Officers Liability Insurance: You will be covered under the Company’s directors and officers liability insurance policies as set forth in the applicable policy documents.
401(k) Retirement Plan: You will also be eligible to participate immediately in the Company’s 401(k) Retirement Plan and other benefit programs including medical, dental, vision, life insurance, disability and other plans, subject to their terms and conditions. The 401(k) Savings Plan allows you to save money for retirement on a pretax basis and provides an annual matching contribution of up to 7% of your base pay. Please note that the 401(k) Savings Plan has an automatic enrollment feature, meaning that you will be automatically enrolled at a contribution rate of 3% if you do not opt out of the plan within 60 days of your hire date.
Supplemental Executive Retirement Plan (SERP): You will be eligible to participate in the Company’s Supplemental Executive Retirement Plan (SERP), subject to its terms and conditions, beginning in 2024. Under the current plan, the Company makes a contribution into the SERP equal to the amount by which your Base Compensation exceeds “Recognized Compensation” (currently $321,428 for 2023 which is subject to change by the IRS) multiplied by seven percent (7%).
Paid Time Off: You will be entitled to thirty (30) PTO days in your first year and subsequent year(s) of employment in accordance with the Company’s paid time off policy for other similarly situated employees of the Company, subject to the Company’s generally applicable policies related to PTO.
Clawback: You expressly agree and acknowledge that your cash and non-cash incentive compensation (whether provided under this letter or otherwise) shall be subject to the terms and conditions of the Company’s Incentive Compensation Recoupment Policy approved by the Company’s Board of Directors in March 2016 or any other clawback policy adopted by the Company.
Entire Agreement: This letter represents the entire agreement of the parties and shall supersede any and all previous contracts, arrangements or understandings between and among you, the Company and its affiliates, with respect to the subject matter, including, without limitation, the employment agreement between Henry Schein Krugg s.r.l. and you, dated October 9, 2013, as amended by the addendum, dated October 22, 2021.
It is important to understand that you will be employed “at-will,” that our Company does not offer employment on a fixed term or guaranteed basis and the representations in this letter and those discussed in our meetings and phone conversations with you should not be construed in any manner as a proposed contract for any fixed term of employment.
You will be required to execute a Non-Compete, Non-Solicitation, Confidentiality and Inventions agreement as a condition of your employment. This offer and your employment with the Company are contingent on your execution of this document as requested by the Company.
Please contact me at your earliest convenience when you are in a position to respond to our offer and to discuss an expected start date. If you have any questions or desire further information, feel free to contact me at [*** - personal information].
Please acknowledge your acceptance of this offer by signing a copy of this letter and returning it to me.
I look forward to having you join Team Schein in New York.
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| Very truly yours, |
|---|
| /s/ Lorelei McGlynn |
| Lorelei McGlynn<br><br><br>SVP & Chief Human Resources Officer |
| /s/ Andrea Albertini |
| --- |
| Andrea Albertini |
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August 23, 2023
Dear Andrea Albertini:
Congratulations on your upcoming international move. As part of the continuing development of your career at Henry Schein, we are pleased to share with you the details of your move. This letter confirms our mutual understanding of the terms and conditions applying to your move. The letter is neither intended, nor to be construed, as an employment contract of any type or as an undertaking by Henry Schein Inc, (the “Company”) and any of its subsidiaries. Your employment during the move, and the terms of this outline, are subject to the Company’s personnel policies, compensation programs and benefit plans. The Company reserves the right to modify the terms and conditions of your move due to changes in applicable Company policy.
Home City and Country: Bologna, Italy
Host City andCountry: New York, U.S.A.
Move Title: CEO, International Distribution Group, Global Dental Equipment and Lab
Estimated Move Effective Date: September 1, 2023
All move terms and conditions that apply to you are summarized in the Henry Schein Global Mobility Policy for a Local Permanent move. You are responsible to review and agree to both this letter and the policy document.
Your move is conditional upon the issue and maintenance of valid residency, work and/or any other permits necessary to legally reside and work in your host location as well as your acceptance of the terms and conditions outlined in this letter and in the policy detailed above. The move will be effective only after the Move Letter has been signed by both parties and other condition(s) of move have been met.
COMPENSATION AND BENEFITS
You will be placed on host country compensation and incentive target and will participate in the host country health care and retirement plans upon relocation. Additional benefits specific to your home/host location may apply and will be outlined in the attached provision summary. Your original hire date will be maintained and you will follow host country policies for vacation entitlement, work schedule and holidays.
Please refer to the Move Allowance Summary for specific details of your compensation and move related allowances and services.
Local Permanent Move Letter
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TSM EXPECTATIONS
During the course of your move, you may not engage in any employment or business enterprise that will in any way conflict with your service to, or the interests of, the Company. You will be required to comply with all applicable laws in the host country.
TAX POLICY & ASSISTANCE
You will be responsible for complying with any and all applicable income tax regulations in your home and host country and in any other countries where you are required to pay taxes. The Company will provide tax filing assistance through a designated tax services provider.
You will be responsible for all actual taxes (in all jurisdictions as applicable) on base compensation which includes the base salary, bonus and long-term incentives. For other move-related support elements that enable the relocation to the Host Country, along with elements to aid you during the move period, to the extent these move-related elements are taxable; Henry Schein will be responsible for the tax due on these items. Below is a list of the potential items for which you may be eligible to receive and which income and/or social taxes may be due that will be the responsibility of Henry Schein:
| • | Any taxable items you receive prior to the move (defined as the Pre-Move<br>phase) |
|---|---|
| • | Move-related support elements you receive during and after the move (defined as the Post-Move phase)<br> |
| --- | --- |
In some cases, the effect of the move on your tax obligations will last longer than the year of the move. For this reason, the tax filing assistance will be provided for
| • | The year of the move from the Home Location to the Host Location |
|---|---|
| • | Four (4) years after the move or until residual tax expenses are complete |
| --- | --- |
ACCEPTANCE
You recognize that the Company retains the right to establish and modify compensation, benefits and working conditions for its TSMs, and for its various categories of TSMs, in its sole discretion. It is important to understand that our Company does not offer employment on a fixed term or guaranteed basis and the representations in this should not be constructed in any manner as a proposed contract for any fixed term of employment.
