LEVERAGING OUR STRENGTHS
2024 ANNUAL REPORT
2
3
To My Fellow Stakeholders,
Last year we reported that Henry Schein was
working tirelessly to uphold our brand promise
- Rely On Us – following some disruption to our
operations in the fourth quarter of 2023. Thanks
to the relentless eff orts of Team Schein, during
2024 we successfully achieved this goal, re-
engaging with our customers, delivering high levels
of customer service and satisfaction, and we are
now looking ahead with a commitment to grow
our business from the strong base we have built.
We continued to make progress throughout the year
on our recently completed 2022–2024 BOLD+1
Strategic Plan, exceeding our 2024 target of
generating 40% of our worldwide operating income
from high-growth, high-margin businesses. BOLD+1
has become the foundation of our transformation into
a higher growth, higher margin, customer-centric,
digitally advanced and more agile and effi cient
company, with the opportunity to further leverage
synergies across our complementary businesses.
For the full-year 2024, our high-growth, high-
margin businesses accounted for approximately
41% of our total operating income. Including income
from our corporate brand product off erings, this
increases to approximately 50% of total operating
income and almost $3 billion, or 25%, of our
sales. Henry Schein has a strong track record of
delivering double-digit earnings growth, with a
non-GAAP earnings per share (EPS) compound
annual growth rate of 12.4%* since our IPO. While
recently we have faced several headwinds, including
macroeconomic pressures, volatility in the personal
protective equipment category and COVID test kit
sales, and the cyber incident, we remain confi dent
in the underlying strength of our business.
Financial Results**
Our 2024 results refl ect stable end markets and
sequential market share gains. Total net sales
reached $12.7 billion, an increase of 2.7% from 2023.
GAAP net income was $390 million, or $3.05 per
diluted share, compared to $416 million, or $3.16
per diluted share, in 2023. Non-GAAP net income
increased to $605 million, or $4.74 per diluted share,
versus $593 million, or $4.50 per diluted share,
in 2023. Operating cash fl ow in 2024 was $848
million, compared to $500 million in 2023, and we
made strategic acquisitions including investments
in non-controlling interests of $485 million, and
completed $385 million in stock repurchases.
We are pleased with the performance of our recent
strategic acquisitions as well as the successful
launch of certain internally developed products
and services. This includes the Tapered Pro
Conical dental implant in the U.S., developed and
manufactured by our BioHorizons subsidiary, which
signifi cantly expands the U.S. market we are able
to serve. There were also new developments
to enhance the functionality of our Dentrix® and
Dentrix Ascend® practice management software
solutions. This includes Eligibility Pro software,
providing practices important patient information
on insurance coverage, and Reserve with Google,
providing functionality for patients to book a dental
appointment directly from Google’s Chrome browser.
Our BOLD+1 Strategy: Strengthening
Our Competitive Advantage
The BOLD+1 strategy, as a brief reminder, involves
Building complementary software, specialty,
and services businesses for high growth;
Operationalizing our One Distribution approach to
A MESSAGE FROM THE CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
BUILD
DRIVE
DIGITAL
LEVERAGE
O
P
E
R
A
T
I
O
N
A
L
I
Z
E
4
deliver an exceptional customer experience, and
increase effi ciency, and growth; Leveraging all
of Henry Schein’s businesses and solutions to
broaden and deepen customer relationships; and
Driving digital transformation for our customers and
for Henry Schein. In doing so, we believe that by
executing on these pillars we deliver diff erentiated
solutions that make our customers’ practices more
successful and improve patient outcomes.
In 2024, some of our key accomplishments included:
• Building on our leadership in global dental
software, endodontics, and implants. We also
entered the extremities niche of the attractive
orthopedic market through the acquisition of
TriMed, providing solutions for the orthopedic
treatment of lower extremities (foot and ankle)
and upper extremities (primarily hand and wrist),
which complements our Brasseler medical
instruments business. We have also expanded our
home solutions off ering, building this business
to a $400 million annual revenue platform.
• Implementing operational effi ciencies and
integrated manufacturing facilities through
our restructuring plan, which we expect to
provide $75 million to $100 million in annual
run-rate savings by the end of 2025.
• Leveraging Henry Schein’s corporate brand and
distribution networks to drive stronger sales.
• Continuing to digitalize our operations with AI-
driven tools, e-commerce expansion, and software
development. This included the successful
launch of our new Global eCommerce Platform
(GEP) in the UK and Ireland, where customer
feedback has been very positive, and we are
planning its rollout later this year in the U.S.
As we execute on our strategy, we remain committed
to the “+1” element of BOLD+1: creating value for
all our stakeholders, including customers, suppliers,
stockholders, society, and Team Schein. Sustainability
remains a core element of value-creation, including
building upon our validated science-based targets
and establishing a net zero transition plan to advance
our global climate roadmap. In 2024, we focused on
advancing a culture of wellness and engagement
for TSMs and continued to expand initiatives and
policies promoting inclusivity and collaboration. By
continuing to invest in our values – Community,
Caring, and Career – and being a most trusted
partner to our team and all of our stakeholders,
we can achieve greater growth and profi tability
while making the world healthier, together.
A New Era
To continue to advance our strategy, we have
streamlined our organizational structure into two
groups to oversee our businesses. We named Andrea
Albertini to the position of CEO, Global Distribution
and Technology, overseeing the further integration
of our distribution, value-added services, and
technology solutions businesses. Tom Popeck, as
CEO of the Henry Schein Products Group, will lead
a group of businesses, including dental implants,
biomaterials, endodontics, orthodontics, orthopedics,
as well as the Henry Schein-brand product portfolio.
We believe these changes will enhance growth
by expanding our product and service off erings,
strengthening our e-commerce business, and
improving operational effi ciencies. Along with this
new organizational structure, we have also updated
our reportable segments to align with the new
management reporting, thereby providing clearer line-
of-sight into our business performance for investors.
While we are excited about these changes, it
is with mixed emotions that earlier this year we
announced the transition of two long-tenured Henry
Schein leaders to the role of Senior Advisor. One
is my partner, Jimmy Breslawski, with whom I have
worked for 49 years. Jimmy joined Henry Schein
in 1980 when the Company had just $42 million in
revenues and operated out of a combined offi ce and
distribution center building in Port Washington, New
York. Jimmy served in many roles at the Company,
most recently as President and Vice Chairman. Brad
Connett is also transitioning to Senior Advisor after a
long and successful career. Brad joined Henry Schein
in 1997 and most recently served as Chief Executive
Offi cer of our North America Distribution Group.
I would like to recognize the contributions both
these leaders have made to the Company, and we
are fortunate that we will continue to benefi t from
Jimmy’s and Brad’s experience as they will continue
to serve on our Executive Management Committee.
Our 2025 – 2027 BOLD+1 Strategic Plan
The structural foundation of Henry Schein’s 2025
– 2027 BOLD+1 strategy is refl ected in each of our
three key businesses – distribution and value-added
services, owned-brand self-manufacturing, and
technology. While Henry Schein’s historic strength
has been in product distribution, we have been
successful building a portfolio of complementary
high-growth, high-margin technology and owned-
brand manufacturing businesses. Our focus is
now to leverage these businesses to provide our
customers with an integrated off ering of solutions
5
unmatched in the industry. Through Leveraging
Our Strengths across the organization, we
expect to accelerate growth in our owned-brands
businesses and further develop diff erentiated
solutions and product off erings for our customers.
KKR’s recent investment as our largest non-
index shareholder underscores confi dence in our
strategy, and our ability to achieve high-single-
digit to low-double-digit earnings expansion
in the near future. Together, Henry Schein
and KKR will collaborate to pursue additional
opportunities to create shareholder value and
drive the business in its next phase of growth.
Board of Directors Updates
As we advance our strategy and evolve Henry
Schein, we are ensuring our Board of Directors
has the background and skills to advance the
needs of our business. We are pleased to welcome
Robert J. Hombach as an independent director,
further strengthening our governance and strategic
oversight. His extensive experience in the health
care industry and fi nancial leadership will be
invaluable. We also expect KKR representatives Max
Lin and William “Dan” Daniel to join our Board once
KKR has received certain regulatory approvals in
connection with its investment in Henry Schein.
We also extend our sincere gratitude to Carol
Raphael and Mark Mlotek, who will be stepping down
as directors following our 2025 Annual Meeting.
Carol has served on the Board since 2012 and has
provided valuable leadership through our Strategic
Advisory Committee and Regulatory, Compliance
and Cybersecurity Committee. Mark has served on
our Board since 1995. We are pleased that he will
continue in his role as Henry Schein’s Executive
Vice President and Chief Strategic Offi cer, and as a
member of our Executive Management Committee.
Our Bright Future Ahead
As we navigate an evolving macroeconomic
landscape, Henry Schein remains focused on
executing our comprehensive growth strategy,
building on our proven track record of earnings
growth, and leveraging our leadership in key
markets. We have expanded and utilized our highly
complementary product, service, and technology
portfolio to deepen partnerships with customers
and suppliers. We have a skilled and experienced
leadership team, as well as exceptional individuals
who comprise Team Schein, to drive success.
Along with the entire Henry Schein Board of
Directors, I extend my sincerest thanks to all Team
Schein Members for their dedication and hard work.
It is because of Team Schein that I remain confi dent
in Henry Schein’s future and in our ability to deliver
on our commitments to our fi ve constituencies that
make up the Henry Schein Mosaic of Success: Team
Schein, customers, supplier partners, stockholders,
and society. We remain steadfast in our commitment
to deliver long-term value and to advance our mission
of assisting health care professionals to provide
quality care while making the world healthier.
We are committed to rewarding you for
your investment and trust in us.
Forward-looking statements made in this report are subject to the risks
specifi ed in the Safe Harbor statement in the Company’s Form 10-K fi ling and
forward-looking statement language in our press release fi led on Form 8-K
on February 25, 2025.
Sincerely,
Stanley M. Bergman
Chairman of the Board and Chief Executive Offi cer
March 2025
* See GAAP to non-GAAP reconciliation in the Supplemental Information section of our IR website page:
https://investor.henryschein.com/fi nancials-fi lings
** See reconciliation of GAAP and non-GAAP measures on page 8.
EXECUTIVE MANAGEMENT
BOARD OF DIRECTORS
Stanley M. Bergman
Michael S. Ettinger
David Kochman
Christopher Pendergast
Andrea Albertini
Christine Sheehy
Walter Siegel
Tom Popeck
Mark E. Mlotek
Ronald N. South
R. Steven Boggan
James P. Breslawski
James Mullins
Brad Connett
Kelly Murphy
Bianka Wilson
Top row, left to right: Reed V. Tuckson, M.D., FACP, Scott Serota, Robert J. Hombach, Bradley T. Sheares, Ph.D., Philip A. Laskaway,
Kurt P. Kuehn, Mark E. Mlotek, Mohamad Ali; bottom row, left to right: Anne H. Margulies, Carol Raphael, Stanley M. Bergman,
Joseph L. Herring, Deborah Derby, Carole T. Faig
7
EXECUTIVE MANAGEMENT
Stanley M. Bergman*
Chairman of the Board
and Chief Executive Offi cer
Andrea Albertini*
Chief Executive Offi cer,
Global Distribution and Technology
R. Steven Boggan
Co-Chief Executive Offi cer,
Global Oral Reconstruction Group
James P. Breslawski
Senior Advisor
Brad Connett
Senior Advisor
Michael S. Ettinger*
Executive Vice President,
Chief Operating Offi cer
David Kochman
Senior Vice President,
Chief Corporate Aff airs Offi cer
Mark E. Mlotek*
Executive Vice President,
Chief Strategic Offi cer
James Mullins
Senior Vice President,
Global Supply Chain
Kelly Murphy
Senior Vice President,
General Counsel
Christopher Pendergast
Senior Vice President,
Chief Technology Offi cer
Tom Popeck*
Chief Executive Offi cer,
Henry Schein Products Group
Christine Sheehy
Senior Vice President,
Chief Human Resources Offi cer
Walter Siegel*
Senior Vice President,
Chief Legal Offi cer
Ronald N. South*
Senior Vice President,
Chief Financial Offi cer
Bianka Wilson
Co-Chief Executive Offi cer,
Global Oral Reconstruction Group
BOARD OF DIRECTORS
Stanley M. Bergman
Chairman of the Board
and Chief Executive Offi cer
Mohamad Ali
Senior Vice President and Head of IBM Consulting,
IBM Corporation
Deborah Derby
Operating Partner, Garnett Station Partners; and
Former President and CEO, Carrols Restaurant Group, Inc.
Carole T. Faig
Former U.S. Health Sector Leader, EY LLP
Joseph L. Herring
Former Chairman and Chief Executive Offi cer, Covance Inc.
Robert J. Hombach
Former Executive Vice President, CFO and
COO, Baxalta, Inc.
Kurt P. Kuehn
Former Chief Financial Offi cer,
United Parcel Service, Inc.
Philip A. Laskawy
Lead Director, Henry Schein, Inc.; and Retired Chairman
and CEO, EY LLP
Anne H. Margulies
Former Vice President and Chief Information Offi cer,
Harvard University
Mark E. Mlotek
Executive Vice President,
Chief Strategic Offi cer
Carol Raphael
National Advisor, Manatt Health Solutions;
and Former President and Chief Executive Offi cer,
Visiting Nurse Service of New York
Scott Serota
Former President and Chief Executive Offi cer
of Blue Cross Blue Shield Association
Bradley T. Sheares, Ph.D.
Former Chief Executive Offi cer, Reliant Pharmaceuticals,
Inc.; and Former President of U.S. Human Health, Merck & Co.
Reed V. Tuckson, M.D., FACP
Managing Director of Tuckson Health Connections, LLC;
Co-Founder and Convener, Black Coalition Against
COVID-19; and Co-Founder and Board Chairman of the
Coalition For Trust in Health & Science
COMMON STOCK
Henry Schein Common Stock trades on the Nasdaq®
Stock Market under the symbol “HSIC.”
STOCKHOLDER REPORTS
AND INVESTOR INQUIRIES
For stockholder inquiries, including requests for
quarterly and annual reports, contact our Investor
Relations department at (631) 843-5500, or email your
request to investor@henryschein.com. Printed materials
can also be requested through the Company’s Website.
FORM 10-K
Our Annual Report on Form 10-K for the fi scal year ended
December 28, 2024 has been fi led with the SEC and is
available free of charge through our website,
www.henryschein.com. Stockholders may also obtain
a copy of the Form 10-K upon request via email at
investor@henryschein.com. In response to such
request, the Company will furnish without charge the
Form 10-K, including fi nancial statements, fi nancial
schedules, and a list of exhibits.
INDEPENDENT AUDITORS
BDO USA, P.C.
200 Park Avenue
New York, New York 10166
LEGAL COUNSEL
Proskauer Rose LLP
Eleven Times Square,
New York, New York 10036
STOCK TRANSFER AGENT
For address changes, account cancellation, registration
changes, and lost stock certifi cates, please contact:
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
(212) 509-4000
*Executive Offi cers
As of April 9, 2025
8
NON-GAAP DISCLOSURES
The following table sets forth, for the applicable periods,
a reconciliation of operating income and net income
attributable to Henry Schein, Inc., and diluted earnings per
share presented following generally accepted accounting
principles in the United States (“GAAP”) to these measures
adjusted to reflect the effects of restructuring and
integration costs, litigation settlements, impairment
of intangible and capitalized assets, acquisition
intangible amortization, cyber incident net proceeds
and costs, change in contingent consideration and costs
associated with shareholder advisory matters.
USE OF NON-GAAP MEASURES
The information in the table includes financial measures that
are not calculated and presented in accordance with GAAP. The
table reconciles differences between each of operating income,
net income attributable to Henry Schein, Inc., and diluted
earnings per share attributable to Henry Schein, Inc., each as
presented in accordance with GAAP, and comparable non-GAAP
amounts. We eliminated the effect of the items listed below to
assist in evaluating the underlying operational performance of
our business, excluding such costs, over the periods presented.
Management believes that non-GAAP financial measures provide
investors with useful supplemental information about the
financial performance of our business, enable comparison of
financial results between periods where certain items may vary
independent of business performance and allow for greater
transparency with respect to key metrics used by management
in operating our business. These non-GAAP financial measures
are presented solely for informational and comparative
purposes and should not be regarded as a replacement
for corresponding, similarly captioned, GAAP measures.
NOTES
(1) During 2024, we recorded restructuring costs of $110
million ($79 million, net of tax and noncontrolling interests).
During 2023, we recorded restructuring costs of $80 million
($53 million, net of tax and noncontrolling interests). During
2022, we recorded restructuring and integration costs
of $131 million ($103 million net of tax and noncontrolling
interests). The effect that these charges had on 2024, 2023,
and 2022 earnings per diluted share attributable to Henry
Schein, Inc. was ($0.62), ($0.40), and ($0.74), respectively.
(2) During 2024, we recorded a charge of $5 million ($4
million, net of tax) related to estimated settlement amounts
for litigation related to the October 2023 cyber incident and
settlement of certain opioid related lawsuits during year-to-
date 2024. The effect that this charge had on earnings per
diluted share attributed to Henry Schein, Inc. was ($0.03).
(3) During 2024, 2023, and 2022, we recorded impairment
charges on certain intangible assets of $1 million ($0
million, net of tax), $7 million ($5 million, net of tax and
noncontrolling interests), and $34 million ($23 million
net of tax and noncontrolling interests), respectively. The
effect that these charges had on 2024, 2023, and 2022
earnings per diluted share attributable to Henry Schein,
Inc. was ($0.00), ($0.04), and ($0.16), respectively.
(4) Represents impairment of certain capitalized asset costs
of $12 million ($6 million, net of tax and noncontrolling
interests) during 2024 and $27 million ($19 million, net of
tax) recorded during 2023. The effect that these costs had
on 2024 and 2023 diluted earnings per share attributed to
Henry Schein, Inc. was ($0.05) and ($0.15), respectively.
(5) Represents cyber incident insurance proceeds, net of
third-party advisory expenses of $31 million ($23 million, net of
taxes) during 2024 and one time professional and other fees
of $11 million ($8 million, net of taxes) during 2023, related
to our Q4 2023 cyber incident. The effect that these costs
had on 2024 and 2023 diluted earnings per share attributed
to Henry Schein, Inc. was $0.18 and ($0.06), respectively.