Local Permanent Move Letter
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I have read and fully understand and accept the terms and conditions of the move as outlined in this letter.
| TSM: | /s/ Andrea Albertini | Date: August 23, 2023 |
|---|---|---|
| Andrea Albertini | ||
| Authorized Signer: | /s/ Lorelei McGlynn | Date: August 23, 2023 |
| Lorelei McGlynn |
Local Permanent Move Letter
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Assignment Allowance Summary
TSM Name: Andrea Albertini
Family Size: Three (3): Self, Spouse, Son
Assignment Type: Local Permanent
Estimated Assignment Effective Date: September 1, 2023
| TSM Base Compensation | Amount and Currency | Pay Frequency | Gross/Net |
|---|---|---|---|
| Annual Base Salary & Currency (includes Car Allowance): | $575,000 USD | Annual | Gross |
| Variable Pay: | $402,500 USD | Annual | Gross |
| Equity | $900,000 USD | Annual – start March 2024 | |
| One Time Equity | $750,000USD | One Time – Granted in September 2023 | |
| Assignment Allowances | Amount and Currency | Payment Type | Gross/Net |
| Relocation Bonus Award: | $1,500,000 | Paid in equal monthly installments beginning September 2023 and continuing for 48 months. ($31,250/mo.) | Gross |
| Other One Time Items as listed below to be paid by the Company: | Estimate - TBD:<br> <br>$155,000 USD<br><br><br>Year (1)<br> <br>$37,500 (Years 2,3 & 4) | Company Paid Directly to Vendors as follows: | |
| •<br><br>Immigration Visas for TSM/Family | Greenspoon Marder | ||
| •<br><br>Transportation of Goods – Air Shipment (500 lbs) | Continuum Relocation | ||
| •<br><br>Estimated employer US tax cost on relocation services | |||
| •<br><br>Furniture Allowance | $50,000 | One-Time Payment to TSM | Gross |
| •<br><br>Deloitte Tax Services:<br><br><br><br><br>•<br><br>Pre-Assignment Tax Estimates<br><br><br><br><br>•<br><br>Exit Home & Enter Host Location Interview | TBD – Estimate $1K for E/E and $2,500 per Return + cost of Italy Return | Directly to Deloitte |
Local Permanent Move Letter
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| •<br><br>Deloitte Tax Preparation – Four (4) years Tax Assistance or until residual tax expenses completed (Employees are responsiblefor paying all actual home/host country taxes without support from the Company)<br><br><br><br><br>•<br><br>Ongoing Periodic Tax Advice, as needed | ||
|---|---|---|
| •<br><br>Destination/Cultural Services – 2 -3 days w/3^rd^<br>Party Provider – home finding; familiarize with Country; Schools; Location Registration & paperwork; shopping; dining; medical facilities, etc. | TBD | Paid Directly to Continuum/Relocation/Cooper & Cooper |
| •<br><br>Home Leave – TSM will be eligible for three (3) home visits per year for a period of 4 years (TSM; Spouse; Dependent) | TBD | Charge to Cost Center |
Local Permanent Move Letter
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Exhibit 10.48
RESTRICTIVE COVENANT, CONFIDENTIALITY AND INVENTIONS AGREEMENT
This Restrictive Covenant, Confidentiality and Inventions Agreement (“Agreement”) is made and entered into effective as of the 23 day of August, 2023, by and between Henry Schein, Inc., a Delaware corporation headquartered in New York (“the Company”) and Andrea Albertini (“Employee”).
RECITALS
A. WHEREAS, Employee is an executive of the Company, most recently working as CEO, International Distribution Group; and
B. WHEREAS, Employee is being promoted to the position of Chief Executive Officer, International Distribution Group and Global Dental Equipment and Lab, and, in this capacity, is expected to serve as CEO of the International Distribution Group, and to lead the Dental and Lab business verticals, including in achieving their digital equipment and laboratory product and service, strategic and profit targets; Employee is also expected to work to ensure strategic guidance and best practice sharing in the integration and success of the digital workflow platform as a fundamental part of the Company’s strategies.
C. WHEREAS, in the new capacity to which he is being promoted, Employee will be one of the most senior executives in the Company, leading and helping to lead, a key area, and a significant portion of the Company’s business; Employee’s position with the Company is a position of trust and confidence; and
D. WHEREAS, the parties acknowledge that Employee is and will be a unique employee of the Company, and that Employee will be privy to key and critical confidential information and trade secrets concerning the entire Company, its affiliates, and their businesses, planning, personnel, strategic initiatives, expansion and futures, and concerning the interaction among the businesses of the Company’s various units, subsidiaries and affiliates, including businesses, segments and/or areas in which the Company has and/or is developing interests or expanding into; the parties further acknowledge that in connection with and/or as part of Employee’s employment by the Company, Employee is expected to have access to, will have knowledge of, and will assist in developing, highly confidential and proprietary information related to the Company, its plans, affiliates, divisions, groups, personnel, and/or their businesses, products and services, including new and additional confidential and trade secret information; and
E. WHEREAS, entry into this Agreement is a material part of Company agreeing to promote Employee; and
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F. WHEREAS, Employee has had an opportunity to consider the matter, has had the opportunity to review the terms and restrictions hereof with independent legal counsel of his own choosing, and has made an independent and informed decision that this Agreement is (a) fair and not excessive; (b) necessary for the protection of the Company and its business; and (c) that entry into this Agreement, and compliance with the terms hereof, including the restrictions set forth herein, is reasonable and is something that he chooses to do.
NOW, in consideration of the premises, of $20,000, of the opportunity to earn enhanced compensation, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:
I. COVENANTS AND OTHER TERMS
| A. | Definitions. The following terms shall be defined as provided below for purposes of this Agreement.<br> |
|---|---|
| 1. | Separation Date. The phrase “Separation Date” as used throughout this Agreement means the<br>effective date of Employee’s termination from employment with the Company, whether by resignation or termination for any reason. In the event Employee’s employment with the Company is terminated and Employee is subsequently rehired by<br>the Company in the same or any other position, the phrase “Separation Date” shall refer to the most recent date of Employee’s termination from employment with the Company. |
| --- | --- |
| 2. | Period of Restriction. The phrase “Period of Restriction” as used throughout this Agreement<br>is defined to mean the period commencing on the date of this Agreement and continuing throughout Employee’s employment with the Company and for a period of eighteen (18) months after the Separation Date. |
| --- | --- |
| 3. | Restricted Area. The parties recognize that Employee’s responsibilities and work for the Company,<br>will be Global and is expected to extend to all of the geographic territories in which the Company does business. The phrase “Restricted Area” as used in this Agreement shall mean (i) the United States, and (ii) such additional<br>countries globally: (A) where Employee works or performs services on behalf of the Company at any time during the three years prior to the Separation Date; (B) where a business group of the Company or an affiliate, that reported to<br>Employee, or that Employee was involved in supervising or managing, at any time during the thirty six (36) months prior to the Separation Date, is engaged in business and/or is providing products, technology and/or services at any time during<br>the thirty six (36) months prior to the Separation Date; and/or (C) in or to which Employee’s efforts on behalf of the Company were directed, at any time during the thirty six (36) months prior to the Separation Date;<br>(iii) in addition, during the period when Employee is employed by the Company or an affiliate, the Restricted Area shall also include the geographic territories in which the Company and such affiliate do business. |
| --- | --- |
| 4. | Restricted Business. The term “Restricted Business” shall mean and include: (A) any<br>business in which the Company’s International Distribution Group (by whatever name it may then be known) engages, at any time during the three (3) years prior to the Separation Date, and/or in which, as of the Separation Date, the Company<br>is planning to engage at any |
| --- | --- |
2
| time within the year after the Separation Date; (B) any business in which the Company’s Dental Equipment and Lab businesses (by whatever name they shall then be known) engage, at any<br>time during the three (3) years prior to the Separation Date, and/or in which, as of the Separation Date, the Company is planning to engage at any time within the year after the Separation Date; (C) any business of the Company, its<br>subsidiaries or affiliates, which Employee managed, or assisted in managing, or which reported to Employee, at any time during the three (3) years prior to the Separation Date; (D) the businesses of the Company, its subsidiaries or<br>affiliates, about which Employee, at any time during the two (2) years prior to the Separation Date, learned, developed or utilized, Confidential Information; (E) a business in which Employee was materially involved in the Company’s<br>actual or attempted acquisition, at any time during the two (2) years prior to the Separation Date; and/or (F) a business which attempts to compete with, or is in the same line of business as, a business described in subsections<br>(A) through (E), above. Notwithstanding the foregoing, and for purposes of clarity: (i) the parties agree that the definition of a “Restricted Business” will not prevent Employee from being retained or employed, after the<br>Separation Date, by a non-competitive division, subsidiary or affiliate of an entity that is also engaged in a Restricted Business, or in a position with such entity that is not involved in competing with a<br>Restricted Business, provided that Employee has no involvement, directly or indirectly, and does not assist with or contribute to, work or activity from which Employee is prohibited by this Agreement; (ii) Subsection (A), above shall not be<br>applicable to Employee if he is not involved in the leadership, oversight or supervision of the International Distribution Group (by whatever name it shall then be known) at any time during the three (3) years prior to the Separation Date;<br>(iii) Subsection (B), above shall not be applicable to Employee if he is not involved in the leadership, oversight or supervision of the Company’s Dental Equipment and Lab businesses (by whatever name it or they shall then be known) at<br>any time during the three (3) years prior to the Separation Date. | |
|---|---|
| 5. | Customer. The term “Customer” as used throughout this Agreement shall mean any client,<br>account or customer of the Company, its subsidiaries and/or affiliates: (x) whom Employee solicited, sold to or serviced, on behalf of the Company or any of its businesses, subsidiaries or affiliates, at any time during the thirty six<br>(36) months preceding the Separation Date, and/or (y) on whose account Employee worked on behalf of the Company, or any of its businesses, subsidiaries or affiliates, at any time during the<br>thirty-six (36) months preceding the Separation Date, and/or (z) concerning whose account, Employee, at any time during the thirty-six (36) months<br>preceding the Separation Date, reviewed, utilized, created or developed, Confidential Information. |
| --- | --- |
| 6. | Vendor. The term “Vendor” shall mean any vendor or supplier to the Company or any of its<br>subsidiaries or affiliates (other than a vendor of utilities or maintenance products or services, for the Company’s own premises): (i) with whom, at any time during the thirty-six (36) months prior<br>to the Separation Date, Employee, or any of the Employees who reported directly to Employee at the time of contact (“Report” or “Reports”), had material contact on behalf of the Company; or (ii) for whom Employee was the<br>contact person on behalf of the Company at any time during the thirty-six (36) months prior to the Separation Date. |
| --- | --- |
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| B. | Covenant Concerning Competitive Activity. During the Period of Restriction, except while employed<br>by the Company, and acting on behalf of the Company, its subsidiaries and/or affiliates, Employee shall not, directly or through others: (i) engage, anywhere in the Restricted Area, in any Restricted Business, and/or aid others in, and/or work<br>in aid of, any Restricted Business; (ii) engage in, consult on, or assist, anywhere in the Restricted Area, in the business, management, development and/or acquisition of, any Restricted Business; (iii) contact, solicit, advise, provide<br>products, services, technology, software and/or equipment, to, or consult with, any Customer, for the purpose, or with the effect, of encouraging or causing the Customer to consider, purchase, license or otherwise obtain products, services,<br>technology, software and/or equipment from a person, firm, business or entity other than the Company or an affiliate, where such products, services, technology, software and/or equipment, or competing products, services, technology, software and/or<br>equipment, could have been acquired through the Company; (iv) be involved in the planning, promotion, marketing, distribution, servicing or sale, within the Restricted Area, of products, services, technology, software, businesses and/or<br>equipment, that compete with, attempt to compete with, or are in the same line of business as, any Restricted Business; (v) consult concerning, evaluate, and/or engage in, investment, merger and/or acquisition activity and/or transactions<br>involving the sale or acquisition of a business or line of business, where such business or line of business competes or attempt to compete with Restricted Business(es), or are in a line of business within the definition of Restricted Business as<br>set forth above; and/or (vi) without the prior written consent of the Company, pursue, engage in or utilize on behalf of anyone other than the Company or its affiliates, any proposed business arrangement or business plan on which Employee<br>worked while employed by the Company or an affiliate. Further, during the Period of Restriction, Employee shall not directly or through others, interfere with the business relationship between the Company, its subsidiaries, divisions and/or<br>affiliates, and any Customers or Vendors. The restrictions set forth in this paragraph: (x) shall restrict activity in the Restricted Area, and (y) shall also restrict actions and activity conducted from outside of the Restricted Area,<br>which are directed to the Restricted Area (such as phone calls, remote conferences or computer-based activity outside of the Restricted Area that communicate concerning, are in furtherance of, or contribute to, activity from which Employee is<br>prohibited within the Restricted Area). |
|---|---|
| C. | Covenant Concerning Non-Solicitation of Company Employees; Non-Interference. During the Period of Restriction, Employee shall not, directly or through others, for or on behalf of anyone competing or attempting to compete with any aspect of the business of the Company,<br>recruit or aid in the recruiting of, or solicit for employment, any employee or consultant of the Company; further, Employee shall not, during the Period of Restriction, advise, identify or recommend to any person, firm, business or entity that is<br>competing or attempting to compete with any aspect of the business of the Company, that they employ or solicit for employment, any employee or consultant of the Company. The foregoing restrictions shall be limited to pertain to employees and/or<br>consultants of the Company, its subsidiaries and/or affiliates: (x) with whom Employee worked while at the Company, and/or (y) whom Employee supervised on behalf of the Company, its subsidiaries and/or affiliates, and/or (z) about<br>whose function, work and/or performance, Employee learned during Employee’s employ with the Company. |
| --- | --- |
4
| D. | No Conflicting Obligations; Further Covenant. Employee further covenants and agrees that, during the<br>Period of Restriction, Employee will comply with this Agreement, will not engage in activities that conflict with Employee’s obligations hereunder, and will not interfere with, and will not aid anyone else in interfering with, the<br>relationships between the Company and its Customers and/or Vendors. |
|---|---|
| E. | Acknowledgment of Reasonableness of Restrictions. Employee specifically acknowledges and agrees that the<br>nature of the limitations upon Employee’s activities as specified herein, together with the duration and scope of such restrictions, are reasonable limitations on Employee’s activities and that the restrictions are required to preserve,<br>promote and protect the trade secrets, Confidential Information, goodwill and other legitimate interests of the Company, and impose no greater restraint than is reasonably necessary to secure such protection. Employee represents and warrants that he<br>has carefully considered the provisions hereof, and that he is willing to agree hereto, and that he will enter into and comply with this Agreement. Employee further represents and warrants that the provisions of this Agreement will not substantially<br>impair Employee’s ability to earn a livelihood, nor will such provisions cause Employee any undue hardship. |
| --- | --- |