(6) During 2024, 2023, and 2022, we recorded amortization
expense from acquired intangible assets of $184 million ($112
million, net of tax and noncontrolling interests), $151 million
($92 million, net of tax and noncontrolling interests), and $126
million ($78 million net of tax and noncontrolling interests),
respectively. The effect that these charges had on 2024, 2023,
and 2022 earnings per diluted share attributable to Henry
Schein, Inc. was ($0.88), ($0.70), and ($0.57), respectively.
(7) Represents a change in the fair value of contingent
consideration $45 million ($35 million, net of taxes) recorded
during year-to-date 2024 related to certain 2022 and 2023
acquisitions. The effect that this charge had on earnings per
diluted share attributed to Henry Schein, Inc. was ($0.27).
(8) Represents costs associated with shareholder advisory
matters of $2 million ($2 million, net of taxes) recorded during
year-to-date 2024. The effect that this charge had on earnings
per diluted share attributed to Henry Schein, Inc. was ($0.01).
YEARS ENDED
December 28,
December 30,
December 31,
2024
2023
2022
(in millions, except per share data)
Operating income (GAAP)
$
621
$
615
$
747
Operating margin (GAAP)
4.9%
5.0%
5.9%
Non-GAAP Adjustments:
Restructuring and integration costs (1)
$
110
$
80
$
131
Litigation settlements (2)
$
5
$
--
$
--
Impairment of intangible assets (3)
$
1
$
7
$
34
Impairment of capitalized assets (4)
$
12
$
27
$
--
Cyber incident insurance proceeds,
net of third-party advisory expenses (5)
$
(31)
$
11
$
--
Acquisition intangible amortization (6)
$
184
$
151
$
126
Change in contingent consideration (7)
$
45
$
--
$
--
Costs associated with shareholder
advisory matters (8)
$
2
$
--
$
--
Adjusted operating income (Non-GAAP)
$
949
$
890
$
1,038
Adjusted operating margin (Non-GAAP)
7.5%
7.2%
8.2%
Net income attributable to Henry Schein, Inc. (GAAP)
$
390
$
416
$
538
Adjustments, net of tax and attribution
to noncontrolling interests:
Restructuring and integration costs (1)
$
79
$
53
$
103
Litigation settlements (2)
$
4
$
--
$
--
Impairment of intangible assets (3)
$
--
$
5
$
23
Impairment of capitalized assets (4)
$
6
$
19
$
--
Cyber incident insurance proceeds,
net of third-party advisory expenses (5)
$
(23)
$
8
$
--
Acquisition intangible amortization (6)
$
112
$
92
$
78
Change in contingent consideration (7)
$
35
$
--
$
--
Costs associated with shareholder
advisory matters (8)
$
2
$
--
$
--
Adjusted net income attributable to
Henry Schein, Inc. (Non-GAAP)
$
605
$
593
$
741
Diluted earnings per share attributable to
Henry Schein, Inc. (GAAP)
$
3.05
$
3.16
$
3.91
Diluted earnings per share attributable to
Henry Schein, Inc. (Non-GAAP)
$
4.74
$
4.50
$
5.38
Diluted weighted-average
common shares outstanding
127,779
131,748
137,756
Note: Amounts may not sum due to rounding.
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 28, 2024
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 0-27078
HENRY SCHEIN, INC.
(Exact name of registrant as specified in its charter)
Delaware
11-3136595
(State or other jurisdiction of
(I.R.S. Employer Identification No.)
incorporation or organization)
135 Duryea Road
Melville, New York
(Address of principal executive offices)
11747
(Zip Code)
(631) 843-5500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $.01 per share
HSIC
The Nasdaq Global Select Market
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 29, 2024, was approximately $8,092,479,000.
As of February 18, 2025, there were 124,176,781 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 28, 2024) 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.
Cybersecurity
42
ITEM 2.
Properties
44
ITEM 3.
Legal Proceedings
44
ITEM 4.
Mine Safety Disclosures
44
PART II
ITEM 5.
Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
45
ITEM 6.
[Reserved]
46
ITEM 7.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
47
ITEM 7A.
Quantitative and Qualitative Disclosures About Market Risk
70
ITEM 8.
Financial Statements and Supplementary Data
72
ITEM 9.
Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure
136
ITEM 9A.
Controls and Procedures
136
ITEM 9B.
Other Information
140
ITEM 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
140
PART III
ITEM 10.
Directors, Executive Officers and Corporate Governance
140
ITEM 11.
Executive Compensation
140
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
141
ITEM 13.
Certain Relationships and Related Transactions, and Director Independence
141
ITEM 14.
Principal Accounting Fees and Services
141
PART IV
ITEM 15.
Exhibits and Financial Statement Schedules
141
ITEM 16.
Form 10-K Summary
148
Signatures
149
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 help customers operate a more efficient and successful business so the practitioner can provide
better clinical care.
With 93 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 and other alternate care clinics.
We are headquartered in Melville, New York and employ approximately 25,000 people. Approximately 49% of
our workforce is based in the United States and 51% outside of the United States. Our operations or affiliates are
located in 33 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 products and Henry Schein corporate brand
products through our main distribution centers. Our infrastructure, including over 5.4 million square feet of space
in 36 strategically located distribution centers and 0.5 million square feet of space in 15 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.
During the fourth quarter of our fiscal year ended December 28, 2024, we revised our reportable segments to align
with how the Chairman and Chief Executive Officer manages the business, assesses performance and allocates
resources. Our revised reportable segments 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.
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.
4
Industry
The distribution and value-added services 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 mid-
sized and large group practices ranging in size from a few practitioners to several hundred practices owned or
operated by dental support organizations (“DSOs”), medical group purchasing organizations (“GPOs”), health
maintenance organizations (“HMOs”), hospital systems 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.
We believe that consolidation within the industry will continue to result in a number of distributors, particularly
those with limited financial, operating and marketing resources, seeking to combine with larger companies that can
provide growth opportunities. This consolidation also may continue to result in distributors seeking to acquire
companies that can enhance their current product and service offerings or provide opportunities to serve a broader
customer base.
In addition, 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 HMOs,
group practices, other managed care accounts and collective buying groups such as DSOs and 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.
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 also face significant competition internationally,
where we compete on the basis of price and customer service against several large competitors, including the
GACD Group, Proclinic SA, Lifco AB, Nuent Group AB, Planmeca Oy and Billericay Dental Supply Co. Ltd., as
well as a large number of other dental and medical product distributors and manufacturers in international countries
and territories we serve.
Within Global Specialty Products, our primary competitors include Straumann, Envista, Zimvie, and Dentsply
Sirona.
With regard to our dental software, we compete against numerous companies, 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, Weave Communications, Inc.,
and Solutionreach, Inc. Many of these competitors connect to our software platforms through our API program.
Manufacturing and Raw Materials
We manufacture certain of our products for our specialty businesses (oral surgery solutions including dental
implants, endodontics, and orthopedics) at our 15 company manufacturing sites. We also outsource certain
manufacturing to third parties. We purchase our raw materials from various third-party suppliers. No single
supplier is material; however, 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 significant products.
We may experience shortages of raw materials or purchased components. In recent periods, we have experienced
increased costs and shortages of purchased components, which had a negative impact on our profit margins and on
our sales for certain product categories, due to our inability to fully satisfy demand.
6
Competitive Strengths
We have 93 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 meeting our customers’ unique needs. We are committed to providing customized solutions to our
customers that are driven by our understanding of the end markets we serve and that reflect the technology-driven
products and services best suited for their practice needs. We are committed to continuing to enhance these
offerings through organic investment in our products 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 personal or virtual visits by field sales representatives, frequent direct marketing and
telesales contact, 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 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.
• 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 enhance our marketing technology 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.
• 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 platform to offer enhanced
content management so customers can more easily find the products they need and to enable an engaging
purchase experience, supported by excellent customer service.
• 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 2024,
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 36 strategically located distribution centers. We strive
to maintain optimal inventory levels in order to satisfy customer demand for prompt delivery and complete order
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.
7
Broad product and service offerings at competitive prices. We offer a broad range of products 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 branded products and Henry Schein corporate brand
products through our main distribution centers. We also market and sell our own corporate brand portfolio
of cost-effective, high-quality consumable merchandise 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, and consulting 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 129 equipment sales and service centers worldwide that provide a variety of
repair, installation and technical services for our health care customers. Our technicians provide
installation and repair services for dental handpieces, dental and medical small equipment, table-top
sterilizers and large dental equipment.
• Financial services. 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.
Global Specialty Products
• Dental implants and digital solutions. We develop, manufacture, market and distribute a broad portfolio of
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 our 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
8
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, and repair services,
restoratives and preventives, as well as certain other health care-related consumable merchandise products
and services.
Global Technology
• We sell practice management, business analytics, 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, electronic claims processing and word processing programs, 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 28, 2024, we had an active user base of approximately 100,000 practices and 321,000
consumers, including users of AxiUm®, Dentally®, Dentrix Ascend®, DentalVision®, Dentrix® Dental
Systems, EXACT®, Gesden®, Jarvis Analytics®, Julie® Software, 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.
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 142,000 cartons daily.
• Comprehensive ordering process. Customers may place orders 24 hours a day, 7 days a week via e-
commerce solutions, telephone, fax, e-mail and mail.
9
Integrated management information systems. Certain of our information systems generally allow for centralized
management of key functions, including accounts receivable, inventory, accounts payable, payroll, purchasing,
sales, order fulfillment and financial and operational reporting. These systems allow us to manage our growth,
deliver superior customer service, properly target customers, manage financial performance and monitor daily
operational statistics.
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 28,
December 30,
December 31,
2024
2023
2022
Global Distribution and Value-Added Services:
Dental merchandise (1)
37.3 %
38.8%
37.7%
Dental equipment (2)
13.6
13.5
13.5
Value-added services (3)
1.8
1.6
1.2
Total Dental
52.7
53.9
52.4
Medical (4)
32.2
31.7
34.4
Total Global Distribution and Value-Added Services:
84.9
85.6
86.8
Global Specialty Products (5)
11.4
10.8
10.1
Global Technology (6)
5.0
4.9
4.3
Eliminations
(1.3)
(1.3)
(1.2)
Total
100.0 %
100.0%
100.0%
(1) Includes infection-control products, handpieces, preventatives, impression materials, composites, anesthetics, teeth, dental
implants, 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 and
high-tech and digital restoration equipment.
(3) Consists of financial services on a non-recourse basis, continuing education services for practitioners, consulting and other services.
(4) Includes branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products, X-ray
products, equipment, PPE products and vitamins.
(5) Includes manufacturing, marketing and sales of dental implant and biomaterial products; and endodontic, orthodontic and
orthopedic products and other health care-related products and services.
(6) Consists of practice management software, e-services, and other products, which are distributed to health care providers.
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 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 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 2024 and 2034, the
population of people aged 45 and older is expected to grow by approximately 10%. Between 2024 and 2044, this
age group is expected to grow by approximately 18%. This compares with expected total U.S. population growth
rates of approximately 4% between 2024 and 2034 and approximately 6% between 2024 and 2044.
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In the dental industry, there is predicted to be a rise in oral health care expenditures 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
We experience fluctuations in quarterly earnings. As a result, we may fail to meet or exceed the expectations of
securities analysts and investors, which could cause our stock price to decline.
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
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foreign governments have also increased enforcement activity in the health care sector, particularly in areas of fraud
and abuse, anti-bribery and anti-corruption, controlled substances handling, medical device regulations and data
privacy and security standards.
Certain of our businesses involve pharmaceuticals and/or medical devices, including orthopaedic, in vitro
diagnostic devices, software regulated as a medical device, and sales of medical equipment and supplies directly to
patients, that are paid for by third parties and/or patients and must operate in compliance with a variety of
burdensome and complex coding, billing and record-keeping requirements in order to substantiate claims for
payment under federal, state and commercial health care reimbursement programs.
Government and private insurance programs fund a large portion of the total cost of medical care, and there have
been efforts to limit such private and government insurance programs, including efforts, thus far unsuccessful, to
seek repeal of the entire United States Patient Protection and Affordable Care Act, as amended by the Health Care
and Education Reconciliation Act, each enacted in March 2010 (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; amalgam bans;
pricing disclosures; supply chain transparency around labor practices; and safe working conditions. In addition,
activities to control medical costs, including laws and regulations lowering reimbursement rates for
pharmaceuticals, medical devices, medical supplies and/or medical treatments or services, are ongoing. For
example, the Centers for Medicare & Medicaid Services’ (“CMS”) 2024 durable medical equipment, prosthetics,
orthotics and supplies (“DMEPOS”) reimbursement schedule, which was effective January 1, 2024, reduced the
DMEPOS reimbursement rates for non-rural suppliers, such as us, by removing the Coronavirus Aid, Relief, and
Economic Security (“CARES”) Act relief rates in effect during the COVID-19 pandemic. These and other laws
and regulations are subject to change and their evolving implementation may impact our operations and our
financial performance.
Certain of our businesses also maintain contracts with governmental agencies and are subject to certain regulatory
requirements specific to government contractors.
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.
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”),
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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
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 submit annual reports to the FDA, which include
information regarding each state where the wholesaler or 3PL is licensed, 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
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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, 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, 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”), 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.
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, and EU Regulation (EC) No. 726/2004 of 31 March 2004. These rules
provide for the authorization of products, and regulate their manufacture, importation, marketing and distribution.
It implements 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.
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
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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, the new Regulation No.
2024/1860 of 13 June 2024 has 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; 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
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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
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 (among others) has expressed concerns about
financial relationships between 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
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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
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 transparency of certain interactions between suppliers
and their customers.
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
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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. Also, at the federal level, 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.
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 growing
number of EU member states (such as France in 2011 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
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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, 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. 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”), effective from 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). Uncertainty about compliance with the GDPR and EU data protection laws remains, with the possibility
that 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, or guidance on 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
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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 private a 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. Comprehensive privacy laws in Colorado, Connecticut,
Virginia, Utah, Oregon, Delaware, Montana, Texas, Iowa, Maryland, New Jersey, New Hampshire, and Nebraska
are now in effect, and similarly enacted broad state laws relating to privacy, data protection, and information
security will come into effect later in 2025 and 2026, 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 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 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 US 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.
Further, countries are applying their data and consumer protection laws to AI, particularly generative AI, and are
considering and implementing specific legal frameworks with respect to AI, for example the EU AI Act 2024
(which as with the GDPR, will have 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 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.
21
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.
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
22
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 intend to protect
our trademarks and patents to the fullest extent practicable.
Employees and Human Capital
At Henry Schein, we understand that our long-term growth is enhanced by creating shared value for our business
and the communities we serve, while engaging our key stakeholders that make up our Mosaic of Success - Team
Schein Members (TSMs), customers, suppliers, stockholders, and society. Rooted in our long, rich history of
sustainability and corporate citizenship, we build relationships to foster trust, strengthen resilience and catalyze
innovative solutions to make the world healthier, together. We do this by building environmental, social, and
economic value for the Company’s sustained growth and continued success as a trusted partner and leader in health
care. 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 2024 highlights related to human capital matters
include:
•
continuing to evaluate our pay equity for the majority of the U.S. workforce, which reviews compensation
for equity and fairness;
•
expanding our Inclusive Culture learning journey by educating TSMs on how to create and sustain a
meaningful, inclusive and learning oriented culture; and
•
continuing to drive a culture of wellness and engagement for our TSMs by fostering an environment where
they can feel a sense of belonging and purpose.
At Henry Schein, our employees continue to be one of our greatest assets. We employ approximately 25,000
people, with approximately 49% of our workforce based in the United States and approximately 51% based outside
of the United States. We have approximately 13% of our employees that are subject to collective bargaining
agreements. We believe that our relations with our employees are excellent.
Our TSMs are the cornerstone of the 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 2024, we rolled out a continuous listening
program that used various vehicles, including The Pulse Global Culture Survey 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 of our TSMs to pursue their ambitions, deliver within our values driven
culture, and enjoy a rewarding career enabled by great people leaders. The Pulse Global Culture Survey was
redesigned in 2023 to measure scores aligned to our Team Schein Values. Our recent annual Pulse survey indicates
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that although there are heightened stress levels caused by the 2023 cyber incident and restructuring initiatives,
TSMs generally remain satisfied with their work experience, feel connected to their colleagues and intend to stay
with Henry Schein. This year, data suggests continued opportunities to improve how we cascade communications
to all levels of the organization, continue to reduce burnout and stress and provide more transparency around
opportunities for career development. Throughout the year, we also administer quarterly employee listening
surveys as a way to continuously understand and respond to our TSMs’ feelings. This feedback is shared with our
Executive Management Committee and Board, both of whom are committed to addressing identified opportunities.
As part of this commitment, some highlights from 2024 included:
•
Community: Provide opportunities for TSMs to have fun while contributing to an inclusive team that
respects and supports one another.
•
Continued focus on creating an inclusive environment where TSMs feel a sense of belonging; notably,
in 2024 for the third 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
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. We continue to publish our
United States Equal Employment Opportunity Commission (“EEOC”) EEO-1 data for the U.S.
•
Completed our first 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. In 2024, we launched our seventh ERG,
ADAPT (Abled and Disabled Allies Partnering Together). Each of our ERGs has a sponsor from our
Executive Management Committee and our Board. Our CEO engages directly in many of our ERG
programs.
•
Certified over 200 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., Gives Kids
A Smile, Cares Package Program, Global Student Outreach Program, and Prepare to Care).
•
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 2024, we rolled out a ‘Banish Burnout’ campaign, partnering with an external wellness
professional to create individualized tips and programming based on the burnout tendencies each TSM
faces.
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•
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.
•
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 2024, we saw an increase in
participation in our workshops, with TSMs reporting a high utilization of skills learned.
•
Continued expansion of our Leadership Development programs, with 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.
•
Announced the creation of the Core Leadership Capabilities (CLCs), a skills-based model 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.
•
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 2024, we recognized 15 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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Information about our Executive Officers
The following table sets forth certain information regarding our executive officers as of February 25, 2025:
Name
Age
Position
Stanley M. Bergman
75
Chairman, Chief Executive Officer, Director
Andrea Albertini
54
Chief Executive Officer, Global Distribution and Technology
James P. Breslawski
71
President
Brad Connett
66
Chief Executive Officer, North America Distribution Group
Michael S. Ettinger
63
Executive Vice President and Chief Operating Officer
Mark E. Mlotek
69
Executive Vice President, Chief Strategic Officer, Director
Tom Popeck
55
Chief Executive Officer, Henry Schein Products
Walter Siegel
65
Senior Vice President and Chief Legal Officer
Ronald N. South
63
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.