| F. | Interpretation of Covenants. In the event that any provision of this Agreement shall be held invalid or<br>unenforceable by a court of competent jurisdiction by reason of the duration or scope thereof or for any other reason, such invalidity or unenforceability shall attach only to the specific provision determined to be unenforceable, and the rest of<br>the covenants and the Agreement shall remain in full force and effect. Employee and the Company intend that the restrictions and provisions set forth in this Agreement shall be deemed to be severable, and shall further be deemed to be a series of<br>separate covenants. Further, to the greatest extent permitted by law, the parties agree that, in the event a court determines that a provision hereof is invalid or unenforceable, that the court, to the greatest extent permitted by law, modify such<br>provision in a manner permitted by law, to afford the greatest protection permitted by law consistent with the intent expressed in this Agreement, and, as so modified, that the court enforce the provision. |
| --- | --- |
| G. | Notification to Future Employers. Employee agrees that no later than ten (10) days after accepting<br>employment, contracting with or agreeing to provide services to another person or entity during the Period of Restriction, Employee will so advise the Company, and the Company may, in its discretion, inform of the terms hereof, and/or provide a copy<br>of this Agreement, to the entity to which Employee is or will be employed or providing services. Employee hereby waives any claims against the Company or its representatives due to the Company’s providing this Agreement to any such entity,<br>including but not limited to claims for defamation and/or interference with contractual relations. |
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II. FURTHERPROTECTION OF CONFIDENTIAL AND
PROPRIETARY INFORMATION
| A. | Confidential and Proprietary Information. The parties hereto agree and acknowledge that the following<br>information and materials in written, oral, electronic, magnetic, photographic or any other form, are the confidential and/or proprietary information of the Company (“Confidential Information”): |
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5
| 1. | All nonpublic information, in any form, related to the current and/or prospective businesses and/or activities<br>of the Company, its subsidiaries, divisions and/or affiliates, which is utilized, developed or obtained by the Company, its subsidiaries, divisions and/or affiliates, and/or any of their employees, including but not limited to: research and<br>development activities; products; acquisitions and potential acquisitions being analyzed; strategic analysis; Technology; strategy; organization; finances; software; technical and/or product matters; nonpublic pricing, including, but not limited to,<br>proprietary pricing, and special pricing for individual customers, GPOs, IPNs and other organizations and buying groups; costing; nonpublic customer and supplier related information; nonpublic marketing and sales information; business opportunities,<br>potential and/or nonpublic acquisitions, joint-ventures, divestitures and reorganizations; credentials to Company accounts, including passwords to company websites and company-focused social media; organizational issues; legal matters; trade<br>secrets, other intellectual property information and nonpublic applications; algorithms; inventions; manufacturing, production and operations processes and plans; business plans; analyses, forecasts and methodologies; projections; operational<br>matters; digital analyses; internal reports and analyses concerning the Company’s business or an aspect thereof; internal reports concerning customers, suppliers, products, sales and/or potential or pending transactions; and other materials<br>and information which the Company considers to be nonpublic, confidential or trade secret, and which are not excluded from this definition pursuant to paragraph 3 below. |
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| 2. | Confidential Information shall also include a third party’s information received by the Company subject<br>to an obligation or understanding of confidentiality, including, but not limited to, credit, financial and/or other information subject to confidentiality obligations under HIPAA. |
| --- | --- |
| 3. | Notwithstanding the foregoing, Confidential Information shall not include information which was generally known<br>by, or readily available through proper means to, the general public or the trade, prior to Employee’s receipt, use or disclosure of it, but shall include the Company’s internal analysis and/or further development of such information.<br>Notwithstanding any other provision of this Agreement, Employee may not disclose or utilize, and shall protect and keep confidential, any information that Employee released or releases to third parties or the public, in violation of Employee’s<br>obligations by law or hereunder. |
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| 4. | As used herein, “Technology” shall mean any and all ideas, concepts, inventions, discoveries,<br>developments, designs, derivatives, modifications, improvements, research information, works of authorship, methods, systems, processes, products, prototypes, apparatus, equipment, specifications, schematics, data, software (including, without<br>limitation, both source code and object code), hardware, communications and networking systems, content, drawings, files, databases, code, graphics, formulae, algorithms, techniques, technology and know-how,<br>whether or not patentable or copyrightable; and all copies and tangible embodiments of any of the foregoing, and all related notes, reports, summaries, memoranda and other documentation, in each case, in whatever form or medium.<br> |
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| B. | Protection of Confidential and Proprietary Information. Employee agrees to take at least the steps<br>described below to preserve the confidentiality of all Confidential Information. It is understood and agreed that Employee’s obligations under this Section III of this Agreement, and in connection with the steps described below, shall, subject<br>to Section III (B) (4), below, survive and remain enforceable indefinitely, or as otherwise required or permitted by law, until the item of Confidential Information at issue, is no longer confidential or is otherwise no longer subject to protection<br>under the terms hereof. |
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| 1. | Nondisclosure. Employee will not use, disclose or otherwise permit any person or entity access to any of<br>the Confidential Information other than as required by the Company for its benefit. Employee shall not, under any circumstances, disclose, or make use of, any Confidential Information for Employee’s own purpose or benefit or for the benefit of<br>any person or entity other than the Company. |
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| 2. | No Copies. Employee shall not make any copies, abstracts or summaries of any Confidential Information,<br>or any other Company-owned or controlled documents or information, or any duplicates of Company-owned or controlled electronic or other data storage media, which Employee may have in Employee’s possession or control, other than as required for<br>the use and benefit of the Company. |
| --- | --- |
| 3. | Prevent Disclosure. Employee will take all reasonable precautions to prevent disclosure of any<br>Confidential Information to persons or entities other than the Company. |
| --- | --- |
| 4. | Exceptions. Notwithstanding the foregoing, Employee shall not have liability to the Company hereunder<br>with respect to use or disclosure of Confidential Information, provided that one of the following is established with respect to the information at issue: (a) the Confidential Information was disclosed or made public with prior written consent<br>of the Company; (b) the Confidential Information was received by Employee after his employment with the Company ended, without any restriction or confidentiality obligation, from a source other than the Company, which source was in lawful<br>possession of such Confidential Information, and was lawfully able to provide it without restriction or confidential obligation, and did provide it without any restriction or confidentiality obligation; or (c) Employee is compelled by a court<br>of law, or pursuant to government process, to disclose such information. Further, notwithstanding the foregoing, Employee acknowledges that nothing herein prevents Employee from filing a charge or complaint with, or voluntarily participating in an<br>investigation or proceeding conducted by, any government agency, self-regulatory body or law enforcement authority or from testifying truthfully in the course of any administrative, legal or arbitration proceeding. |
| --- | --- |