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.
James P. Breslawski has been our President since 2005 and was our Vice Chairman from 2018 to May 2024 and a
director from 1992 to May 2024. Mr. Breslawski was the Chief Executive Officer of our Henry Schein Global
Dental Group from 2005 to 2018. Mr. Breslawski held the position of Executive Vice President and President of
U.S. Dental from 1990 to 2005, with primary responsibility for the North American Dental Group. Between 1980
and 1990, Mr. Breslawski held various positions with us, including Chief Financial Officer, Vice President of
Finance and Administration and Corporate Controller.
Brad Connett has been our Chief Executive Officer, North American Distribution Group since 2021. Previously
Mr. Connett was the President of our U.S. Medical Group from 2018 to 2021. Mr. Connett joined us in 1997 and
has held a number of roles of increasing responsibility at the Company. Throughout his career, he has received
numerous industry honors, including the John F. Sasen Leadership Award from the Health Industry Distributors
Association (HIDA), in recognition of his service to the industry, and induction into the Medical Distribution Hall
of Fame by Repertoire Magazine.
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.
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Mark E. Mlotek has been our Executive Vice President and Chief Strategic Officer since 2012. 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.
Walter Siegel has been our Senior Vice President and Chief Legal Officer since 2021. Previously, Mr. Siegel was
our Senior Vice President and General Counsel from 2013 until 2021. Prior to joining us, Mr. Siegel was employed
with Standard Microsystems Corporation, a publicly traded global semiconductor company from 2005 to 2012,
holding positions of increasing responsibility, most recently as Senior Vice President, General Counsel and
Secretary.
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, where he
served as Vice President, Finance, for the Cardiovascular and Metabolic business lines, as well as Vice President,
Controller, for its U.S. Pharmaceutical Division, and Vice President, Corporate General Auditor. Prior to Bristol-
Myers Squibb, he served as North American Director of Corporate Audit at 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 25, 2025:
Name
Age
Position
R. Steven Boggan
60
Co-Chief Executive Officer, Global Oral Reconstruction Group
Trinh Clark
51
Senior Vice President and Chief Global Customer Experience Officer
James Mullins
60
Senior Vice President, Global Supply Chain
Kelly Murphy
44
Senior Vice President and General Counsel
Christopher Pendergast
62
Senior Vice President and Chief Technology Officer
Christine Sheehy
57
Senior Vice President, Chief Human Resources
Bianka Wilson
57
Co-Chief Executive Officer, Global Oral Reconstruction Group
R. Steven Boggan has been our Co-Chief Executive Officer, Global Oral Reconstruction Group since April 2024.
As Co-CEO of our Global Oral Reconstruction Group, which is part of our Specialty Products and Other segment,
Mr. Boggan leads commercial operations in the Americas, the Middle East, and Africa, as well as 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.
Trinh Clark has been our Senior Vice President and Chief Global Customer Experience Officer since 2022. Ms.
Clark joined us in 2007 and has served as Vice President, Technology Enablement, North American Distribution
Group. Prior to joining Henry Schein, Ms. Clark held various positions of increasing responsibility at eSurg.
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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. 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.
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.
Bianka Wilson has been our Co-Chief Executive Officer, Global Oral Reconstruction Group since April 2024. As
Co-CEO of our Global Oral Reconstruction Group, which is part of our Specialty Products and Other segment, Ms.
Wilson leads the group's business, including strategic partnerships, in Europe and APAC, as well as Global Oral
Reconstruction Group strategy, finance, and human resources. Ms. Wilson joined Henry Schein in 2018 as Chief
Financial Officer of the Global Oral Reconstruction Group. Prior to joining Henry Schein, Ms. Wilson was CFO of
a public Swiss medical communication technology company and before that an Advisory Partner in KPMG's
consulting practice, following her initial career in public accounting.
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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 and supply of a significant volume of our products and
where we manufacture products, we are dependent upon third parties for raw materials and 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 2024, 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. Additionally, where we are the manufacturer of certain dental specialty products we sell
in the areas of oral surgery, implants, orthodontics and endodontics, we are dependent upon third parties for raw
materials and purchased components. 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 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. In recent periods, we
have experienced increased costs and shortages of purchased components, which has had a negative impact on our
profit margins and on our sales for certain product categories, due to our inability to fully satisfy demand.
We may be unsuccessful in achieving our strategic growth objectives.
Our 2022 – 2024 BOLD+1 Strategic Plan is defined under “Business, Business Strategy” above. We expect to
continue to execute the BOLD+1 strategic priorities with the next evolution of our strategic plan. 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 recently signed Strategic Partnership Agreement.
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. In addition to KKR’s current holdings, KKR will make an additional $250 million investment in the
Company’s common stock. As a result, KKR will become the largest non-index fund stockholder of the Company
with a 12% position. KKR will also have the ability to purchase additional shares via open market purchases up to
a total equity stake of 14.9% of the outstanding common shares of the Company. Under the Partnership
Agreement, two representatives of KKR (the “Investor Designees”) will join our Board of Directors. Each of the
Investor Designees will also be nominated by our Board of Directors to stand for election at our 2025 annual
meeting of stockholders for a term expiring at our 2026 annual meeting of stockholders. As part of the Partnership
Agreement, KKR has agreed to customary voting and other provisions. Consummation of the transactions
contemplated by the Partnership Agreement is subject to customary closing conditions, including the expiration or
29
termination of any waiting period under the Hart-Scott-Rodino Act and certain foreign regulatory approvals. 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. While these innovations
can present benefits to the Company, they also create risks and challenges. If investments in such 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
assessable generative AI that rapidly surpasses our organizational ability to understand associated risks and
opportunities (including employees’ failure to comply with policies governing AI usage) could endanger our
intellectual property, lead to misuse of data and cause reputational harm.
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;
•
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
30
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,
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, is 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 businesses and strategic
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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 have
the ability to 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 stores 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. In particular, the health care industry has been
targeted by threat actors seeking to undermine companies’ cybersecurity defensive measures. 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 and may in
the future incur substantial costs as we update our cybersecurity defense systems and our general computer controls
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to meet evolving challenges, and legislative or regulatory action related to cybersecurity may increase our costs to
develop or implement new technology products and services.
A cyberattack that bypasses or compromises our 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 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 prior 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. 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, and we continue to review the effects of the incident on the Company’s business. We have spent,
and plan to expend in the future, additional resources to continue to 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.
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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.
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, or changes to the methodology by which reimbursement levels are
determined. 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
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 be material in the future. 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.
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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 our
business, financial condition or operating results. These uncertainties, include, among other things, those listed
under “Managements 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
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). 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
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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 FDC Act, the Federal Drug Quality and Security Act, including DSCSA, 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, 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 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
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 and DEA, 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
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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, 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.
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
37
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 United States government (among others) has 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. As of April 4, 2024, the SEC
has temporarily suspended implementation of its climate disclosure rules.
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.
We also are subject to the requirements of Directive No. 2022/2464 on corporate sustainability reporting (“CSRD”)
that became effective on January 5, 2023. CSRD requires in-scope companies to report on sustainability-related
information that is material from a financial risk or opportunity perspective to their business and from an impact
perspective on the environment or society. The materiality of sustainability matters is subjective and may be
interpreted differently by various stakeholders. CSRD, its transposition into national EU Member State law, and
associated guidance are evolving and reporting requirements may change, which may further increase the costs of
complying with CSRD. CSRD has not yet been fully implemented by all EU Member States.
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.
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.
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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 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, 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 effective from May 25, 2018,
which increased privacy rights for 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 Brexit, the UK also has data protection laws
equivalent to the GDPR). Switzerland enacted FADP. Uncertainty about compliance with these data protection
laws remains, with the possibilities that 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, or guidance
on 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 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 are also quickly evolving, with many
39
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 private a 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. 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. Comprehensive privacy laws in a number of other states are
now in effect, and similarly enacted broad laws relating to privacy, data protection, and information security that
will come into effect later in 2025 and 2026, 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 other 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 United States 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 or interpretations of the requirements, could have a material adverse effect on our business.
Further, countries are applying their data and consumer protection laws to AI, particularly generative AI, and are
considering and implementing specific legal frameworks with respect to AI, for example the EU AI Act 2024
(which as with the GDPR, will have 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 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, 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
40
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
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
41
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:
•
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 of foreign customers 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.
Our future success is substantially dependent upon the efforts and abilities of members of our existing senior
management, particularly Stanley M. Bergman, Chairman and Chief Executive Officer. In November 2022, Mr.
Bergman’s employment agreement was extended through December 31, 2025. Although the Company has an
internal succession plan for its senior leadership team, including Mr. Bergman, the loss of the services of Mr.
Bergman could have a material adverse effect on our business. We do not currently have “key man” life insurance
42
policies on any of our employees. Competition for senior management is intense, burnout and turn-over rates are
increasing workplace concerns, and we may not be successful in attracting and retaining key personnel.
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 2024 fiscal year.
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
43
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;
•
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.
Prior Cyber Incidents
In addition to immaterial and unrelated prior 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,
44
(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.
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 5.1 million square feet of properties,
consisting of distribution, office, showroom, manufacturing and sales space, in locations including the United
States, Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, China, the Czech Republic, France, Germany,
Hong Kong SAR, Ireland, Israel, Italy, Japan, Liechtenstein, Luxembourg, Mexico, Morocco, the Netherlands, New
Zealand, Peru, Poland, Portugal, South Africa, Spain, Sweden, Switzerland, Thailand, United Arab Emirates and
the United Kingdom. Lease expirations range from 2025 to 2041.
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.
45
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 18, 2025, there were approximately 108,000 holders of record of our common stock and the last
reported sales price was $77.63. 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 totaling $5.9 billion, authorized by our Board, to the repurchase program provide for a total of $6.0 billion
(including $500 million authorized on January 27, 2025) of shares of our common stock to be repurchased under
this program. Subject to market conditions and other factors, we plan to continue to accelerate our share repurchase
activity.
As of December 28, 2024, we had repurchased approximately $5.1 billion of common stock (95,814,454 shares)
under these initiatives, with $380 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 28, 2024:
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)
9/29/2024 through 11/2/2024
564,907
$
70.93
564,907
5,895,367
11/3/2024 through 11/30/2024
441,702
71.32
441,702
4,975,402
12/1/2024 through 12/28/2024
44,530
77.02
44,530
5,395,131
1,051,139
1,051,139
(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 2024 or 2023. 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.
46
Stock Performance Graph
The graph below compares the cumulative total stockholder return on $100 invested, assuming the reinvestment of
all dividends, on December 28, 2019, the last trading day before the beginning of our 2020 fiscal year, through the
end of our 2024 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 28, 2019
ASSUMES DIVIDENDS REINVESTED
December 28,
December 26,
December 25,
December 31,
December 30,
December 28,
2019
2020
2021
2022
2023
2024
Henry Schein, Inc.
$
100.00
$
98.86
$
112.51
$
119.92
$
113.66
$
105.70
Dow Jones U.S. Health
Care Index
100.00
114.06
141.78
136.42
138.99
143.91
NASDAQ Stock Market
Composite Index
100.00
143.44
176.49
119.01
172.14
227.78
ITEM 6.
[Reserved]
$50
$100
$150
$200
$250
$300
December 2019 December 2020 December 2021 December 2022 December 2023 December 2024
Henry Schein, Inc.
Dow Jones US Health Care Index
NASDAQ Composite Index
47
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; risks related to the recently signed Strategic
Partnership Agreement; our ability to develop or acquire and maintain and protect new products (particularly
technology products) and services and utilize new technologies that achieve market acceptance with acceptable
margins; transitional challenges associated with acquisitions, dispositions and joint ventures, including the failure to
achieve anticipated synergies/benefits, as well as significant demands on our operations, information systems, legal,
regulatory, compliance, financial and human resources functions in connection with acquisitions, dispositions and
joint ventures; certain provisions in our governing documents that may discourage third-party acquisitions of us;
adverse changes in supplier rebates or other purchasing incentives; risks related to the sale of corporate brand
products; 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; changes in the health care industry; risks from expansion of customer
purchasing power and multi-tiered costing structures; increases in shipping costs for our products or other service
issues with our third-party shippers, 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, ongoing wars,
fluctuations in energy pricing and the value of the U.S. dollar as compared to foreign currencies, and changes to
other economic indicators, international trade agreements; the threat or outbreak of war, 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; supply chain disruption; geopolitical
wars; 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; litigation risks; new or unanticipated litigation developments and the status of litigation matters;
our dependence on our senior management, 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.
48
We caution that these factors may not be exhaustive and that many of these factors are beyond our ability to control
or predict. Accordingly, any forward-looking statements contained herein should not be relied upon as a prediction
of actual results. We undertake no duty and have no obligation to update forward-looking statements except as
required by law.
Where You Can Find Important Information
We may disclose important information through one or more of the following channels: SEC filings, public
conference calls and webcasts, press releases, the investor relations page of our website (www.henryschein.com)
and the social media channels identified on the About Media Center page of our website.
Recent Developments
While the U.S. economy has experienced inflationary pressures and strengthening of the U.S. dollar, their impacts
have not been material to our results of operations. Though inflation impacts both our revenues and costs, the depth
and breadth of our product portfolio often allows us to offer lower-cost national brand solutions or corporate brand
alternatives to our more price-sensitive customers who are unwilling to absorb price increases, thus positioning us
to protect our gross profit.
Segment Reporting
During the fourth quarter of our fiscal year ended December 28, 2024, we revised our reportable segments to align
with how the Chairman and Chief Executive Officer manages the business, assesses performance and allocates
resources. Our revised reportable segments now consist of: (i) Global Distribution and Value-Added Services; (ii)
Global Specialty Products; and (iii) Global Technology.
Global Distribution and Value-Added Services includes distribution to the global dental and medical markets of
national brand and corporate brand merchandise, as well as equipment and related technical services. This segment
also includes value-added services such as financial services, continuing education services, consulting and other
services. This segment also markets and sells under our own corporate brand, a portfolio of cost-effective, high-
quality consumable merchandise. Global Specialty Products includes manufacturing, marketing and sales of dental
implant and biomaterial products; and endodontic, orthodontic and orthopedic products and other health care-
related products and services. Global Technology includes development and distribution of practice management
software, e-services, and other products, which are distributed to health care providers.
Cyber Incident
In October 2023 Henry Schein experienced a cyber incident that primarily affected the operations of our North
American and European dental and medical distribution businesses. Henry Schein One, our practice management
software, revenue cycle management and patient relationship management solutions business, was not affected, and
our manufacturing businesses were mostly unaffected. On November 22, 2023, we experienced a disruption of our
ecommerce platform and related applications, which was remediated.
During the year ended December 28, 2024, we had a sales decrease in our dental and medical distribution
businesses, which we believe was primarily a result of lower sales to episodic customers following last year’s cyber
incident. We have a number of programs underway focused on re-establishing these customers.
During the years ended December 28, 2024 and December 30, 2023, we incurred $9 million and $11 million of
expenses directly related to the cyber incident, mostly consisting of professional fees. We maintain cyber
insurance, subject to certain retentions and policy limitations. With respect to the October 2023 cyber incident, we
have a $60 million insurance policy, following a $5 million retention. During the year ended December 28, 2024,
we submitted a claim under this policy for $60 million and received insurance proceeds of $40 million, with the
remaining $20 million of the claim being under review by our insurance providers.
49
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 and other alternate care clinics. We believe that we have a strong
brand identity due to our more than 93 years of experience distributing health care products.
We are headquartered in Melville, New York, employ approximately 25,000 people (of which approximately
13,000 are based outside of the United States) and have operations or affiliates in 33 countries and territories. Our
broad global footprint has evolved over time through our organic growth as well as through contribution from
strategic acquisitions.
We have established strategically located distribution centers around the world to enable us to better serve our
customers and increase our operating efficiency. This infrastructure, together with broad product and service
offerings at competitive prices, and a strong commitment to customer service, enables us to be a single source of
supply for our customers’ needs.
While our primary go-to-market strategy is in our capacity as a distributor, we also market and sell our own
corporate brand portfolio of cost-effective, high-quality consumable merchandise products. We also manufacture,
source and sell a range of company-owned manufactured products, primarily implants, biomaterial products,
endodontics, handpiece and small equipment, hand instrument and repair, restoratives, orthodontics, wound care,
orthopedics and dental lab products. We have achieved scale in these global businesses primarily through
acquisitions, as manufacturers of these products typically do not utilize a distribution channel to serve customers.
During the fourth quarter of our fiscal year ended December 28, 2024, we revised our reportable segments to align
with how the Chairman and Chief Executive Officer manages the business, assesses performance and allocates
resources. Our revised reportable segments now consist of: (i) Global Distribution and Value-Added Services; (ii)
Global Specialty Products; and (iii) Global Technology.
Global Distribution and Value-Added Services includes distribution to the global dental and medical markets of
national brand and corporate brand merchandise, as well as equipment and related technical services. This segment
also includes value-added services such as financial services, continuing education services, consulting and other
services. This segment also markets and sells under our own corporate brand, a portfolio of cost-effective, high-
quality consumable merchandise. Global Specialty Products includes manufacturing, marketing and sales of dental
implant and biomaterial products; and endodontic, orthodontic and orthopedic products and other health care-
related products and services. Global Technology includes development and distribution of practice management
software, e-services, and other products, which are distributed to health care providers.
A key element to grow closer to our customers is our One Schein initiative, which is a unified go-to-market
approach that enables practitioners to work synergistically with our supply chain, equipment sales and service and
other value-added services, allowing our customers to leverage the combined value that we offer through a single
program. Specifically, One Schein provides customers with streamlined access to our comprehensive offering of
national brand products, our corporate brand products and proprietary specialty products and solutions (including
implant, orthodontic and endodontic products). In addition, customers have access to a wide range of services,
including software and other value-added services.
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
50
the potential to favorably affect demand for technology solutions, including software, which can enhance the
efficiency and facilitation of practice management.
Our operating results in recent years have been significantly affected by strategies and transactions that we
undertook to expand our business, domestically and internationally, in part to address significant changes in the
health care industry, including consolidation of health care distribution companies, health care reform, trends
toward managed care, cuts in Medicare and collective purchasing arrangements.
Industry Consolidation
The health care products distribution industry, as it relates to office-based health care practitioners, is fragmented
and diverse. The industry ranges from sole practitioners working out of relatively small offices to group practices
or service organizations ranging in size from a few practitioners to a large number of practitioners who have
combined or otherwise associated their practices.
Due in part to the inability of office-based health care practitioners to store and manage large quantities of supplies
in their offices, the distribution of health care supplies and small equipment to office-based health care practitioners
has been characterized by frequent, small quantity orders, and a need for rapid, reliable and substantially complete
order fulfillment. The purchasing decisions within an office-based health care practice are typically made by the
practitioner or an administrative assistant. Supplies and small equipment are generally purchased from more than
one distributor, with one generally serving as the primary supplier.
The trend of consolidation extends to our customer base. Health care practitioners are increasingly seeking to
partner, affiliate or combine with larger entities such as hospitals, health systems, group practices or physician
hospital organizations. In many cases, purchasing decisions for consolidated groups are made at a centralized or
professional staff level; however, orders are delivered to the practitioners’ offices.
We believe that consolidation within the industry will continue to result in a number of distributors, particularly
those with limited financial, operating and marketing resources, seeking to combine with larger companies that can
provide growth opportunities. This consolidation also may continue to result in distributors seeking to acquire
companies that can enhance their current product and service offerings or provide opportunities to serve a broader
customer base.
Our approach to acquisitions and joint ventures has been to expand our role as a provider of products and services
to the health care industry. This trend has resulted in our expansion into service areas that complement our existing
operations and provide opportunities for us to develop synergies with, and thus strengthen, the acquired businesses.
As industry consolidation continues, we believe that we are positioned to capitalize on this trend, as we believe we
have the ability to support increased sales through our existing infrastructure, although there can be no assurances
that we will be able to successfully accomplish this. 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
51
insurance coverage. In addition, the physician market continues to benefit from the shift of procedures and
diagnostic testing from acute care settings to alternate-care sites, particularly physicians’ offices.
According to the U.S. Census Bureau’s International Database, between 2024 and 2034, the 45 and older
population is expected to grow by approximately 10%. Between 2024 and 2044, this age group is expected to grow
by approximately 18%. This compares with expected total U.S. population growth rates of approximately 4%
between 2024 and 2034 and approximately 6% between 2024 and 2044.
According to the U.S. Census Bureau’s International Database, in 2024 there are approximately seven million
Americans aged 85 years or older, the segment of the population most in need of long-term care and elder-care
services. By the year 2050, that number is projected to increase to approximately 17 million. The population aged
65 to 84 years is projected to increase by approximately 18% during the same period.
As a result of these market dynamics, annual expenditures for health care services continue to increase in the
United States. We believe that demand for our products and services will grow while continuing to be impacted by
current and future operating, economic, and industry conditions. The Centers for Medicare and Medicaid Services
or CMS published “National Health Expenditure Data” indicating that total national health care spending reached
approximately $4.9 trillion in 2023, or 17.6% of the nation’s gross domestic product, the benchmark measure for
annual production of goods and services in the United States. Health care spending is projected to reach
approximately $7.7 trillion by 2032, or 19.7% of the nation’s projected gross domestic product.
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
1. Business – Governmental Regulations” for a discussion of laws, regulations and governmental activity that may
affect our results of operations and financial condition.
52
Results of Operations
The following tables summarize the significant components of our operating results and cash flows for each of the
three years ended December 28, 2024, December 30, 2023, and December 31, 2022 (in millions):
Years Ended
December 28,
December 30, December 31,
2024
2023
2022
Operating results:
Net sales
$
12,673 $
12,339 $
12,647
Cost of sales
8,657
8,479
8,816
Gross profit
4,016
3,860
3,831
Operating expenses:
Selling, general and administrative
3,034
2,956
2,771
Depreciation and amortization
251
209
182
Restructuring and integration costs
110
80
131
Operating income
$
621 $
615 $
747
Other expense, net
$
(108) $
(73) $
(26)
Income taxes
(128)
(120)
(170)
Net income
398
436
566
Net income attributable to Henry Schein, Inc.
390
416
538
Years Ended
December 28,
December 30, December 31,
2024
2023
2022
Cash flows:
Net cash provided by operating activities
$
848 $
500 $
602
Net cash used in investing activities
(430)
(1,135)
(276)
Net cash provided by (used in) financing activities
(510)
701
(315)
53
Plans of Restructuring and Integration Costs
On August 6, 2024, we committed to a new restructuring plan (the “2024 Plan”) to integrate recent acquisitions,
right-size operations and further increase efficiencies. During the year ended December 28, 2024, we recorded
restructuring charges associated with the 2024 Plan of $73 million, which primarily related to severance and
employee-related costs, accelerated amortization of right-of-use lease assets and fixed assets, impairment of
intangible assets related to the disposal of a portion of a business and other exit costs. We expect to record
restructuring charges associated with the 2024 Plan in 2025; however an estimate of the amount of these charges
has not yet been determined.
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. This impairment is
included in the $73 million of restructuring charges discussed above and related to the Global Specialty Products
segment.
On August 1, 2022, we committed to a restructuring plan (the “2022 Plan”) focused on funding the priorities of the
BOLD+1 strategic plan, streamlining operations and other initiatives to increase efficiency. The 2022 Plan has
been completed as of July 31, 2024. During the years ended December 28, 2024, December 30, 2023, and
December 31, 2022, in connection with our 2022 Plan, we recorded restructuring costs of $37 million, $80 million,
and $128 million, respectively. The restructuring costs for these periods primarily related to severance and
employee-related costs, accelerated amortization of right-of-use lease assets and fixed assets, impairment of
intangible assets related to disposal of a U.S. business, 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. This impairment is included in the $80
million of restructuring costs discussed above and related to the Global Specialty Products segment. The disposal
was completed during the first quarter of 2024.
During the year ended December 31, 2022, in connection with the 2022 Plan, we vacated one of the buildings at our
corporate headquarters in Melville, New York, which resulted in an accelerated amortization of a right-of-use lease
asset of $34 million. We also initiated the disposal of a non-profitable U.S. business within the Global Specialty
Products segment and recorded related costs of $49 million, which primarily consisted of impairment of intangible
assets and goodwill, inventory impairment, and severance and employee-related costs, which are included in the
Global Specialty Products segment. These costs are included in the $128 million of restructuring charges discussed
above. The disposal was completed during the first quarter of 2023.
On August 26, 2022, we acquired Midway Dental Supply. In connection with this acquisition, during the year
ended December 31, 2022, we recorded integration costs of $3 million related to one-time employee and other
costs, as well as restructuring charges of $9 million, which are included in the $128 million of restructuring charges
discussed above. The integration and restructuring costs related to Midway Dental Supply are recorded in the
Global Distribution and Value-Added Services segment.
54
2024 Compared to 2023
Note: Percentages for Net Sales; Gross Profit; Operating Expenses; Other Expense, Net; and Income Taxes are
based on actual values and may not recalculate due to rounding.
During the fourth quarter of our fiscal year ended December 28, 2024, we revised our reportable segments to align
with how the Chairman and Chief Executive Officer manages the business, assesses performance and allocates
resources. Our revised reportable segments now consist of: (i) Global Distribution and Value-Added Services; (ii)
Global Specialty Products; and (iii) Global Technology. All prior comparative segment information has been recast
to reflect our new segment structure.
Net Sales
Net sales by reportable segment and by major product or service type were as follows:
% of
% of
Increase / (Decrease)
2024
Total
2023
Total
$
%
Global Distribution and Value-Added Services
Global Dental merchandise (1)
$
4,727
37.3%
$
4,787
38.8%
$
(60)
(1.3)%
Global Dental equipment (2)
1,719
13.6
1,671
13.5
48
2.9
Global Value-added services (3)
233
1.8
191
1.6
42
21.5
Global Dental
6,679
52.7
6,649
53.9
30
0.4
Global Medical (4)
4,081
32.2
3,912
31.7
169
4.3
Total Global Distribution and Value-Added Services
10,760
84.9
10,561
85.6
199
1.9
Global Specialty Products (5)
1,446
11.4
1,331
10.8
115
8.7
Global Technology (6)
630
5.0
602
4.9
28
4.7
Eliminations
(163)
(1.3)
(155)
(1.3)
(8)
n/a
Total
$
12,673
100.0
$
12,339
100.0
$
334
2.7
(1) Includes infection-control products, handpieces, preventatives, impression materials, composites, anesthetics, teeth, dental
implants, 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 and
high-tech and digital restoration equipment.
(3) Consists of financial services on a non-recourse basis, continuing education services for practitioners, consulting and other services.
(4) Includes branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products, X-ray
products, equipment, PPE products and vitamins.
(5) Includes manufacturing, marketing and sales of dental implant and biomaterial products; and endodontic, orthodontic and
orthopedic products and other health care-related products and services.
(6) Consists of practice management software, e-services, and other products, which are distributed to health care providers.
The components of our sales growth/(decline) were as follows:
Local Currency Growth/(Decline)
Total Local
Currency
Growth/(Decline)
Foreign
Exchange
Impact
Total Sales
Growth/(Decline)
Local Internal
Growth
Acquisition
Growth
Global Distribution and Value-Added Services
Global Dental Merchandise
(1.2)%
0.2 %
(1.0)%
(0.3)%
(1.3) %
Global Dental Equipment
2.7
0.3
3.0
(0.1)
2.9
Global Value-added services
0.4
21.4
21.8
(0.3)
21.5
Global Dental
(0.2)
0.9
0.7
(0.3)
0.4
Global Medical
(1.2)
5.5
4.3
-
4.3
Total Global Distribution and Value-Added Services
(0.6)
2.6
2.0
(0.1)
1.9
Global Specialty Products
0.1
9.1
9.2
(0.5)
8.7
Global Technology
2.4
2.0
4.4
0.3
4.7
Total
(0.4)
3.3
2.9
(0.2)
2.7
55
Global Sales
Global net sales for the year ended December 28, 2024 increased 2.7%. The components of sales growth are
presented in the table above.
The 0.4% decrease in our internally generated local currency sales was primarily attributable to the migration to
lower priced products and the challenging economic environment in certain markets and lower sales of PPE
products and COVID-19 test kits. For the year ended December 28, 2024, the estimated increase in internally
generated local currency sales, excluding PPE products and COVID-19 test kits, was 0.3%.
Global Distribution and Value-Added Services Sales
Global Distribution and Value-Added Services net sales for the year ended December 28, 2024 increased 1.9%.
The components of our sales increase are presented in the table above.
The 0.2% decrease in internally generated local currency dental sales was primarily due to the migration to lower
priced dental merchandise products and a challenging economic environment in certain markets, and lower sales of
PPE products. The decrease was partially offset by sales growth in traditional equipment and parts and services in
the United States and sales growth in digital equipment in our international markets, partially offset by lower sales
of digital equipment in the United States and declines in sales of traditional equipment in certain international
markets. The growth in traditional equipment benefited from installation delays during the fourth quarter of 2023
after the cyber incident.
The 1.2% decrease in internally generated local currency medical sales reflects the conversion of certain
pharmaceutical products to lower priced generics, and lower sales of PPE products, COVID-19 test kits and
influenza vaccines, partially offset by strong sales of point-of-care diagnostics including multi-assay flu/COVID
combination test kits.
The acquisition growth in medical sales was attributable to our expansion in the Home Solutions market, including
the acquisition of Shield Healthcare during the year ended December 30, 2023. The acquisition growth in value-
added services within dental sales was attributable primarily to an acquisition of a practice transitions business in
2023.
We estimate that sales of PPE products and COVID-19 test kits were approximately $622 million for the year
ended December 28, 2024 as compared to $710 million for the year ended December 30, 2023 representing an
estimated decrease of $88 million. The estimated $88 million net decrease in sales of PPE products and COVID-19
test kits represents 5.8% of Global Distribution and Value-Added Services net sales for the year ended December
28, 2024, and was primarily due to lower glove prices and reduced demand following the cyber incident. The
estimated increase in the segment’s internally generated local currency sales, excluding PPE products and COVID-
19 test kits, was 0.3%.
Global Specialty Products
Global Specialty Products net sales for the year ended December 28, 2024 increased 8.7%. The components of our
sales increase are presented in the table above.
The internally generated local currency sales were relatively flat due to implant sales growth in certain international
markets and growth in endodontics sales in the United States and international markets, offset by a decline in
implant sales in the United States and lower orthodontic sales. The increase in local currency Global Specialty
Products sales was attributable to the acquisitions of TriMed during the year ended December 28, 2024, and
Biotech Dental and S.I.N. Implant System during the year ended December 30, 2023.
56
Global Technology
Global Technology net sales for the year ended December 28, 2024 increased 4.7%. The components of sales
growth are presented in the table above.
The internally generated local currency increase of 2.4% in Global Technology sales was primarily attributable to a
continued increase in the number of cloud-based users of our practice management software and an increase in
revenue cycle management solutions and our analytical products.
Gross Profit
Gross profit and gross margin percentages by segment and in total were as follows:
Gross
Gross
Increase / (Decrease)
2024
Margin %
2023
Margin %
$
%
Global Distribution and Value-Added Services
$
2,776
25.8 %
$
2,699
25.6%
$
77
3.2%
Global Specialty Products
802
55.4
720
54.1
82
11.3
Global Technology
424
67.4
417
69.2
7
1.9
Corporate
14
n/a
24
n/a
(10)
(41.4)
Total
$
4,016
31.7
$
3,860
31.3
$
156
4.1
As a result of different practices of categorizing costs associated with distribution networks throughout our
industry, our gross margins may not necessarily be comparable to other distribution companies. Gross margin
percentages vary between our segments. We realize substantially higher gross margin from sales of products that
we develop and manufacture within our Global Specialty Products segment compared to gross margin from sales of
products that we distribute within our Global Distribution and Value-Added Services segment. Within our Global
Technology segment, higher gross margins result from us being both the developer and seller of software products
and services.
Within our Global Distribution and Value-Added Services segment, gross profit margins may vary between the
periods as a result of the changes in the mix of products sold as well as changes in our customer mix. With respect
to customer mix, sales to our large-group customers are typically completed at lower gross margins due to the
higher volumes sold as opposed to the gross margin on sales to office-based practitioners, who normally purchase
lower volumes.
The increase in Global Distribution and Value-Added Services gross profit for the year ended December 28, 2024
compared to the prior-year-period is due to acquisitions and margin expansion providing a favorable impact of sales
mix of higher-margin products.
The increase in Global Specialty Products gross profit reflects increased sales volume and higher gross profit from
internally generated sales and gross profit from acquisitions. The increase in gross margin rates was due to product
mix.
The increase in Global Technology gross profit is the result of a higher gross profit from internally generated sales
and gross profit from acquisitions. The decrease in gross margin rates was due to increased vendor costs and
product mix.
57
Operating Expenses
Operating expenses (consisting of selling, general and administrative expenses; depreciation and amortization; and
restructuring and integration costs) by segment were as follows:
% of
% of
Respective
Respective
Increase / (Decrease)
2024
Net Sales
2023
Net Sales
$
%
Global Distribution and Value-Added Services
$
2,080
19.3 %
$
2,034
19.3%
$
46
2.3%
Global Specialty Products
624
43.2
545
41.0
79
14.4
Global Technology
272
43.2
275
45.6
(3)
(0.8)
Corporate
91
n/a
116
n/a
(25)
(22.1)
3,067
24.2
2,970
24.1
97
3.3
Adjustments (1)
328
n/a
275
n/a
53
n/a
Total operating expenses
$
3,395
26.8
$
3,245
26.3
$
150
4.6
(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 ($184 million vs. $150 million); (ii)
restructuring costs ($110 million vs. $80 million); (iii) changes in contingent consideration ($45 million vs. $0 million); (iv) cyber
incident third-party advisory expenses, net of insurance proceeds ($31 million net proceeds vs. $11 million net expenses); (v)
impairment of capitalized assets ($12 million vs. $27 million); (vi) impairment of intangible assets ($0 million vs. $7 million); (vii)
litigation settlements ($6 million vs. $0 million); and (viii) costs associated with shareholder advisory matters ($2 million vs. $0
million).
The net increase in operating expenses is attributable to the following:
Operating Costs
(excluding
acquisitions)
Acquisitions
Adjustments
Total
Global Distribution and Value-Added Services
$
(23)
$
69
$
-
$
46
Global Specialty Products
9
70
-
79
Global Technology
(8)
5
-
(3)
Corporate
(25)
-
-
(25)
(47)
144
-
97
Adjustments
-
-
53
53
Total operating expenses
$
(47)
$
144
$
53
$
150
The components of the net increase in total operating expenses are presented in the table above. The decrease in
operating costs (excluding acquisitions) during the year ended December 28, 2024 included cost savings from our
restructuring activities and reflected a gain of $19 million related to the remeasurement to fair value of a previously
held equity investment within our Global Distribution and Value-Added Services segment.
Other Expense, Net
Other expense, net was as follows:
Variance
2024
2023
$
%
Interest income
$
24 $
17
$
7
39.8%
Interest expense
(131)
(87)
(44)
(51.7)
Other, net
(1)
(3)
2
n/a
Other expense, net
$
(108) $
(73)
$
(35)
(49.3)
Interest income increased primarily due to increased interest rates. Interest expense increased primarily due to
increased borrowings and increased interest rates.
58
Income Taxes
Our effective tax rate was 24.9% for the year ended December 28, 2024, compared to 22.1% for the prior year
period. The difference between our effective and federal statutory tax rates primarily relates to state and foreign
income taxes and interest expense.
The Organization of Economic Co-Operation and Development (OECD) issued technical and administrative
guidance on Pillar Two rules in December 2021, which provides for a global minimum tax rate on the earnings of
large multinational businesses on a country-by-country basis. Effective January 1, 2024, the minimum global tax
rate is 15% for various jurisdictions pursuant to the Pillar Two rules. 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 28, 2024, the impact of the Pillar Two
rules to our financial statements was immaterial.