| C. | Return of Confidential Information. Upon the request of the Company or, if no request is made, upon<br>termination of Employee’s employment with the Company, Employee shall promptly return to the Company all Confidential Information and all originals and copies of all records, documents, drives, tapes, magnetic disks, notes, reports, proposals,<br>lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment and/or other media of any type or nature in Employee’s possession or control containing Confidential Information. Employee shall not retain any copies<br>of, or access to, any Confidential Information. Employee shall not destroy Confidential Information in his possession, without the express authorization of the Company. Employee shall also disclose to Company all passwords and other information<br>required to access Company information and/or materials. |
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| D. | Return of Company Property. Upon the request of the Company or, if no request is made, upon termination<br>of Employee’s employment with the Company, Employee shall promptly return to the Company all Company property in Employee’s possession, including, but not limited to, Confidential Information, product samples, documents, manuals,<br>catalogs, mobile phones, tablets, electronic media, access to media and laptops. Employee shall not destroy Company Property in his possession, without the express authorization of the Company. |
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| E. | Disclosure of Trade Secrets. Nothing in this Agreement prohibits or restricts Employee from reporting an<br>event that Employee reasonably and in good faith believes is a violation of law to the relevant law-enforcement agency (such as, without limitation, the Securities and Exchange Commission, Equal Employment<br>Opportunity Commission, or Department of Labor), or from cooperating in an investigation conducted by such a government agency, or making disclosures to such an agency. Employee is hereby provided notice that under the 2016 Defend Trade Secrets Act<br>no individual will be held criminally or civilly liable under Federal or State trade secret law for the disclosure of a trade secret (as defined in the Economic Espionage Act) if the disclosure is: (i) made in confidence to a Federal, State, or<br>local government official, either directly or indirectly, or to an attorney, and made solely for the purpose of reporting or investigating a suspected violation of law; or (ii) made in a complaint or other document filed in a lawsuit or other<br>proceeding, if such filing is made under seal so that it is not made public. An individual who pursues a lawsuit for alleged retaliation by an employer for reporting a suspected violation of the law may disclose the trade secret to an attorney of<br>the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except as permitted by law or court order. In order for<br>a disclosure to be permitted and protected under this provision, it must be made in strict accordance with limitations under law, as described above. |
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III. ASSIGNMENT OF INVENTIONS
| A. | Definitions. The following terms shall be defined as provided below for purposes of Section III of this<br>Agreement. |
|---|---|
| 1. | “Work Product” shall mean all Technology and Confidential Information, as defined in Section II of<br>this Agreement, and other information which relate to known, proposed or reasonably anticipated business pursuits of the Company and/or its affiliates. |
| --- | --- |
| 2. | “Prior Work Product” shall mean all Work Product that was conceived in whole or in part by Employee<br>prior to Employee’s employment with the Company to which Employee has any right, title or interest, and which relate to the Company’s proposed business, products, or research and development. |
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8
| 3. | “Company Work Product” shall mean Work Product that Employee may solely or jointly conceive of,<br>create, develop or reduce to practice, or cause to be conceived of, developed or reduced to practice within the scope of Employee’s employment by the Company (whether or not during business hours) with the aid assistance or use of the<br>property, equipment, facilities, resources, Confidential Information, trade secrets or other intellectual property of the Company and/or its affiliates, or related to the current or anticipated business, research or development of the Company or its<br>affiliates. |
|---|---|
| 4. | “Intellectual Property Rights” means all intellectual property rights throughout the world,<br>including, without limitation, (i) all rights relating to the protection of inventions, including patents, patent applications and invention disclosures; (ii) all rights in works of authorship, copyrightable works, registered and<br>unregistered copyrights, all rights to databases and data collections, and registrations and applications for registration thereof; (iii) all rights in mask works and registrations and applications for registration thereof; (iv) all rights<br>in registered and unregistered trademarks, service marks, trade names, corporate names, logos, trade dress, designs, packaging, Internet domain names, and registrations and applications for registration thereof, together with all goodwill associated<br>therewith; (v) all rights relating to the protection of computer software (including, without limitation, both source code and object code); (vi) all rights relating to the ownership and/or protection of trade secrets, know-how and proprietary information; (vii) all moral and economic rights of authors and inventors, however denominated, throughout the world; (viii) all copies and tangible embodiments of any of the<br>foregoing in whatever form or medium; (ix) all rights to obtain renewals, reissues, reexaminations, continuations, continuations-in-part, divisions or other<br>extensions of legal protections pertaining thereto; (x) all claims or causes of action arising out of or related to any infringement or misappropriation of any of the foregoing; and (xi) any right analogous to those set forth in this<br>Section 4. |
| --- | --- |
| B. | Rights Retained by Employee. Employee shall attach to this Agreement at the time of execution as<br>Appendix A, a list describing all Prior Work Product; or, if no such list is attached, Employee represents and warrants that there is no such Prior Work Product. Employee represents and warrants that the inclusion of any Prior Work Product on<br>Appendix A of this Agreement will not affect Employee’s ability to perform all obligations under this Agreement. |
| --- | --- |
| C. | Company Rights. |
| --- | --- |
| 1. | All right, title and interest in any Company Work Product is the exclusive property of the Company and/or its<br>affiliates, and Employee shall use such Company Work Product only for the benefit of the Company and/or its affiliates. Employee hereby acknowledges and agrees that to the fullest extent permitted by law, all Company Work Product shall be deemed to<br>be “Work Made for Hire” (as that term is defined in the U.S. Copyright Act), and all rights thereto shall be owned solely and exclusively by the Company in perpetuity. In the event that any portion or aspect of any Company Work Product<br>otherwise does not qualify for or is deemed not to be Work Made for Hire, Employee hereby irrevocably transfers and assigns to Company, without any further compensation, all of Employee’s right, title and interest, throughout the world, in and<br>to such Company Work Product, including without limitation, all Intellectual Property Rights, and hereby waives any so-called “moral rights” with respect to such Company Work Product. At the<br>request of the Company, Employee will execute any documents and take any actions that may be needed to effect and confirm such transfer and assignment and waiver. |
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| 2. | If, in the course of Employee’s employment with the Company, Employee incorporates into or uses in<br>connection with any Company Work Product any Prior Work Product, Employee hereby grants to the Company a nonexclusive, royalty-free, fully paid-up, irrevocable, perpetual, worldwide license, with the right to<br>grant and authorize sublicenses, to make, have made, modify, use, import, offer for sale, and sell such Prior Work Product as part of or in connection with such product, process, service, technology or other work and to practice any method related<br>thereto. |
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| 3. | Employee agrees promptly to disclose to the Company, or any designee, all Company Work Product which are or may<br>be subject to the provisions of this Section C. |
| --- | --- |
| D. | Maintenance of Records. Employee agrees to keep and maintain adequate, current, accurate, and authentic<br>written records of all Work Product made by Employee (solely or jointly with others) during the term of Employee’s employment with the Company. The records will be in the form of notes, sketches, drawings, electronic files, reports, or any<br>other format that may be specified by the Company. The records are and will be available to and remain the sole property of the Company at all times. |
| --- | --- |