59
2023 Compared to 2022
Discussion of the results of operations for the year ended December 30, 2023 as compared to December 31, 2022
was included in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” in the Company’s Form 10-K for the year ended December 30, 2023, as filed with the SEC on
February 28, 2024. During the fourth quarter of our fiscal year ended December 28, 2024, we revised our reportable
segments to align with how the Chairman and Chief Executive Officer manages the business, assesses performance
and allocates resources. A discussion of the results of operations for the year ended December 30, 2023 as
compared to December 31, 2022 for net sales and segment adjusted operating income based on the realigned
segments is presented below.
Note: Percentages for Net Sales; Gross Profit; Operating Expenses; Other Expense, Net; and Income Taxes are
based on actual values and may not recalculate due to rounding.
Net Sales
Net sales were as follows:
% of
% of
Increase / (Decrease)
2023
Total
2022
Total
$
%
Global Distribution and Value-Added Services
Global Dental merchandise (1)
$
4,787
38.8 %
$
4,763
37.7%
$
24
0.5 %
Global Dental equipment (2)
1,671
13.5
1,715
13.5
(44)
(2.6)
Global Value-added services (3)
191
1.6
151
1.2
40
27.1
Global Dental
6,649
53.9
6,629
52.4
20
0.3
Global Medical (4)
3,912
31.7
4,346
34.4
(434)
(10.0)
Total Global Distribution and Value-Added Services
10,561
85.6
10,975
86.8
(414)
(3.8)
Global Specialty Products (5)
1,331
10.8
1,273
10.1
58
4.6
Global Technology (6)
602
4.9
549
4.3
53
9.6
Eliminations
(155)
(1.3)
(150)
(1.2)
(5)
n/a
Total
$
12,339
100.0
$
12,647
100.0
$
(308)
(2.4)
(1) Includes infection-control products, handpieces, preventatives, impression materials, composites, anesthetics, teeth, dental
implants, 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 and
high-tech and digital restoration equipment.
(3) Consists of financial services on a non-recourse basis, continuing education services for practitioners, consulting and other services.
(4) Includes branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products, X-ray
products, equipment, PPE products and vitamins.
(5) Includes manufacturing, marketing and sales of dental implant and biomaterial products; and endodontic, orthodontic and
orthopedic products and other health care-related products and services.
(6) Consists of practice management software, e-services, and other products, which are distributed to health care providers.
The components of our sales growth/(decline) were as follows:
Local Currency Growth/(Decline)
Total Local
Currency
Growth/
(Decline)
Foreign
Exchange
Impact
Total Sales
Growth/
(Decline)
Local
Internal
Growth
Acquisition
Growth
Extra Week
Impact
Global Distribution and Value-Added Services
Global Dental Merchandise
(0.6)%
2.2 %
(1.0)%
0.6 %
(0.1)%
0.5 %
Global Dental Equipment
(1.7)
1.1
(2.1)
(2.7)
0.1
(2.6)
Global Value-added services
11.4
16.5
(0.7)
27.2
(0.1)
27.1
Global Dental
(0.6)
2.2
(1.3)
0.3
-
0.3
Global Medical
(11.0)
2.3
(1.3)
(10.0)
-
(10.0)
Total Global Distribution and Value-Added Services
(4.7)
2.2
(1.3)
(3.8)
-
(3.8)
Global Specialty Products
(4.0)
8.7
(1.0)
3.7
0.9
4.6
Global Technology
8.3
2.1
(0.8)
9.6
-
9.6
Total
(4.2)
2.9
(1.2)
(2.5)
0.1
(2.4)
60
Global Sales
We report our results of operations on a 52 or 53 weeks per fiscal year basis ending on the last Saturday of
December. The year ended December 30, 2023 consisted of 52 weeks, and the year ended December 31, 2022
consisted of 53 weeks, resulting in an extra week of sales.
Global net sales for the year ended December 30, 2023 decreased 2.4%. The components of our sales decline are
presented in the table above.
The 4.2% decrease in our internally generated local currency sales was primarily attributable to a decrease in sales
of PPE products and COVID-19 test kits. For the nine months ended September 30, 2023, the estimated increase in
internally generated local currency sales, excluding PPE products and COVID-19 test kits, was 3.5%. However, as
a result of the adverse impact of the 2023 cyber incident during the quarter ended December 30, 2023, our
internally generated local currency sales, excluding sales of PPE products and COVID-19 test kits, on a full year
basis were flat compared to the prior year.
Global Distribution and Value-Added Services Sales
Global Distribution and Value-Added Services net sales for the year ended December 30, 2023 decreased 3.8%.
The components of our sales decline are presented in the table above.
The 0.6% decrease in internally generated local currency dental sales was attributable to a decrease in sales of
dental merchandise and dental equipment as a result of the adverse impact of the 2023 cyber incident.
The 11.0% decrease in internally generated local currency medical sales is primarily attributable to the impact of
the 2023 cyber incident and to lower sales of PPE products and COVID-19 test kits and other point-of-care
diagnostic products.
The acquisition growth in medical sales was attributable to our expansion in the Home Solutions market, including
the acquisition of Shield Healthcare during the year ended December 30, 2023. The acquisition growth in value-
added services was attributable primarily to an acquisition of a practice transitions business in 2023.
The increase in internally generated local currency value-added services sales is attributable to an increase in our
dental billing solutions, partially offset by the expiration, during the year ended December 31, 2022, of a modestly
profitable government contract in one of our value-added services businesses.
We estimate that sales of PPE products and COVID-19 test kits were approximately $710 million for the year
ended December 30, 2023 as compared to $1,238 million for the year ended December 31, 2022 representing an
estimated decrease of $528 million. The estimated $528 million net decrease in sales of PPE products and COVID-
19 test kits represents 5.0% of Global Distribution and Value-Added Services net sales for the year ended
December 30, 2023 and was primarily due to lower market prices and loss of demand during the 2023 cyber
incident. Excluding PPE products and COVID-19 test kits, our internally generated local currency sales were flat.
Global Specialty Products
Global Specialty Products net sales for the year ended December 30, 2023 increased 4.6%. The components of
sales increase are presented in the table above.
The decrease in internally generated local currency sales was primarily attributable to lower sales in our
orthodontics business, partially impacted by a patent expiration and the October 2023 cyber incident and declines in
certain other health care related consumable merchandise products.
The acquisition growth in Global Specialty Products sales was attributable to the acquisitions of Biotech Dental and
S.I.N. Implant system during the year ended December 30, 2023.
61
Global Technology
Global Technology net sales for the year ended December 30, 2023 increased 9.6%. The components of our sales
growth are presented in the table above. During the year ended December 30, 2023, the trend for sales of practice
management software growth remained strong as we continued to increase the number of cloud-based users. We
also experienced increased demand for our revenue cycle management solutions and our analytical products. This
segment of our business was not directly affected by the 2023 cyber incident in the fourth quarter.
Gross Profit
Gross profit and gross margin percentages by reportable segment were as follows:
Gross
Gross
Increase / (Decrease)
2023
Margin %
2022
Margin %
$
%
Global Distribution and Value-Added Services $
2,699
25.6 %
$
2,769
25.2%
$
(70)
(2.5)%
Global Specialty Products
720
54.1
678
53.3
42
6.3
Global Technology
417
67.4
375
69.2
42
11.3
Corporate
24
n/a
9
n/a
15
152.9
Total
$
3,860
31.7
$
3,831
31.3
$
29
0.8
As a result of different practices of categorizing costs associated with distribution networks throughout our
industry, our gross margins may not necessarily be comparable to other distribution companies. Gross margin
percentages vary between our segments. We realize substantially higher gross margin from sales of products that
we develop and manufacture within our Global Specialty Products segment compared to gross margin from sales of
products that we distribute within our Global Distribution and Value-Added Services segment. Within our Global
Technology segment, higher gross margins result from us being both the developer and seller of software products
and services.
Within our Global Distribution and Value-Added Services segment, gross profit margins may vary between the
periods as a result of the changes in the mix of products sold as well as changes in our customer mix. For example,
sales of our corporate brand and certain specialty products achieve gross profit margins that are higher than average
total gross profit margins of all products. With respect to customer mix, sales to our large-group customers are
typically completed at lower gross margins due to the higher volumes sold as opposed to the gross margin on sales
to office-based practitioners, who normally purchase lower volumes.
The decrease in Global Distribution and Value-Added Services gross profit for the year ended December 30, 2023
compared to the prior year was due to the 2023 cyber incident and a reduction in sales of PPE products and
COVID-19 test kits, partially offset by additional gross profit from acquisitions.
The increase in Global Specialty Products gross profit is primarily attributable to gross profit from our acquisitions
offset by lower gross profit from our orthodontics business and certain other health care related consumable
merchandise products. The increase in gross margin rates was due to a favorable impact of sales mix.
The increase in Global Technology gross profit reflects increased local currency revenues and additional gross
profit from acquisitions.
62
Operating Expenses
Operating expenses (consisting of selling, general and administrative expenses; depreciation and amortization,
restructuring and integration costs) by segment were as follows:
% of
% of
Respective
Respective
Increase / (Decrease)
2023
Net Sales
2022
Net Sales
$
%
Global Distribution and Value-Added Services $
2,034
19.3 %
$
1,936
17.6%
$
98
5.0%
Global Specialty Products
545
41.0
486
38.2
59
12.3
Global Technology
275
45.6
250
45.4
25
10.1
Corporate
116
n/a
121
n/a
(5)
(4.9)
2,970
24.1
2,793
22.1
177
6.3
Adjustments (1)
275
n/a
291
n/a
(16)
n/a
Total operating expenses
$
3,245
26.3
$
3,084
24.4
$
161
5.2
(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 ($150 million vs. $126 million); (ii)
restructuring costs ($80 million vs. $131 million); (iii) cyber incident third-party advisory expenses ($11 million vs. $0 million);
(iv) impairment of capitalized assets ($27 million vs. $0 million); and (v) impairment of intangible assets ($7 million vs. $34
million).
The net increase in operating expenses is attributable to the following:
Operating Costs
(excluding
acquisitions)
Acquisitions
Adjustments
Total
Global Distribution and Value-Added Services $
45
$
53
$
-
$
98
Global Specialty Products
(12)
71
-
59
Global Technology
21
4
-
25
Corporate
(5)
-
-
(5)
49
128
-
177
Adjustments
-
-
(16)
(16)
Total operating expenses
$
49
$
128
$
(16)
$
161
The increase in operating costs (excluding acquisitions) during the year ended December 30, 2023 includes
increases in payroll and payroll related costs primarily in our Global Distribution and Value-Added Services
segment. During the year ended December 30, 2023, our operating expenses were favorably impacted by the
recognition of a remeasurement gain of $18 million following an acquisition of a controlling interest of a previously
held equity investment.
Other Expense, Net
Other expense, net was as follows:
Variance
2023
2022
$
%
Interest income
$
17 $
8
$
9
125.1%
Interest expense
(87)
(35)
(52)
(148.7)
Other, net
(3)
1
(4)
n/a
Other expense, net
$
(73) $
(26)
$
(47)
(172.9)
Interest income increased primarily due to increased interest rates. Interest expense increased primarily due to
increased borrowings and increased interest rates.
63
Income Taxes
Our effective tax rate was 22.1% for the year ended December 30, 2023 compared to 23.5% for the prior year. In
each year, the difference between our effective and federal statutory tax rates primarily relates to state and foreign
income taxes and interest expense.
The Organization of Economic Co-Operation and Development (OECD) issued technical and administrative
guidance on Pillar Two rules in December 2021, which provides for a global minimum tax rate on the earnings of
large multinational businesses on a country-by-country basis. Effective January 1, 2024, the minimum global tax
rate is 15% for various jurisdictions pursuant to the Pillar Two rules. 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 30, 2023, the impact of the Pillar Two
rules to our financial statements was immaterial.
64
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.
We believe that our cash and cash equivalents, our ability to access private debt markets and public equity markets,
and our available funds under existing credit facilities provide us with sufficient liquidity to meet our currently
foreseeable short-term and long-term capital needs.
Our acquisition strategy is focused on investments in companies that add new customers and sales teams, increase
our geographic footprint (whether entering a new country, such as emerging markets, or building scale where we
have already invested in businesses), and finally, those that enable us to access new products and technologies.
Net cash provided by operating activities was $848 million for the year ended December 28, 2024, compared to net
cash provided by operating activities of $500 million for the prior year. The net change of $348 million was
primarily attributable to changes in working capital accounts (primarily accounts receivable and inventory), and
higher cash net income. The residual impacts of the 2023 cyber incident on our working capital during the year
ended December 28, 2024 included an increase in operating cash flows from accounts receivable due to improved
collection levels and decreased cash flows from accounts payable and accrued expenses resulting from previously
delayed payments.
Net cash used in investing activities was $430 million for the year ended December 28, 2024, compared to net cash
used in investing activities of $1,135 million for the prior year. The net change of $705 million was primarily
attributable to decreased payments for equity investments and business acquisitions.
Net cash used in financing activities was $510 million for the year ended December 28, 2024, compared to net cash
provided by financing activities of $701 million for the prior year. The net change of $1,211 million was primarily
due to decreased net borrowings from debt to finance our investments, increased acquisitions of noncontrolling
interests in subsidiaries and increased repurchases of common stock.
65
The following table summarizes selected measures of liquidity and capital resources:
December 28,
December 30,
2024
2023
Cash and cash equivalents
$
122
$
171
Working capital (1)
1,180
1,805
Debt:
Bank credit lines
$
650
$
264
Current maturities of long-term debt
56
150
Long-term debt
1,830
1,937
Total debt
$
2,536
$
2,351
Leases:
Current operating lease liabilities
$
75
$
80
Non-current operating lease liabilities
259
310
(1) Includes $241 million and $284 million of certain accounts receivable which serve as security for U.S. trade accounts receivable
securitization at December 28, 2024 and December 30, 2023, respectively.
Our cash and cash equivalents consist of bank balances and investments in money market funds representing
overnight investments with a high degree of liquidity.
Accounts receivable days sales outstanding and inventory turns
Our accounts receivable days sales outstanding from operations increased to 47.3 days as of December 28, 2024
from 46.2 days as of December 30, 2023. Adjusted for the impact of the cyber incident our days sales outstanding
decreased to 45.7 days as of December 28, 2024. During the years ended December 28, 2024 and December 30,
2023, we wrote off approximately $12 million and $16 million, respectively, of fully reserved accounts receivable
against our trade receivable reserve. Our inventory turns from operations increased to 5.0 as of December 28, 2024
from 4.5 as of December 30, 2023. 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 4.88%), as well as
inventory purchase commitments and operating lease obligations as of December 28, 2024:
Payments due by period
< 1 year
2 - 3 years
4 - 5 years
> 5 years
Total
Contractual obligations:
Long-term debt, including interest
$
140 $
1,053 $
337 $
657 $
2,187
Inventory purchase commitments
9
5
-
-
14
Operating lease obligations
87
130
80
81
378
Transition tax obligations
24
-
-
-
24
Finance lease obligations, including interest
3
3
1
-
7
Total
$
263 $
1,191 $
418 $
738 $
2,610
For information relating to our debt please see Note 14 – Debt.
66
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 17 years, some of
which may include options to extend the leases for up to 15 years. As of December 28, 2024, our right-of-use
assets related to operating leases were $293 million and our current and non-current operating lease liabilities were
$75 million and $259 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.
From March 3, 2003 through December 28, 2024, we repurchased $5.1 billion, or 95,814,454 shares, under our
common stock repurchase programs, with $380 million available as of December 28, 2024 for future common stock
share repurchases. Subject to market conditions and other factors, we plan to continue to accelerate our share
repurchase activity.
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 28, 2024 and December 30, 2023, our balance for
redeemable noncontrolling interests was $806 million and $864 million, respectively. Please see Note 20 –
Redeemable Noncontrolling Interests for further information.
Unrecognized tax benefits
As more fully disclosed in Note 15 – Income Taxes of “Notes to Consolidated Financial Statements,” we cannot
reasonably estimate the timing of future cash flows related to our unrecognized tax benefits, including accrued
interest, of $108 million and $115 million as of December 28, 2024 and December 30, 2023, respectively.
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:
67
Inventories and Reserves
Inventories consist primarily of finished goods, raw materials and work-in-process and are valued 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 tech equipment and drop-shipments. We include product costs, labor, and related fixed
and variable overhead in the cost of inventory that we manufacture. In estimating carrying value of inventory, we
consider many factors including the condition and salability of the inventory by reviewing on-hand quantities,
historical sales, forecasted sales and market and economic trends.
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 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 regard our reporting units to be our operating segments or one level below the operating
segments. Goodwill is allocated to such reporting units, for the purposes of preparing our impairment analyses,
based on a specific identification basis.
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.
On an annual basis, we prepare financial projections. These projections are based on input from our leadership and
are presented annually to our Board. Influences on this year's forecasted financial information and the fair value
model include: the impact of planned strategic initiatives, the continued integration of recent acquisitions and
overall market conditions. The estimates used to calculate the fair value of a reporting unit change from year to
year based on operating results, market conditions, and other factors.
During the year ended December 28, 2024, we engaged third-party valuation specialists to determine the relative
fair value of our goodwill related to the revision of our reportable segments. Our management reviewed and
approved this valuation.
During the fourth quarter of our fiscal year ended December 28, 2024, we revised our segment structure to align
with how our Chairman and Chief Executive Officer manages the business, assesses performance and allocates
resources. Our revised reportable segments now consist of: (i) Global Distribution and Value-Added Services; (ii)
Global Specialty Products; and (iii) Global Technology. Reporting units under the former structure were tested for
impairment, and no impairment was identified. As a result of the realignment and the change in operating
segments, we reallocated goodwill to each of our new reporting units using a relative fair value approach. Based on
the impairment test under the new structure, it was determined that the fair values of our reporting units more likely
than not exceeded their carrying values, resulting in no impairment. For both the former and new structure
goodwill impairment tests as of September 30, 2024, the fair values of reporting units were computed using the
methodology described above.
68
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. For the year ended
December 31, 2022, in connection with our restructuring activities, we recorded a $20 million impairment of
goodwill, in the Global Specialty Products segment, relating to the disposal of an unprofitable business for which
estimated fair value was lower than carrying value.
Apart from the above impairments identified in connection with our restructuring initiative, we did not record any
additional impairment during the years ended December 28, 2024, December 30, 2023, and December 31, 2022.
We performed our annual quantitative testing for the remaining goodwill and the fair value of each of our reporting
units sufficiently exceeded the carrying values.