| E. | Obtaining and Enforcing Proprietary Rights. Employee agrees to assist the Company, or its designee, at<br>the Company’s expense, in every proper way to secure the rights of the Company and/or its affiliates in the Company Work Product and any rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent<br>information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments which the Company shall deem proper or necessary in order to apply for, register, obtain, maintain, defend,<br>and enforce such rights and in order to assign and convey to the Company, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Company Work Product and any rights relating thereto, and testifying in<br>a suit or other proceeding relating to such Company Work Product and any rights relating thereto. Employee further agrees that Employee’s obligation to execute or cause to be executed, when it is in Employee’s power to do so, any such<br>instrument or papers shall continue after the termination of this Agreement. If the Company is unable because of Employee’s mental or physical incapacity or for any other reason to secure Employee’s signature with respect to any Work<br>Product including, without limitation, to apply for or to pursue any application for any United States or foreign patents or copyright registrations covering such Work Product, then Employee hereby irrevocably designates and appoints the Company and<br>its duly authorized officers and agents as Employee’s agents and attorneys in fact, whose power is coupled with an interest, to act for and in Employee’s behalf and stead to execute and file any papers, oaths and to do all other lawfully<br>permitted acts with respect to such Company Work Product with the same legal force and effect as if executed or done by Employee. |
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IV. GENERAL PROVISIONS
| A. | Actions. |
|---|---|
| 1. | Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the<br>State of New York, both as to interpretation and performance, but without regard to the conflicts of law provisions thereof. |
| --- | --- |
| 2. | Jurisdiction and Venue. The Company and Employee acknowledge and agree to the exclusive jurisdiction of,<br>and venue in, the State and federal courts, sitting in the State of New York, for any action arising out of or related to the interpretation and/or enforcement of this Agreement. Neither party shall object to nor seek to change, venue or<br>jurisdiction in any action filed or pursued in accordance with the foregoing. |
| --- | --- |
| 3. | Remedies. |
| --- | --- |
| (a) | Accounting for Profits. Employee covenants and agrees that in the event Employee violates any of<br>Employee’s restrictions or obligations under this Agreement, the Company shall be entitled, to the greatest extent permitted by law, to an accounting and repayment of all profits, compensation, commissions, remuneration and other benefits<br>which Employee directly or indirectly receives and/or is entitled to receive, as a result of, or growing out of, the violation of any restrictions or obligation under this Agreement. Employee and the Company acknowledge and agree that such remedy<br>shall be in addition to and not in limitation of any injunctive relief, damages, and any other rights or remedies to which the Company is or may be entitled at law, in equity or under this Agreement. |
| --- | --- |
| (b) | Entitlement to Equitable Relief. The Company and Employee acknowledge and agree that the breach by<br>Employee of any restriction or obligation under this Agreement will cause the Company substantial, immediate and irreparable harm, and that the full extent of damages caused by any violation of this Agreement would be impossible to ascertain, and<br>that there is no adequate remedy at law in the event of such breach. Accordingly, the Company and Employee hereby agree that the Company shall be entitled to injunctive relief, without posting bond, by bringing an appropriate action for such remedy,<br>and that this remedy is without prejudice to the other rights the Company has, in law or equity or under this Agreement, including, without limitation, its claim for damages for the breach of this Agreement. In connection with any application for<br>injunctive relief hereunder, to the greatest extent permitted by law, any alleged offset or counterclaim that the Employee may claim or assert, shall not be a basis to deny injunctive relief to Company, but may be addressed in the underlying<br>action. |
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| B. | Non-Waiver. No failure to exercise, delay in exercising or<br>single or partial exercise of any right, power or remedy by either party under this Agreement shall constitute a waiver thereof or shall preclude any other or further exercise of the same or any other right, power or remedy. |
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| C. | Applicability. Any change or changes in Employee’s title, duties, responsibilities, employment<br>status, salary and/or compensation, shall not affect the validity or scope of this Agreement, and the provisions of this Agreement, including those of Sections I, II, III, and IV, will, to the greatest extent permitted by law, remain in full force<br>and effect, regardless of such change or changes, and regardless of which Party caused or instigated such change or changes. |
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| D. | No Modification of At-Will Employment. Employee is an at-will employee of the Company. Nothing in this Agreement shall be construed: (i) to give to Employee any right to employment for a specific period of time; or (ii) to limit or restrict Employer’s<br>and Employee’s rights to terminate such employment with the Company, or (iii) to otherwise alter or modify the at-will nature of Employee’s employment with the Company. |
| --- | --- |
| E. | Fees. To the greatest extent permitted by law, Employee shall pay the Company’s reasonable<br>attorneys’ fees and costs incurred in seeking to enforce this Agreement. |
| --- | --- |
| F. | Severability. This Agreement is severable. If one or more of the provisions of this Agreement are deemed<br>void by law, then the remaining provisions shall continue in full force and effect. The parties agree that a court considering this Agreement may modify any unenforceable term hereof to render this Agreement lawful and enforceable, and to<br>effectuate, to the fullest extent permitted by law, the Parties’ intent as set forth herein. Further, this provision shall be construed and interpreted in a manner consistent with Section I(F) of this Agreement. |
| --- | --- |
| G. | Successors and Assigns. This Agreement may not be assigned by Employee without the Company’s prior<br>written consent, and any such attempted assignment shall be void. The Company may, without the consent of Employee, and in its sole discretion, assign this Agreement to another entity, or to a successor or affiliate, or as part of a transfer or sale<br>of all or a portion of Company assets. The rights and covenants of this Agreement shall inure and extend to the Parties hereto, their respective heirs, personal representatives, successors and permitted assigns. |
| --- | --- |
| H. | Survival. The Parties acknowledge that the provisions of this Agreement require that Employee comply<br>with restrictions and other provision(s) hereunder, after the end of Employee’s employment with the Company. Employee agrees to comply with such restrictions and other provisions, regardless of whether his employment has terminated, and<br>regardless of which party instigated or caused such termination. |
| --- | --- |
| I. | Counterparts. This Agreement may be executed in counterparts. All counterparts taken together shall<br>constitute a single Agreement. A facsimile/photocopied signature shall have the same force and effect of an original signature. |
| --- | --- |
| J. | Entire Agreement. Except as otherwise specifically provided herein, this Agreement sets forth the entire<br>agreement and understanding between the Company and Employee relating to the matter set forth herein, and supersedes all prior understandings, negotiations and representations with respect to this Agreement and with respect to entering into this<br>Agreement. Notwithstanding the foregoing and any other provisions hereof, this Agreement shall not supersede or in any way nullify or change any obligation that Employee has to protect the Company’s confidential information, or to refrain from<br>competing with the Company, and/or from soliciting Company employees, vendors or customers, during or after Employee’s employment is terminated, and/or to assign intellectual property to the Company, which<br> |
| --- | --- |
12
| obligations are: (i) imposed by law or equity; or (ii) which are imposed by contract or other agreement that Employee has previously entered into or is entering into at this time, but<br>rather, such obligations shall remain in full force and effect and are cumulative of the remedies set forth herein. No modification of or amendment to this Agreement, or any waiver of any rights under this Agreement, will be effective unless in a<br>writing signed by the parties. |
|---|
IN WITNESS WHEREOF, the Company and Employee have executed this Agreement effective as of the date first set forth above.
| HENRY SCHEIN, INC. | ANDREA ALBERTINI | |
|---|---|---|
| By: | /s/ Lorelei McGlynn | /s/ Andrea Albertini |
| Name: | Lorelei McGlynn | Date: August 23, 2023 |
| Title: | SVP, CHRO | |
| Date: | August 23, 2023 |
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Exhibit 21.1
List of Subsidiaries
| Subsidiary | Jurisdiction of incorporation or organization |
|---|---|
| ACE Surgical Supply Co., Inc. | Massachusetts |
| BHCL US Holdings Inc.^1^ | Delaware |
| Camlog USA, Inc.^2^ | Delaware |
| eAssist, Inc.^3^ | Wyoming |
| Exan Enterprises Inc.^4^ | Nevada |
| Handpiece Parts & Repairs, Inc.^5^ | Delaware |
| Henry Schein (Lancaster, PA) Inc. | Pennsylvania |
| Henry Schein Europe, Inc.^6^ | Delaware |
| Henry Schein Global Sourcing, Inc.^7^ | Delaware |
| Henry Schein Home Health, LLC^8^ | Delaware |
| Henry Schein International LLC | Delaware |
| Henry Schein Latin America Pacific Rim, Inc.^9^ | Delaware |
| Henry Schein Medical Systems, Inc. | Ohio |
| Henry Schein MSO, LLC | Delaware |
| Henry Schein PPT, Inc. | Wisconsin |
| Henry Schein Practice Solutions Inc.^10^ | Utah |
| Henry Schein Puerto Rico, Inc. | Puerto Rico |
| Henry Schein Supply, Inc. | New York |
| HS Brand Management, LLC | Delaware |
| HS Financial Holdings, Inc.^11^ | Delaware |
| HS TM Holdings, LLC^12^ | Delaware |
| HSFR, Inc. | Delaware |
| HSG-S Corp.^13^ | Delaware |
| HSI Gloves, Inc. | Delaware |
| HSI RE I, LLC | Delaware |
| Insource, Inc. | Virginia |
| Modern Laboratory Services, Inc. | California |
| Ortho2, LLC | Delaware |
| Project Helium Holdings, LLC^14^ | Delaware |
| Project Spartan Holdings Corp.^15^ | Delaware |
| S & S Discount, Inc.^16^ | Delaware |
| SAS Holdco, Inc.^17^ | Delaware |
| TDSC, Inc. | Delaware |
| Toy Products Corp.^18^ | Delaware |
| Trimed, Inc.^19^ | California |
| ^1^ | BHCL US Holdings Inc. is the parent company of 16 consolidated, wholly-owned subsidiaries, eight which operate<br>in the dental implant and distribution industries in the United States and eight which operate in the dental implant and distribution industries outside the United States. BHCL US Holdings Inc. is also the parent company of a consolidated,<br>majority-owned subsidiary, BioHorizons Camlog Italia SRL, which operates in the dental implant and distribution industry outside the United States. |
| --- | --- |
| ^2^ | Camlog USA, Inc. is the parent company of three consolidated, wholly-owned subsidiaries which provide services<br>to healthcare practices in the United States. Camlog USA, Inc. is also the parent company of the following three consolidated, majority-owned subsidiaries, which provide services to healthcare practitioners in the United States: Henry Schein<br>Financial Services, LLC; Large Practice Sales, LLC; and Invisible DSO Advisor, LLC. |
| --- | --- |
| ^3^ | eAssist, Inc. is the parent company of the following four consolidated, majority-owned subsidiaries, all which<br>operate to provide consulting and educational services in the dental industry in the United States: eAssist Consulting, LLC; eAssist Publishing, LLC; eAssist University, LLC; and Unitas PPO Solutions, LLC. |
| --- | --- |
| ^4^ | Exan Enterprises Inc. is the parent company of one consolidated, wholly-owned subsidiary which operates in the<br>dental management software industry in the United States. |
| --- | --- |
| ^5^ | Handpiece Parts & Repair, Inc. is the parent company of two consolidated, wholly-owned subsidiaries<br>which operate in the dental handpiece and repair industry in the United States. |
| --- | --- |
| ^6^ | Henry Schein Europe, Inc. is the parent company of 79 consolidated, wholly-owned subsidiaries, six which<br>operate in the health care distribution industry in the United States and 73 which operate in the health care distribution industry outside the United States. Henry Schein Europe, Inc. is also the parent company of the following 22 consolidated,<br>majority-owned subsidiaries, all which operate in the health care distribution industry outside the United States: AS Medizintechnik Verwaltungs GmbH; Biotech Dental Academy S.A.S.; Biotech Dental Digital S.A.S.; Biotech Dental Manufacturing S.A.;<br>Biotech Dental Smilers S.A.S.; Biotech Dental S.A.S.; Dental 2R S.A.S.; Henry Schein Dental Warehouse (Pty) Ltd.; Infomed Servicios Informáticos, S.L.; innOralis, S.A.S.; Kabushiki Kaisha BA International; Label Dent Bordeaux S.A.S.; Label<br>Dent Group S.A.S.; Label Dent La Roseraie S.A.S.; Laboratoire Label Dent Anglet S.A.S.; Laboratoire Philip S.A.S.; Laboratoire Premier Bordeaux S.A.S.; Medentis Medical GmbH; Newshelf 1223 Proprietary Limited; Opti health consulting GmbH; TP Connect<br>S.A.S.; and Ztech Digital and Esthetics, S.L. |
| --- | --- |
| ^7^ | Henry Schein Global Sourcing, Inc. is the parent company of one consolidated, wholly-owned subsidiary which<br>provides health care regulatory and operational services outside of the United States. |
| --- | --- |
| ^8^ | Henry Schein Home Health, LLC is the parent company of three consolidated, wholly-owned subsidiaries which<br>operate in the health care industry in the United States. Henry Schein Home Health, LLC is also the parent company of the following six consolidated, majority-owned subsidiaries, all of which operate in the health care industry in the United States:<br>AEP Mini Holdco, LLC; Dharma Ventures Group, Inc.; Lorraine Surgical Supply Company, Inc.; Shield-California Health Care Center, Inc., Shield-Denver Health Care Center, Inc., and Shield-Texas Healthcare, Inc. |
| --- | --- |
| ^9^ | Henry Schein Latin America Pacific Rim, Inc. is the parent, holding company of 11 consolidated, wholly-owned<br>subsidiaries, three which operate in the health care distribution industry in the United States and eight which operate in the health care distribution industry outside of the United States. Henry Schein Latin America Pacific Rim, Inc. is also the<br>parent company of the following 27 consolidated, majority-owned subsidiaries, all which operate in the health care distribution industry outside the United States: Accord Corporation Limited; Adaam Pty Ltd.; Adaam Unit Trust; Alta-Dent Corporation;<br>BA Pro Repair Ltd.; Beijing Ruisimei Henry Schein Medical Instrument Co., Ltd.; CB Healthcare Consulting Pty Ltd.; De Healthcare Limited; Hangzhou Lixue Henry Schein Medical Instrument Co., Ltd.; Henry Schein China Management Co. Ltd.; Henry Schein<br>China Services Limited; Henry Schein Hemao Guangzhou Medical Device Co., Ltd.; Henry Schein Hong Kong Limited; Henry Schein Regional Limited; Henry Schein Regional Pty Ltd as the Trustee for the Henry Schein Regional Trust; Henry Schein Regional<br>Trust; Henry Schein Shvadent (2009) Ltd.; Henry Schein Sunshine (Beijing) Medical Device Co. Ltd.; Henry Schein Trading (Shanghai) Co., Ltd.; Medi-Consumables PTY Limited; Pacific Dental Specialties Limited; Pacific Dental Specialties Pty Ltd.;<br>Regional Health Care Group Pty Limited; Regional Technology Systems Pty Limited; Schuster Comerico De Equipamentos Odontologicos S.A.; Wuhan Hongchang Henry Schein Dental Instrument Co., Ltd.; and Zhengzhou Yifeng Henry Schein Dental Instrument Co.,<br>Ltd. |
| --- | --- |
| ^10^ | Henry Schein Practice Solutions Inc. is the parent company of 32 consolidated, wholly-owned subsidiaries, four<br>which operate in the digital dental products and solutions industry in the United States and 28 which operate in the digital dental products and solutions industry outside the United States. Henry Schein Practice Solutions Inc. is also the parent<br>company of Henry Schein One, LLC and Lighthouse 360, Inc., consolidated, majority-owned subsidiaries, which operate in the digital dental products and solutions industry within and outside of the United States. Additionally, Henry Schein Practice<br>Solutions Inc. is the parent company of the following 14 consolidated, majority-owned subsidiaries, all which operate in the digital dental products and solutions industry outside the United States: Axium Solutions ULC; LSI S.A.; Henry Schein One<br>Italia S.r.l.; Henry Schein One Australia; Henry Schein One New Zealand; Infomed Software, S.L.; HS1 Holdings I, LLC; HSLC Participações S.A.; SAS; Henry Schein One Austria GmbH; Henry Schein One UK Limited; Orisline Portugal<br>Unipessoal Lda; Quantity Serviços e Comércio de Produtos para a Saúde S.A.; and Real Cloud Imaging, Inc. |