Definite-Lived Intangible Assets
Annually or if we identify an impairment indicator, definite-lived intangible assets such as non-compete
agreements, trademarks, trade names, customer relationships and lists, and product development 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 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 and were calculated as the differences
between the carrying values and the estimated fair values of the impaired intangible assets, using a discounted
estimate of future cash flows.
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. These
impairment charges were calculated as the differences between the carrying values and the estimated fair values of
the impaired intangible assets, using a discounted estimate of future cash flows.
During the year ended December 31, 2022, we recorded $49 million of impairment charges related to businesses in
our Global Distribution and Value-Added Services segment, consisting of a $15 million charge related to the
disposal of an unprofitable business in connection with our restructuring initiatives, and a $34 million charge
related to customer lists and relationships attributable to customer attrition rates being higher than expected in
certain other Global Distribution and Value-Added Services businesses. These impairment charges were calculated
as the differences between the carrying values and the estimated fair values of the impaired intangible assets, using
a discounted estimate of future cash flows.
Please see Note 16 – Plans of Restructuring and Integration Costs for additional details.
69
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
When determining if the realization of a deferred tax asset is likely to assess the need to record a valuation
allowance, estimates and judgement are required. 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.
70
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 2024 compared to
foreign currencies would have changed our 2024 reported Net income attributable to Henry Schein, Inc. by
approximately $7 million.
As of December 28, 2024, our forward foreign currency exchange agreements, which expire through November 3,
2028, had a fair value of $12 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 $9 million. A 5% increase in the
value of the Euro to the USD from December 28, 2024 would decrease the fair value of these forward contracts by
$17 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 28, 2024, the
notional value of the investments in these plans was $106 million. At December 28, 2024, the financing blended
rate for this swap was based on the Secured Overnight Financing Rate (“SOFR”) of 4.53% plus 0.61%, for a
combined rate of 5.14%. For the years ended December 28, 2024, December 30, 2023, and December 31, 2022 we
have recorded a gain/(loss), within selling, general and administrative expense, of approximately $8 million, $10
million and $(17) 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.
71
Interest Rate Risk
As of December 28, 2024, 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 28, 2024, there was $0 million outstanding under this revolving credit facility.
During the year ended December 28, 2024, the average outstanding balance was approximately $50 million. Based
upon our average outstanding balances, for each hypothetical increase of 25 basis points, our interest expense
thereunder would have increased by $0.1 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 28, 2024, the commercial paper rate was 4.73% plus 0.75%, for a combined rate of 5.48%, and the
outstanding balance under this securitization facility was $150 million. During the year ended December 28, 2024,
the average outstanding balance was approximately $252 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 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 28, 2024, the
notional value of the interest rate swap agreements was $713 million.
On July 11, 2023, we entered into a three-year $750 million term loan credit agreement (the “Term Credit
Agreement”). The interest rate on this term loan is based on the Term SOFR plus a spread based on our leverage
ratio at the end of each financial reporting quarter. This term loan matures on July 11, 2026. 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, we have a hedge in place (see Note 13 – Derivatives and Hedging Activities for additional information)
that ultimately creates an effective fixed rate of 6.04%.
72
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, NY; PCAOB
ID#243)
73
Consolidated Financial Statements:
Balance Sheets as of December 28, 2024 and December 30, 2023
75
Statements of Income for the years ended December 28, 2024,
December 30, 2023 and December 31, 2022
76
Statements of Comprehensive Income for the years ended December 28, 2024,
December 30, 2023 and December 31, 2022
77
Statements of Changes in Stockholders’ Equity for the years ended
December 28, 2024, December 30, 2023 and December 31, 2022
78
Statements of Cash Flows for the years ended December 28, 2024,
December 30, 2023 and December 31, 2022
79
Notes to Consolidated Financial Statements
80
Note 1 – Basis of Presentation and Significant Accounting Policies
80
Note 2 – Cyber Incident
91
Note 3 – Net Sales from Contracts with Customers
92
Note 4 – Segment and Geographic Data
93
Note 5 – Business Acquisitions
96
Note 6 – Inventories, Net
102
Note 7 – Property and Equipment, Net
102
Note 8 – Leases
103
Note 9 – Goodwill and Other Intangibles, Net
105
Note 10 – Investments and Other
107
Note 11 – Fair Value Measurements
108
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 Integration Costs
121
Note 17 – Commitments and Contingencies
124
Note 18 – Stock-Based Compensation
126
Note 19 – Employee Benefit Plans
129
Note 20 – Redeemable Noncontrolling Interests
132
Note 21 – Comprehensive Income
132
Note 22 – Earnings Per Share
134
Note 23 – Supplemental Cash Flow Information
134
Note 24 – Related Party Transactions
135
Note 25 – Subsequent Event
135
73
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 28, 2024 and December 30, 2023, the related consolidated statements of income, comprehensive income,
changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 28, 2024,
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 28, 2024 and December 30, 2023, and the results of its operations and its cash flows for each of the three
years in the period ended December 28, 2024, 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 28, 2024,
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 25, 2025 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 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.
74
Business Acquisition - Valuation of Acquired Intangible Assets
As described in Note 5 of the consolidated financial statements, the Company acquired TriMed Inc. (“TriMed”) in
2024. As a result of this acquisition, management was required to determine the fair values of the identifiable assets
acquired and liabilities assumed. In connection with the acquisition of TriMed, the Company recorded $204 million
of identifiable intangible assets related to product development.
We identified the revenue growth rates for certain periods used in the determination of the fair value of the acquired
product development in the acquisition of TriMed as a critical audit matter. The principal consideration for our
determination was the subjective judgement required by management in formulating these revenue growth rates.
Auditing these considerations involved especially subjective and challenging auditor judgement due to the nature
and extent of audit effort required to address these matters.
The primary procedures we performed to address this critical audit matter included:
•
Evaluating the reasonableness of the revenue growth rates used in the determination of the fair values of the
acquired product development in the acquisition of TriMed by: (i) reviewing the historical performance of
the acquired company utilizing their financial statements, and (ii) assessing the revenue projections against
industry metrics for certain periods.
/s/ BDO USA, P.C.
We have served as the Company's auditor since 1984.
New York, NY
February 25, 2025
See accompanying notes.
75
HENRY SCHEIN, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
December 28,
December 30,
2024
2023
ASSETS
Current assets:
Cash and cash equivalents
$
122
$
171
Accounts receivable, net of allowance for credit losses of $78 and $83 (1)
1,482
1,863
Inventories, net
1,810
1,815
Prepaid expenses and other
569
639
Total current assets
3,983
4,488
Property and equipment, net
531
498
Operating lease right-of-use assets
293
325
Goodwill
3,887
3,875
Other intangibles, net
1,023
916
Investments and other
501
471
Total assets
$
10,218
$
10,573
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
962
$
1,020
Bank credit lines
650
264
Current maturities of long-term debt
56
150
Operating lease liabilities
75
80
Accrued expenses:
Payroll and related
303
332
Taxes
139
137
Other
618
700
Total current liabilities
2,803
2,683
Long-term debt (1)
1,830
1,937
Deferred income taxes
102
54
Operating lease liabilities
259
310
Other liabilities
387
436
Total liabilities
5,381
5,420
Redeemable noncontrolling interests
806
864
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,
124,155,884 outstanding on December 28, 2024 and
129,247,765 outstanding on December 30, 2023
1
1
Additional paid-in capital
-
-
Retained earnings
3,771
3,860
Accumulated other comprehensive loss
(379)
(206)
Total Henry Schein, Inc. stockholders' equity
3,393
3,655
Noncontrolling interests
638
634
Total stockholders' equity
4,031
4,289
Total liabilities, redeemable noncontrolling interests and stockholders' equity
$
10,218
$
10,573
(1)
Amounts presented include balances held by our consolidated variable interest entity (“VIE”). At December 28, 2024 and
December 30, 2023, includes trade accounts receivable of $241 million and $284 million, respectively, and long-term debt of $150
million and $210 million, respectively. See Note 1 – Basis of Presentation and Significant Accounting Policies for further
information.
See accompanying notes.
76
HENRY SCHEIN, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except share and per share data)
Years Ended
December 28,
December 30,
December 31,
2024
2023
2022
Net sales
$
12,673 $
12,339 $
12,647
Cost of sales
8,657
8,479
8,816
Gross profit
4,016
3,860
3,831
Operating expenses:
Selling, general and administrative
3,034
2,956
2,771
Depreciation and amortization
251
209
182
Restructuring and integration costs
110
80
131
Operating income
621
615
747
Other income (expense):
Interest income
24
17
8
Interest expense
(131)
(87)
(35)
Other, net
(1)
(3)
1
Income before taxes, equity in earnings of affiliates and
noncontrolling interests
513
542
721
Income taxes
(128)
(120)
(170)
Equity in earnings of affiliates, net of tax
13
14
15
Net income
398
436
566
Less: Net income attributable to noncontrolling interests
(8)
(20)
(28)
Net income attributable to Henry Schein, Inc.
$
390 $
416 $
538
Earnings per share attributable to Henry Schein, Inc.:
Basic
$
3.07 $
3.18 $
3.95
Diluted
$
3.05 $
3.16 $
3.91
Weighted-average common shares outstanding:
Basic
126,788,997
130,618,990
136,064,221
Diluted
127,779,228
131,748,171
137,755,670
See accompanying notes.
77
HENRY SCHEIN, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
Years Ended
December 28,
December 30,
December 31,
2024
2023
2022
Net income
$
398 $
436 $
566
Other comprehensive income, net of tax:
Foreign currency translation gain (loss)
(207)
53
(88)
Unrealized gain (loss) from hedging activities
13
(18)
7
Pension adjustment gain (loss)
(3)
(3)
12
Other comprehensive income (loss), net of tax
(197)
32
(69)
Comprehensive income
201
468
497
Comprehensive income attributable to noncontrolling interests:
Net income
(8)
(20)
(28)
Foreign currency translation loss (gain)
24
(5)
7
Comprehensive loss (income) attributable to noncontrolling interests
16
(25)
(21)
Comprehensive income attributable to Henry Schein, Inc.
$
217 $
443 $
476
See accompanying notes.
78
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 25, 2021
137,145,558 $
1 $
- $
3,595 $
(171) $
638 $
4,063
Net income (excluding $21 attributable to Redeemable
noncontrolling interests)
-
-
-
538
-
7
545
Foreign currency translation loss (excluding loss of $6
attributable to Redeemable noncontrolling interests)
-
-
-
-
(81)
(1)
(82)
Unrealized gain from hedging activities,
net of tax of $3
-
-
-
-
7
-
7
Pension adjustment gain, including tax of $4
-
-
-
-
12
-
12
Distributions to noncontrolling shareholders
-
-
-
-
-
(1)
(1)
Purchase of noncontrolling interests
-
-
-
-
-
(7)
(7)
Change in fair value of redeemable securities
-
-
4
-
-
-
4
Noncontrolling interests and adjustments related to
business acquisitions
-
-
-
-
-
13
13
Repurchase and retirement of common stock
(6,111,676)
-
(65)
(420)
-
-
(485)
Stock issued upon exercise of stock options
35,792
-
2
-
-
-
2
Stock-based compensation expense
1,102,108
-
54
-
-
-
54
Shares withheld for payroll taxes
(376,034)
-
(32)
-
-
-
(32)
Settlement of stock-based compensation awards
(2,931)
-
2
-
-
-
2
Transfer of charges in excess of capital
-
-
35
(35)
-
-
-
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
See accompanying notes.
79
HENRY SCHEIN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Years Ended
December 28,
December 30,
December 31,
2024
2023
2022
Cash flows from operating activities:
Net income
$
398
$
436
$
566
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
297
248
212
Impairment charge on intangible assets
-
7
34
Impairment of capitalized software
12
27
-
Non-cash restructuring charges
32
27
93
Stock-based compensation expense
39
39
54
Provision for losses on trade and other accounts receivable
14
18
5
Benefit from deferred income taxes
(61)
(20)
(73)
Equity in earnings of affiliates
(13)
(14)
(15)
Distributions from equity affiliates
12
15
15
Changes in unrecognized tax benefits
5
10
12
Other
(27)
(3)
(20)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable
315
(327)
(7)
Inventories
(59)
231
(126)
Other current assets
47
(138)
(52)
Accounts payable and accrued expenses
(163)
(56)
(96)
Net cash provided by operating activities
848
500
602
Cash flows from investing activities:
Purchases of property and equipment
(148)
(147)
(96)
Payments related to equity investments and business acquisitions,
net of cash acquired
(230)
(955)
(158)
Proceeds from loan to affiliate
4
6
11
Settlements for net investment hedges
-
22
-
Capitalized software costs
(39)
(40)
(32)
Other
(17)
(21)
(1)
Net cash used in investing activities
(430)
(1,135)
(276)
Cash flows from financing activities:
Net change in bank credit lines
387
153
48
Proceeds from issuance of long-term debt
120
1,368
270
Principal payments for long-term debt
(318)
(468)
(59)
Debt issuance costs
-
(3)
-
Proceeds from issuance of stock upon exercise of stock options
6
1
2
Payments for repurchases and retirement of common stock
(385)
(250)
(485)
Payments for taxes related to shares withheld for employee taxes
(9)
(34)
(32)
Distributions to noncontrolling shareholders
(54)
(47)
(21)
Payments for contingent consideration
(2)
-
-
Acquisitions of noncontrolling interests in subsidiaries
(255)
(19)
(38)
Net cash provided by (used in) financing activities
(510)
701
(315)
Effect of exchange rate changes on cash and cash equivalents
43
(12)
(12)
Net change in cash and cash equivalents
(49)
54
(1)
Cash and cash equivalents, beginning of period
171
117
118
Cash and cash equivalents, end of period
$
122
$
171
$
117
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
80
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 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 operations or affiliates in the United States, Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile,
China, the Czech Republic, France, Germany, Hong Kong SAR, Ireland, Israel, Italy, Japan, Liechtenstein,
Luxembourg, Mexico, Morocco, the Netherlands, New Zealand, Peru, Poland, Portugal, South Africa, Spain,
Sweden, Switzerland, Thailand, United Arab Emirates and the United Kingdom.
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, 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 28, 2024 and December 30, 2023, certain trade
accounts receivable that can only be used to settle obligations of this VIE were $241 million and $284 million,
respectively, and the liabilities of this VIE where the creditors have recourse to us were $150 million and $210
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:
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
81
• Level 1— Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the
measurement date.
• Level 2— Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly. Level 2 inputs include: quoted prices for similar assets or liabilities in active markets;
quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted
prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
• Level 3— Inputs that are unobservable for the asset or liability.
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; 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 year ended December 28, 2024 consisted of 52 weeks, and the years ended December
30, 2023 and December 31, 2022 consisted of 52 weeks and 53 weeks, respectively.
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
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
82
based upon historical data and estimates and are provided for in the period in which the related sales are
recognized.
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 28, 2024 and December 30, 2023, we had accrued approximately $8 million and $12 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.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
83
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 $105 million, $105 million and $103 million for the years ended December
28, 2024, December 30, 2023 and December 31, 2022, 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 $106 million, $98 million and $96 million for the years ended December 28, 2024, December 30, 2023 and
December 31, 2022, respectively.
Advertising and Promotional Costs
We expense advertising and promotional costs as incurred. Total advertising and promotional expenses were $43
million, $47 million and $47 million for the years ended December 28, 2024, December 30, 2023 and December
31, 2022, 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 time-based restricted stock units and on a graded vesting basis for the option awards. 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.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
84
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 $33 million and $52 million, primarily related to
payments for inventory, were classified as accounts payable as of December 28, 2024 and December 30, 2023.
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 a receivable and charge it against its recorded
allowance when we deem them uncollectible.
Our net accounts receivable balance was $1,482 million, $1,863 million, and $1,442 million, at December 28, 2024,
December 30, 2023 and December 31, 2022, respectively.
The following table presents our allowances for credit losses:
As of
Description
December 28,
2024
December 30,
2023
December 31,
2022
Balance at beginning of year
$
83 $
65 $
67
Provision for credit losses
14
17
6
Adjustments to existing allowances for late fees, foreign currency
exchange rates, and write-offs
(19)
1
(8)
Balance at end of year
$
78 $
83 $
65
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
85
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 28, 2024 and December 30, 2023 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 28, 2024, December 30, 2023, and December 31, 2022, 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 28,
2024
December 30,
2023
December 31,
2022
Current contract liabilities
$
81 $
89 $
86
Non-current contract liabilities
8
9
8
Total contract liabilities
$
89 $
98 $
94
Inventories and Reserves
Inventories consist primarily of finished goods, raw materials and work-in-process and are valued at the lower of
cost or net realizable value. Cost is determined by the weighted average method for merchandise and by actual cost
for large equipment and high-tech equipment. We manufacture certain of our products for our specialty businesses
(oral surgery solutions including dental implants, endodontics, and orthopedics). In accordance with our policy for
inventory valuation, we consider many factors including the condition and salability of the inventory, historical
sales, forecasted sales and market and economic trends. From time to time, we adjust our assumptions for
anticipated changes in any of these or other factors expected to affect the value of inventory.
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.
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
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
86
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.
Some 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 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 assets acquired and liabilities assumed at the
acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, within 12 months
following the date of acquisition, or the measurement period, we may record adjustments to the 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.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
87
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 represents, for acquired business, the excess of the purchase price over the estimated fair value of the net
assets acquired, including the amount assigned to identifiable intangible assets. Goodwill is subject to impairment
analysis annually or more frequently if needed. Such impairment analyses for goodwill requires a comparison of
the fair value to the carrying value of reporting units. We aggregate operating segments into the reportable
segments based on economic similarities, the nature of their products, customer basis, and methods of distribution
as follows: Global Distribution and Value-Added Services; Global Specialty Products; and Global Technology.
Goodwill was allocated to such reporting units, for the purpose of preparing our impairment analyses, based on a
specific identification basis.
During the fourth quarter of our fiscal year ended December 28, 2024, we revised our segment structure to align
with how our Chairman and Chief Executive Officer manages the business, assesses performance and allocates
resources. Our revised reportable segments now consist of: (i) Global Distribution and Value-Added Services; (ii)
Global Specialty Products; and (iii) Global Technology. Reporting units under the former structure were tested for
impairment, and no impairment was identified. As a result of the realignment and the change in operating
segments, we reallocated goodwill to each of our new reporting units using a relative fair value approach. Based on
the impairment test under the new structure, it was determined that the fair values of our reporting units more likely
than not exceeded their carrying values, resulting in no impairment. For both the former and new structure
goodwill impairment tests as of September 30, 2024, the fair values of reporting units were computed using the
methodology described above.
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 related to fair value models, the inputs and our judgments in applying them to this analysis. The most
significant inputs include estimation of 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 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. For the year ended
December 31, 2022, we recorded a $20 million impairment of goodwill, in the Global Specialty Products segment,
relating to the disposal of an unprofitable business for which estimated fair value was lower than carrying value.
Intangible Assets
In connection with our business acquisitions, the major classes of assets and liabilities to which we generally
allocate acquisition consideration to, excluding goodwill, include identifiable intangible assets (i.e., customer
relationships and lists, trademarks and trade names, product development and non-compete agreements), inventory
and accounts receivable. The estimated fair value of identifiable intangible assets 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
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
88
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 non-compete agreements, trademarks, trade
names, customer lists, customer relationships and product development. 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 28, 2024, December 30, 2023 and December 31, 2022, we recorded total
impairment charges within the selling, general and administrative line of our consolidated statements of income on
intangible assets of $0 million, $7 million and $34 million, respectively, as more fully discussed in Note 9 –
Goodwill and Other Intangibles, Net. During the years ended December 28, 2024, December 30, 2023 and
December 31, 2022, we recorded impairment charges, within the restructuring and integration costs line of our
consolidated statements of income, of $14 million, $12, million, and $35 million, respectively. See Note 16 – Plans
of Restructuring and Integration 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
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.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
89
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.
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.
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.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
90
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 Adopted
During the year ended December 28, 2024, we adopted Accounting Standards Update (“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 2024 fiscal year annual consolidated financial
statements.
During the year ended December 30, 2023, we adopted ASC Topic 848, “Reference Rate Reform” (Topic 848):
Facilitation of the Effects of Reference Rate Reform on Financial Reporting” which provides optional expedients
and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by the
discontinuation of the London Interbank Offered Rate or by another reference rate expected to be discontinued
because of reference rate reform. The adoption of Topic 848 did not have a material impact on our consolidated
financial statements.
Recently Issued Accounting Standards
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure
(Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires additional disclosure about the
specific expense categories in the notes to financial statements at interim and annual reporting periods. The
amendments in this ASU do not change or remove current expense disclosure requirements but affect where this
information appears in the notes to financial statements. This ASU is effective for annual reporting periods
beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early
adoption permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. We are currently
evaluating the impact that ASU 2024-03 will have on our consolidated financial statements.
In March 2024, the FASB issued ASU 2024-01, “Compensation - Stock Compensation (Topic 718): Scope
Application of Profits Interest and Similar Awards,” which clarifies how to determine whether profits interest and
similar awards should be accounted for as a share-based payment arrangement under Topic 718 or within the scope
of other guidance. The ASU provides an illustrative example with multiple fact patterns and amends the structure
of paragraph 718-10-15-3 of Topic 718 to improve its clarity and operability. The guidance in ASU 2024-01
applies to all entities that issue profits interest awards as compensation to employees or nonemployees in exchange
for goods or services. Entities can apply the amendments either retrospectively to all periods presented in the
financial statements or prospectively to profits interest awards granted or modified on or after the date of adoption.
If prospective application is elected, an entity must disclose the nature of and reason for the change in accounting
principle that resulted from the adoption of the ASU. This ASU is effective for fiscal years beginning after
December 15, 2024, including interim periods within those fiscal years. We do not expect that the requirements of
ASU 2024-01 will have a material impact on our consolidated financial statements.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
91
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax
Disclosures,” which requires public business entities to disclose additional information in specified categories with
respect to the reconciliation of the effective tax rate to the statutory rate for federal, state and foreign income taxes.
It also requires greater detail about individual reconciling items in the rate reconciliation to the extent the impact of
those items exceeds a specified threshold. In addition to new disclosures associated with the rate reconciliation, the
ASU requires information pertaining to taxes paid (net of refunds received) to be disaggregated for federal, state,
and foreign taxes and further disaggregated for specific jurisdictions to the extent the related amounts exceed a
quantitative threshold. The ASU also describes items that need to be disaggregated based on their nature, which is
determined by reference to the item’s fundamental or essential characteristics, such as the transaction or event that
triggered the establishment of the reconciling item and the activity with which the reconciling item is associated.
The ASU eliminates the historic requirement that entities disclose information concerning unrecognized tax
benefits having a reasonable possibility of significantly increasing or decreasing in the 12 months following the
reporting date. This ASU is effective for annual periods beginning after December 15, 2024. Early adoption is
permitted for annual financial statements that have not yet been issued or made available for issuance. This ASU
should be applied on a prospective basis; however, retrospective application is permitted. We are currently
evaluating the impact that ASU 2023-09 will have on our consolidated financial statements.
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.
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 last year’s cyber incident.
During the years ended December 28, 2024 and December 30, 2023, we incurred $9 million and $11 million,
respectively, of expenses directly related to the cyber incident, mostly consisting of professional fees. We maintain
cyber insurance, subject to certain retentions and policy limitations. With respect to the October 2023 cyber
incident, we have a $60 million insurance policy, following a $5 million retention. During the years ended
December 28, 2024 we received insurance proceeds of $40 million under this policy representing a partial
insurance recovery of losses related to the cyber incident, with the remaining $20 million of the claim being under
review by our insurance providers. 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.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
92
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
As noted further in Note 4 – Segment and Geographic Data, during the fourth quarter of our fiscal year ended
December 28, 2024, we revised our reportable segments to align with how the Chairman and Chief Executive
Officer manages the business, assesses performance and allocates resources. All prior comparative segment
information has been recast to reflect our new segment structure.
The following table disaggregates our net sales by reportable and operating segment and geographic area:
Years Ended
December 28,
2024
December 30,
2023
December 31,
2022
Net Sales:
Global Distribution and Value-Added Services
Global Dental merchandise
$
4,727 $
4,787 $
4,763
Global Dental equipment
1,719
1,671
1,715
Global Value-added services
233
191
151
Global Dental
6,679
6,649
6,629
Global Medical
4,081
3,912
4,346
Total Global Distribution and Value-Added Services
10,760
10,561
10,975
Global Specialty Products
1,446
1,331
1,273
Global Technology
630
602
549
Eliminations
(163)
(155)
(150)
Total
$
12,673 $
12,339 $
12,647
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
93
Note 4 – Segment and Geographic Data
During the fourth quarter of our fiscal year ended December 28, 2024, we revised our reportable segments to align
with how the Chairman and Chief Executive Officer manages the business, assesses performance and allocates
resources. Our revised reportable segments now consist of: (i) Global Distribution and Value-Added Services; (ii)
Global Specialty Products; and (iii) Global Technology. These segments offer different products and services to
the same customer base. All prior comparative segment information has been recast to reflect our new segment
structure.
We aggregate operating segments into these reportable segments based on economic similarities, the nature of their
products, customer base, and methods of distribution. Global Distribution and Value-Added Services includes
merchandise and equipment distribution businesses that serve the global dental and medical markets; it also
includes value-added services such as equipment repair services, financial services on a non-recourse basis,
continuing education services for practitioners, consulting and other services.
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) impairment of capitalized assets, (c) amortization of acquisition intangibles, (d)
settlement and litigation, (e) organizational restructuring expenses, (f) impairment of intangible assets, (g) changes
in fair value of contingent consideration, and (h) costs associated with shareholder advisory matters. 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 operating segments are eliminated
in consolidation.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
94
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 28,
December 30,
December 31,
2024
2023
2022
Gross Sales:
Global Distribution and Value-Added Services (1)
$
10,760
$
10,561
$
10,975
Global Specialty Products(2)
1,446
1,331
1,273
Global Technology (3)
630
602
549
Total Gross Sales
12,836
12,494
12,797
Less: Eliminations:
Global Distribution and Value-Added Services
(31)
(36)
(22)
Global Specialty Products
(132)
(119)
(128)
Total eliminations
(163)
(155)
(150)
Net Sales
Global Distribution and Value-Added Services
10,729
10,525
10,953
Global Specialty Products
1,314
1,212
1,145
Global Technology
630
602
549
Total Net Sales
$
12,673
$
12,339
$
12,647
Years Ended
December 28,
December 30,
December 31,
2024
2023
2022
Operating Income
Global Distribution and Value-Added Services
$
696
$
665
$
833
Global Specialty Products
178
175
192
Global Technology
152
142
125
Total Segment Operating Income
1,026
982
1,150
Corporate
(77)
(92)
(112)
Adjustments (4)
(328)
(275)
(291)
Total Operating Income
$
621
$
615
$
747
Depreciation and Amortization
Global Distribution and Value-Added Services
$
141
$
122
$
112
Global Specialty Products
110
80
61
Global Technology
46
46
39
Total
$
297
$
248
$
212
(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) 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:
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
95
Years Ended
December 28,
December 30,
December 31,
2024
2023
2022
Adjustments:
Restructuring costs
$
(110)
$
(80)
$
(131)
Acquisition intangible amortization
(184)
(150)
(126)
Cyber incident-third-party advisory expenses, net of insurance
31
(11)
-
Changes in contingent consideration
(45)
-
-
Litigation settlements
(6)
-
-
Impairment of capitalized assets
(12)
(27)
-
Impairment of intangible assets
-
(7)
(34)
Costs associated with shareholder advisory matters
(2)
-
-
Total adjustments
$
(328)
$
(275)
$
(291)
The following table presents information about our operations by geographic area as of and for the years ended
December 28, 2024, December 30, 2023 and December 31, 2022. 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.
2024
2023
2022
Net Sales
Long-Lived
Assets
Net Sales
Long-Lived
Assets
Net Sales
Long-Lived
Assets
United States
$
8,803 $
3,453 $
8,641 $
3,273 $
9,197 $
2,730
Other
3,870
2,281
3,698
2,341
3,450
1,417
Consolidated total
$
12,673 $
5,734 $
12,339 $
5,614 $
12,647 $
4,147
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
96
Note 5 – Business Acquisitions
Our acquisition strategy is focused on investments in companies that add new customers and sales teams, increase
our geographic footprint (whether entering a new country, such as emerging markets, or building scale where we
have already invested in businesses), and finally, those that enable us to access new products and technologies.
Acquisition of TriMed
On April 1, 2024, we acquired a 60% voting equity interest in TriMed Inc. (“TriMed”), a global developer of
solutions for the orthopedic treatment of lower and upper extremities, headquartered in California, for consideration
of $315 million. This acquisition is reported in our Global Specialty Products segment. During the year ended
December 28, 2024, we completed the accounting for this acquisition. The following table aggregates the final fair
value, as of the date of the acquisition, of consideration paid and net assets acquired in the TriMed acquisition:
Final Allocation
Acquisition consideration:
Cash
$
141
Deferred consideration
21
Redeemable noncontrolling interests
153
Total consideration
$
315
Identifiable assets acquired and liabilities assumed:
Current assets
$
35
Intangible assets
221
Other noncurrent assets
10
Current liabilities
(7)
Deferred income taxes
(62)
Other noncurrent liabilities
(6)
Total identifiable net assets
191
Goodwill
124
Total net assets acquired
$
315
Goodwill is a result of synergies that are expected to originate from the acquisition as well as the expected growth
potential of TriMed. The acquired goodwill is not deductible for tax purposes.
The following table summarizes the identifiable intangible assets acquired as part of the acquisition of TriMed:
2024
Weighted Average Useful
Lives (in years)
Product development
$
204
9
Trademarks / Tradenames
9
7
In process research & development
8
Not Applicable
Total
$
221
Except for in-process research and development (“IPR&D”), intangible assets acquired as a result of the TriMed
acquisition are being amortized over their estimated useful lives using the straight-line method of amortization.
The IPR&D is accounted for as an indefinite-lived intangible asset and is not amortized until completion or
abandonment of the associated research and development efforts. IPR&D is tested for impairment annually or
periodically if an indicator of impairment exists during the period until completion.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
97
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 during the year ended December 28, 2024 was immaterial
to our consolidated financial statements.
Other 2024 Acquisitions
During the year ended December 28, 2024, 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 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 $59 million of goodwill and $64 million of intangible
assets. The intangible assets acquired consisted of customer relationships and lists of $33 million, trademarks and
tradenames of $24 million, product development of $5 million and non-compete agreements of $2 million.
Weighted average useful lives for these acquired intangible assets were 11 years, 7 years, 9 years and 5 years,
respectively.
During the year ended December 28, 2024, we completed the accounting for certain acquisitions that occurred in
fiscal year 2024 and we did not record any material measurement period adjustments related to these acquisitions.
The accounting for other acquisitions in fiscal year 2024 has not been completed in several areas, including but not
limited to pending assessment of current expected credit losses.
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 an 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.
The impact of these acquisitions, individually and in the aggregate, was not considered material to our consolidated
financial statements.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
98
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.
During the year ended December 28, 2024, we completed the accounting for our acquisition of Shield. The
following table aggregates the final fair value, as of the date of the acquisition, of consideration paid and net assets
acquired in the Shield acquisition:
Final Allocation
Acquisition consideration:
Cash
$
289
Deferred consideration
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.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
99
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.
During the year ended December 28, 2024, we completed the accounting for our acquisition of S.I.N. The
following table aggregates the final fair value, as of the date of acquisition, of consideration paid and net assets
acquired in the S.I.N. acquisition:
Final Allocation
Acquisition consideration:
Cash
$
329
Total consideration
$
329
Identifiable assets acquired and liabilities assumed:
Current assets
$
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.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
100
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.
During the year ended December 28, 2024, we completed the accounting for our acquisition of Biotech Dental.
The following table aggregates the final fair value, as of the date of acquisition, of consideration paid and net assets
acquired in the Biotech Dental acquisition:
Final Allocation
Acquisition consideration:
Cash
$
216
Fair value of contributed equity share in a controlled subsidiary
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.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
101
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 28, 2024, we recorded an adjustment of $38 million, within selling, general and
administrative in our consolidated statements of income, representing a change in the fair value of contingent
consideration related to a 2023 acquisition.
During the year ended December 28, 2024, we completed the accounting for certain fiscal year 2023 acquisitions.
In relation to these acquisitions, we did not record material adjustments in our consolidated financial statements
relating to changes in estimated values of assets acquired, liabilities assumed and contingent consideration assets
and liabilities.
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.
2022 Acquisitions
During the year ended December 31, 2022, we acquired companies within the Global Distribution and Value-
Added Services, Global Specialty Products, and Global Technology segments. Our acquired ownership interest
ranged between 55% to 100%. For the years ended December 30, 2023 and December 31, 2022, there were no
material adjustments recorded in our financial statements relating to acquisitions for which provisional amounts
were recorded in prior periods. During the year ended December 28, 2024, we recorded an adjustment of $7
million, within selling, general and administrative in our consolidated statements of income, representing a change
in the fair value of contingent consideration related to a 2022 acquisition.
Goodwill of $86 million 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. Approximately half of the acquired goodwill
is deductible for tax purposes. Intangible assets of $96 million, consisting of $81 million of customer relationships
and lists, $9 million of trademarks and tradenames, and other of $6 million are being amortized over their weighted
average useful lives that range from two years to ten years.
Pro forma financial information for our 2022 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 28, 2024, December 30, 2023 and December 31, 2022 we incurred $6 million,
$22 million and $9 million in acquisition costs, respectively. These costs are included in selling, general and
administrative in our consolidated statements of income.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
102
Note 6 – Inventories, Net
Inventories, net consisted of the following as of:
Description
December 28,
2024
December 30,
2023
Finished goods
$
1,710 $
1,724
Raw materials
61
54
Work-in process
39
37
Inventories, net
$
1,810 $
1,815
Our inventory reserve was $132 million and $192 million as of December 28, 2024 and December 30, 2023,
respectively.
Note 7 – Property and Equipment, Net
Property and equipment, including related estimated useful lives, consisted of the following as of:
December 28,
December 30,
2024
2023
Land
$
20 $
21
Buildings and permanent improvements
164
166
Leasehold improvements
109
103
Machinery and warehouse equipment
257
250
Furniture, fixtures and other
128
130
Computer equipment and software
523
500
1,201
1,170
Less accumulated depreciation and amortization
(670)
(672)
Property and equipment, net
$
531 $
498
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 28, 2024, December 30, 2023
and December 31, 2022, was $83 million, $70 million and $68 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, within
our Global Distribution and Value-Added Services segment.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
103
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 17 years, some of
which may include options to extend the leases for up to 15 years. The components of lease expense were as
follows:
Years Ended
December 28,
December 30,
December 31,
2024
2023
2022
Operating lease cost:
$
107
$
99
$
132
Variable lease cost
12
12
11
Short-term lease cost
11
10
7
Total operating lease cost (1)
130
121
150
Finance lease cost
4
5
3
Total lease cost
$
134
$
126
$
153
(1) Total operating lease cost for the years ended December 28, 2024, December 30, 2023 and December 31, 2022, included costs of
$17 million, $11 million and $42 million, respectively, related to facility leases recorded in "Restructuring and integration costs"
within our consolidated statements of income.
Further, for the years ended December 28, 2024, December 30, 2023 and December 31, 2022, we recognized a net
impairment of operating lease right-of-use assets of $0 million, $3 million, and $3 million respectively, related to
facility leases recorded in “Restructuring and integration costs” within our consolidated statement of income.