| --- | --- |
| ^11^ | HS Financial Holdings, Inc. is the parent company of six consolidated, wholly-owned subsidiaries, five which<br>oversee intercompany financing in the United States and one which operates outside the United States and acts as the beneficiary of a trust. |
| --- | --- |
| ^12^ | HS TM Holdings, LLC is the parent, holding company of one consolidated, wholly-owned subsidiary which holds and<br>manages trademarks within and outside the United States. |
| --- | --- |
| ^13^ | HSG-S Corp. is the parent, holding company of nine consolidated,<br>wholly-owned subsidiaries, seven which operate in the health care distribution industry in the United States, and two which operate in the health care distribution industry outside of the United States. |
| --- | --- |
| ^14^ | Project Helium Holdings, LLC is the parent, holding company of one consolidated, wholly-owned subsidiary which<br>operates in the dental handpiece repair and sales industry in the United States. |
| --- | --- |
| ^15^ | Project Spartan Holdings Corp. is the parent, holding company of eight consolidated, wholly-owned subsidiaries<br>which operate in the health care industry in the United States. |
| --- | --- |
| ^16^ | S&S Discount Supply, Inc. is the parent, holding company of the following two consolidated, majority-owned<br>subsidiaries, both which operate in the dental manufacturing and/or distribution industry in the United States: Ortho Organizers Holdings, Inc. and Ortho Organizers, Inc. |
| --- | --- |
| ^17^ | SAS Holdco, Inc. is the parent company of two wholly-owned subsidiaries which operate in the direct-to-consumer medical consumables in the industry in the United States. |
| --- | --- |
| ^18^ | Toy Products Corp. is the parent, holding company of Sherman Specialty LLC, a consolidated, majority-owned<br>subsidiary which distributes toys to dental and medical offices in the United States. |
| --- | --- |
| ^19^ | Trimed, Inc. is the parent company of ten consolidated, majority-owned subsidiaries, all of which operate in<br>the orthopedic fixation industry within and outside the United States: Adessy S.A, Implantes TriMed Mexico; S. DE R.L. DE C.V.; TriMed Brasil Importação e Distribuição LTDA; TriMed Chile SpA; TriMed Implantes S.A.; TriMed<br>Japan Kabushiki Gaisha (K.K.); TriMed Latin America, LLC; TriMed Ortho International Limited; TriMed Peru SAC; and TriMed Uruguay S.A. |
| --- | --- |
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Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-283783, 333-283782, 333-253633, 333-212994, 333-192788, 333-171400, 333-164360, 333-111914, 333-91778, 333-35144, 333-39893, 333-33193, and 333-05453) of Henry Schein, Inc. (the Company) of our reports dated February 24, 2026, relating to the consolidated financial statements and the effectiveness of the Company’s internal control over financial reporting, which appear in this Annual Report on Form 10-K.
/s/ BDO USA, P.C.
New York, NY
February 24, 2026
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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:
I have reviewed this annual report on Form 10-K of Henry Schein, Inc. (the “registrant”);
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a 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;
Based on my knowledge, the financial statements, and other financial information included in this report, 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;
The registrant’s other certifying officer and I are responsible for establishing and maintaining 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 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 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 being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial 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 principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this 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 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 control over financial reporting; and
- The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of 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 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 the registrant’s internal control over financial reporting.
| Dated: February 24, 2026 | /s/ Stanley M. Bergman<br><br><br>Stanley M. Bergman<br> <br>Chairman and Chief Executive<br>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:
I have reviewed this annual report on Form 10-K of Henry Schein, Inc. (the “registrant”);
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a 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;
Based on my knowledge, the financial statements, and other financial information included in this report, 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;
The registrant’s other certifying officer and I are responsible for establishing and maintaining 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 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 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 being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial 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 principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this 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 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 control over financial reporting; and
- The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of 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 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 the registrant’s internal control over financial reporting.
| Dated: February 24, 2026 | /s/ Ronald N. South<br><br><br>Ronald N. South<br> <br>Senior Vice President and<br><br><br>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 annual report on Form 10-K of Henry Schein, Inc. (the “Company”) for the period ended December 27, 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.
| Dated: February 24, 2026 | /s/ Stanley M. Bergman |
|---|---|
| Stanley M. Bergman<br> <br>Chairman and Chief Executive<br>Officer | |
| Dated: February 24, 2026 | /s/ Ronald N. South |
| Ronald N. South<br> <br>Senior Vice President and<br><br><br>Chief Financial Officer |
This certification accompanies each Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
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Exhibit 99.5
AMENDMENT NUMBER ONE
TOTHE
HENRY SCHEIN, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AMENDED AND RESTATED EFFECTIVE AS OF SEPTEMBER 1, 2025
WHEREAS, Henry Schein, Inc. (the “Company”) maintains the Henry Schein, Inc. Supplemental Executive Retirement Plan, amended and restated effective as of September 1, 2025, and as subsequently amended (the “Plan”);
**WHEREAS,**pursuant to Section 16 of the Plan, the Board of Directors of the Company (the “Board”) or an authorized committee may amend the Plan;
WHEREAS, pursuant to the Charter of the Compensation Committee of the Board (the “Committee”), the Committee is authorized to amend the Plan; and
WHEREAS, the Committee wishes to amend the Plan to clarify the Plan’s definition of “Recognized Compensation.”
NOW, THEREFORE, the Plan is hereby amended, effective as of November 17, 2025, as follows:
| 1. | Section 1(gg) of the Plan is hereby amended in its entirety to read as follows: |
|---|
“(gg) ‘Recognized Compensation’ means the dollar limitation pursuant to Section 401(a)(17) of the Code or such higher amount specified by the Committee from time to time prior to the determination of the amount of any contribution pursuant to Section 3(a).”
* * *
IN WITNESS WHEREOF, this amendment has been executed this 30^th^ day of December, 2025.
| HENRY SCHEIN, INC. | |
|---|---|
| By: | /s/ Christine Sheehy |
| Name: | Christine Sheehy |
| Title: | Senior Vice President and Chief Human Resources Officer |