Supplemental balance sheet information related to leases is as follows:
Years Ended
December 28,
December 30,
2024
2023
Operating Leases:
Operating lease right-of-use assets
$
293
$
325
Current operating lease liabilities
75
80
Non-current operating lease liabilities
259
310
Total operating lease liabilities
$
334
$
390
Finance Leases:
Property and equipment, at cost
$
16
$
18
Accumulated depreciation
(9)
(9)
Property and equipment, net of accumulated depreciation
$
7
$
9
Current maturities of long-term debt
$
3
$
4
Long-term debt
3
4
Total finance lease liabilities
$
6
$
8
Weighted Average Remaining Lease Term in Years:
Operating leases
5.9
6.6
Finance leases
2.7
2.6
Weighted Average Discount Rate:
Operating leases
4.2 %
3.6%
Finance leases
4.4 %
4.0%
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
104
Supplemental cash flow information related to leases is as follows:
Years Ended
December 28,
December 30,
2024
2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases
$
94
$
92
Financing cash flows for finance leases
4
5
Right-of-use assets obtained in exchange for lease obligations:
Operating leases
$
76
$
124
Finance leases
2
4
Maturities of lease liabilities are as follows:
December 28, 2024
Operating
Finance
Leases
Leases
2025
$
87
$
3
2026
74
2
2027
56
1
2028
43
1
2029
37
-
Thereafter
81
-
Total future lease payments
378
7
Less imputed interest
44
1
Total
$
334
$
6
As of December 28, 2024, we have additional operating leases that have not yet commenced with total lease
payments of $7 million for buildings and vehicles. These operating leases will commence after December 28,
2024, with lease terms of two years to five 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 13 years.
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. As of December 30, 2023, current and non-
current liabilities associated with related party operating leases were $5 million and $23 million, respectively. At
December 30, 2023 related party leases represented 6.3% and 7.4% of the total current and non-current operating
lease liabilities, respectively.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
105
Note 9 – Goodwill and Other Intangibles, Net
Changes in the carrying amounts of goodwill for the years ended December 28, 2024 and December 30, 2023 were
as follows:
Global
Distribution and
Value-Added
Services
Global Specialty
Products
Global
Technology
Total
Balance as of December 31, 2022
$
1,652 $
481 $
760 $
2,893
Adjustments to goodwill:
-
-
-
Acquisitions
338
578
29
945
Foreign currency translation
17
18
2
37
Balance as of December 30, 2023
2,007
1,077
791
3,875
Adjustments to goodwill:
Acquisitions
41
107
-
148
Disposal
-
(11)
(2)
(13)
Foreign currency translation
(39)
(80)
(4)
(123)
Balance as of December 28, 2024
$
2,009 $
1,093 $
785 $
3,887
During the fourth quarter of our fiscal year ended December 28, 2024, we revised our segment structure to align
with how our Chairman and Chief Executive Officer manages the business, assesses performance and allocates
resources. Our revised reportable segments now consist of: (i) Global Distribution and Value-Added Services; (ii)
Global Specialty Products; and (iii) Global Technology. Reporting units under the former structure were tested for
impairment, and no impairment was identified. As a result of the realignment and the change in operating
segments, we reallocated goodwill to each of our new reporting units using a relative fair value approach. Based on
the impairment test under the new structure, it was determined that the fair values of our reporting units more likely
than not exceeded their carrying values, resulting in no impairment. For both the former and new structure
goodwill impairment tests as of September 30, 2024, the fair values of reporting units were computed using the
methodology described in Note 1 – Basis of Presentation and Significant Accounting Policies.
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. For the year ended
December 31, 2022, in connection with our restructuring initiatives, we recorded a $20 million impairment of
goodwill, in the Global Specialty Products segment, relating to the disposal of an unprofitable business for which
estimated fair value was lower than carrying value.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
106
Other intangible assets consisted of the following:
December 28, 2024
Weighted Average
Accumulated
Remaining Life
Cost
Amortization
Net
(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
December 30, 2023
Weighted Average
Accumulated
Remaining Life
Cost
Amortization
Net
(in years)
Customer relationships and lists
$
984 $
(346) $
638
10
Trademarks / Tradenames
168
(69)
99
8
Product development
205
(62)
143
9
Non-compete agreements
21
(6)
15
5
Other
39
(18)
21
10
Total
$
1,417 $
(501) $
916
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 28, 2024, December 30, 2023 and December 31, 2022, was $185 million, $152 million and $126 million,
respectively.
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 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 were calculated as the differences between
the carrying values and the estimated fair values of the impaired intangible assets, using a discounted estimate of
future cash flows.
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. These
impairment charges were calculated as the differences between the carrying values and the estimated fair values of
the impaired intangible assets, using a discounted estimate of future cash flows.
During the year ended December 31, 2022 we recorded $49 million of impairment charges related to businesses in
our Global Distribution and Value-Added Services segment, the components of which were a $15 million charge
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
107
related to the disposal of an unprofitable business in connection with our restructuring initiatives and a $34 million
charge related to customer lists and relationships attributable to customer attrition rates being higher than expected
in certain other distribution and value-added services businesses. These impairment charges were calculated as the
differences between the carrying values and the estimated fair values of the impaired intangible assets, using a
discounted estimate of future cash flows.
Please see Note 16 – Plans of Restructuring and Integration Costs for additional details.
The above intangible asset impairment charges were recorded within selling, general and administrative expenses
and in restructuring and integration charges in our consolidated statement of income.
The annual amortization expense expected to be recorded for existing intangibles assets for the years 2025 through
2029 is $168 million, $151 million, $139 million, $122 million and $108 million.
Note 10 – Investments and Other
Investments and other consisted of the following:
December 28,
December 30,
2024
2023
Investments in unconsolidated affiliates
$
170 $
180
Non-current deferred foreign, state and local income taxes
47
38
Notes receivable (1)
63
44
Capitalized costs for software and cloud based applications for external use
90
95
Security deposits
4
4
Acquisition-related indemnification assets
39
46
Non-current pension assets
9
9
Non-current inventory
27
-
Other
52
55
Total
$
501 $
471
(1)
Long-term notes receivable carry interest rates ranging from 3.0% to 11.0% and are due in varying installments through
November 21, 2028.
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 28, 2024, December 30,
2023 and December 31, 2022, was $29 million, $26 million and $18 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,
within our Global Technology segment.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
108
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 28, 2024 and December 30, 2023 was
estimated at $2,536 million and $2,351 million, respectively. Factors that we considered when estimating the fair
value of our debt include market conditions, such as interest rates and credit spreads.
Derivative contracts
Derivative contracts are valued using quoted market prices and significant other observable inputs. Our derivative
instruments primarily include foreign currency forward 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.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
109
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. For transactions involving changes in our ownership in subsidiaries without a change in our control,
subsequent changes in the estimated fair value of contingent consideration payments are recognized in additional
paid-in capital in our 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.
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 28, 2024 and December 30,
2023:
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 swaps
-
3
-
3
Contingent consideration
-
-
30
30
Total liabilities
$
- $
12 $
30 $
42
Redeemable noncontrolling interests
$
- $
- $
806 $
806
December 30, 2023
Level 1
Level 2
Level 3
Total
Assets:
Derivative contracts designated as hedges
$
- $
1 $
- $
1
Derivative contracts undesignated
-
1
-
1
Total return swap
-
4
-
4
Total assets
$
- $
6 $
- $
6
Liabilities:
Derivative contracts designated as hedges
$
- $
18 $
- $
18
Derivative contracts undesignated
-
2
-
2
Total liabilities
$
- $
20 $
- $
20
Redeemable noncontrolling interests
$
- $
- $
864 $
864
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 28, 2024, December 30, 2023 or December
31, 2022. 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 25% and 4%, respectively, of our aggregate
purchases for the year ended December 28, 2024 and approximately 24% and 4%, respectively, of our aggregate
purchases for the year ended December 30, 2023.
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.
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 28,
2024, December 30, 2023, and December 31, 2022, we recorded an increase/(decrease) of $10 million, $(32)
million, and $9 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 28, 2024, the notional value of the
investments in these plans was $106 million. At December 28, 2024, the financing blended rate for this swap was
based on the Secured Overnight Financing Rate (“SOFR”) of 4.53% plus 0.61%, for a combined rate of 5.14%. For
the years ended December 28, 2024, December 30, 2023, and December 31, 2022, we recorded within selling,
general and administrative expenses in our consolidated statement of income, a gain (loss) of $8 million, 10
million, and $(17) 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 28, 2024, the
notional value of the interest rate swap agreements was $713 million. For the years ended December 28, 2024 and
December 30, 2023, we recorded, within accumulated other comprehensive loss within our consolidated balance
sheets, a loss of $3 million and $10 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
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 28, 2024 and December 30, 2023:
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
December 30, 2023
Notional
Amount
Classification
Fair
Value
Maturity Date
Derivatives used in cash flow hedges:
Foreign currency forward contracts
$
102 Accrued expenses, other
$
(1)
November 21, 2024
Interest rate swaps
741 Accrued expenses, other
(10)
July 13, 2026
Derivatives used in net investment hedges:
Foreign currency forward contracts
352 Accrued expenses, other
(6)
November 3, 2028
Undesignated hedging relationships:
Total return swaps
96 Prepaid expenses and other
4
January 3, 2024
Total
$
1,291
$
(13)
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 28, 2024, December 30, 2023 and December 31, 2022:
Years Ended
December 28, December 30,
December 31,
2024
2023
2022
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
7
(10)
7
Total
$
13
$
(18)
$
7
The amount of gains or losses reclassified from accumulated other comprehensive loss into income were not
material for the years ended December 28, 2024, December 30, 2023, and December 31, 2022.
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 28,
December 30,
2024
2023
Revolving credit agreement
$
-
$
200
Other short-term bank credit lines
650
64
Total
$
650
$
264
Revolving Credit Agreement
On August 20, 2021, we entered into a $1.0 billion revolving credit agreement (the “Revolving Credit Agreement”)
which was subsequently amended and restated on July 11, 2023 to extend the maturity date to July 11, 2028 and
update the interest rate provisions to reflect the current market approach for a multicurrency facility. The interest
rate on this revolving credit facility is based on Term Secured Overnight Financing Rate (“Term SOFR”) plus a
spread based on our leverage ratio at the end of each financial reporting quarter. As of December 28, 2024 the
interest rate on this revolving credit facility was 4.45% plus 1.18% for a combined rate of 5.63%. As of December
30, 2023 the interest rate on this revolving credit facility was 5.36% plus 1.00% for a combined rate of 6.36%.
The Revolving Credit Agreement requires, among other things, that we maintain certain maximum leverage ratios.
Additionally, the Revolving Credit Agreement contains customary representations, warranties and affirmative
covenants as well as customary negative covenants, subject to negotiated exceptions, on liens, indebtedness,
significant corporate changes (including mergers), dispositions and certain restrictive agreements. As of December
28, 2024 and December 30, 2023, we had $0 million and $200 million in borrowings, respectively, under this
revolving credit facility. During the year ended December 28, 2024, the average outstanding balance under the
Revolving Credit Agreement was approximately $50 million. As of December 28, 2024 and December 30, 2023,
there were $11 million and $10 million of letters of credit, respectively, provided to third parties under the
Revolving Credit Agreement.
Other Short-Term Bank Credit Lines
As of December 28, 2024 and December 30, 2023, we had various other short-term bank credit lines available, in
various currencies, with a maximum borrowing capacity of $790 million and $368 million, respectively. As of
December 28, 2024 and December 30, 2023, $650 million and $64 million, respectively, were outstanding. During
the year ended December 28, 2024, the average outstanding balances under our various other short-term bank credit
lines was approximately $492 million. As of December 28, 2024 and December 30, 2023, borrowings under other
short-term bank credit lines had weighted average interest rates of 5.35% and 6.02%, respectively.
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 28,
December 30,
2024
2023
Private placement facilities
$
975 $
1,074
Term loan
712
741
U.S. trade accounts receivable securitization
150
210
Various collateralized and uncollateralized loans payable with interest,
in varying installments through 2031 at interest rates
from 0.00% to 9.42% at December 28, 2024 and
from 0.00% to 9.42% at December 30, 2023
43
54
Finance lease obligations
6
8
Total
1,886
2,087
Less current maturities
(56)
(150)
Total long-term debt
$
1,830 $
1,937
As of December 28, 2024, 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:
2025
$
56
2026
690
2027
257
2028
180
2029
102
Thereafter
601
Total
$
1,886
Private Placement Facilities
Our private placement facilities provided by four insurance companies have a total facility amount of $1.5 billion,
and are available on an uncommitted basis at fixed rate economic terms to be agreed upon at the time of issuance,
from time to time through October 20, 2026. The facilities allow us to issue senior promissory notes to the lenders
at a fixed rate based on an agreed upon spread over applicable treasury notes at the time of issuance. The term of
each possible issuance will be selected by us and can range from five to 15 years (with an average life no longer
than 12 years). The proceeds of any issuances under the facilities will be used for general corporate purposes,
including working capital and capital expenditures, to refinance existing indebtedness, and/or to fund potential
acquisitions. The agreements provide, among other things, that we maintain certain maximum leverage ratios, and
contain restrictions relating to subsidiary indebtedness, liens, affiliate transactions, disposal of assets and certain
changes in ownership. These facilities contain make-whole provisions in the event that we pay off the facilities
prior to the applicable due dates.
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 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
The components of our private placement facility borrowings as of December 30, 2023, which have a weighted
average interest rate of 3.65% are presented in the following table:
Amount of
Date of
Borrowing
Borrowing
Borrowing
Outstanding
Rate
Due Date
January 20, 2012
$
50
3.45 %
January 20, 2024
December 24, 2012
50
3.00
December 24, 2024
June 16, 2017
100
3.42
June 16, 2027
September 15, 2017
100
3.52
September 15, 2029
January 2, 2018
100
3.32
January 2, 2028
September 2, 2020
100
2.35
September 2, 2030
June 2, 2021
100
2.48
June 2, 2031
June 2, 2021
100
2.58
June 2, 2033
May 4, 2023
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
Less: Deferred debt issuance costs
(1)
Total
$
1,074
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”). The interest rate on this term loan is based on the Term SOFR plus a spread based on our leverage
ratio at the end of each financial reporting quarter. This term loan matures on July 11, 2026. We are required to
make quarterly payments of $9 million from September 2024 through June 2026, with the remaining balance due in
July 2026. Previously, we had been required to make quarterly payments of $5 million from September 2023
through June 2024. 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%. As of December 30, 2023, the borrowings outstanding under this term loan were $741 million. At
December 30, 2023, the interest rate under the Term Credit Agreement was 5.36% plus 1.35% for a combined rate
of 6.71%. However, we have a hedge in place that ultimately creates an effective fixed rate of 6.04% and 5.79% at
December 28, 2024 and December 30, 2023, respectively. The Term Credit Agreement requires, among other
things, that we maintain certain maximum leverage ratios. Additionally, the Term Credit Agreement contains
customary representations, warranties and affirmative covenants as well as customary negative covenants, subject
to negotiated exceptions, on liens, indebtedness, significant corporate changes (including mergers), dispositions and
certain restrictive agreements.
U.S. Trade Accounts Receivable Securitization
We have a facility agreement based on our U.S. trade accounts receivable that is structured as an asset-backed
securitization program with pricing committed for up to three years. 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 28, 2024 and December 30, 2023, the borrowings outstanding under this securitization facility
were $150 million and $210 million, respectively. 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%. At December 30, 2023, the interest rate on borrowings under this facility was based on the asset-backed
commercial paper rate of 5.67% plus 0.75%, for a combined rate of 6.42%.
If our accounts receivable collection pattern changes due to customers either paying late or not making payments,
our ability to borrow under this facility may be reduced.
We are required to pay a commitment fee of 30 to 35 basis points depending upon program utilization.
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 28,
December 30,
December 31,
2024
2023
2022
Domestic
$
338 $
424 $
506
Foreign
175
118
215
Total
$
513 $
542 $
721
The provisions for income taxes were as follows:
Years ended
December 28,
December 30,
December 31,
2024
2023
2022
Current income tax expense:
U.S. Federal
$
100 $
72 $
150
State and local
33
28
49
Foreign
56
40
44
Total current
189
140
243
Deferred income tax expense (benefit):
U.S. Federal
(29)
9
(48)
State and local
(12)
(3)
(13)
Foreign
(20)
(26)
(12)
Total deferred
(61)
(20)
(73)
Total provision
$
128 $
120 $
170
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 28,
December 30,
2024
2023
Deferred income tax asset:
Net operating losses
$
91 $
90
Other carryforwards
37
34
Inventory, premium coupon redemptions and accounts receivable
valuation allowances
37
44
Operating lease liability
76
80
Capitalization of research and development costs
27
15
Other asset
49
51
Total deferred income tax asset
317
314
Valuation allowance for deferred tax assets (1)
(38)
(36)
Net deferred income tax asset
279
278
Deferred income tax liability
Intangibles amortization
(260)
(219)
Operating lease right-of-use asset
(67)
(65)
Property and equipment
(7)
(10)
Total deferred tax liability
(334)
(294)
Net deferred income tax asset (liability)
$
(55) $
(16)
(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 28, 2024, we had federal, state and foreign net operating loss carryforwards of approximately $57
million, $45 million and $333 million, respectively. The federal, state and foreign net operating loss carryforwards
will begin to expire in various years from 2025 through 2044. The amounts of federal, state and foreign net
operating losses that can be carried-forward indefinitely are $57 million, $16 million and $311 million,
respectively.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
119
The tax provisions differ from the amount computed using the federal statutory income tax rate as follows:
Years ended
December 28,
December 30,
December 31,
2024
2023
2022
Income tax provision at federal statutory rate
$
108 $
114 $
151
State income tax provision, net of federal income tax effect
11
15
20
Foreign income tax provision
10
5
4
Pass-through noncontrolling interest
1
(8)
(4)
Valuation allowance
6
(3)
(2)
Unrecognized tax benefits and audit settlements
5
9
11
Interest expense related to loans
(14)
(13)
(12)
Effect of cross border tax laws
12
7
6
Other
(11)
(6)
(4)
Total income tax provision
$
128 $
120 $
170
For the year ended December 28, 2024 our effective tax rate was 24.9%, compared to 22.1% for the prior year
period. In 2022, our effective tax rate was 23.5%. The difference between our effective tax rate and the federal
statutory tax rate is primarily due to state and foreign income taxes and interest expense.
On December 22, 2017, the U.S. government passed the Tax Cuts and Jobs Act, which requires U.S. companies to
pay a mandatory one-time transition tax on historical offshore earnings that have not been repatriated to the U.S.
The transition tax is payable over eight years. Within our consolidated balance sheets, transition tax of $24 million
and $11 million were included in accrued taxes for 2024 and 2023, respectively, and $24 million was included in
other liabilities for 2023.
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.
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 28, 2024, the impact of the Pillar Two
rules to our financial statements was immaterial.
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
and interest assessments by these taxing authorities for uncertain tax positions taken in respect of certain tax
matters.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
120
The total amount of unrecognized tax benefits, which are included in “other liabilities” within our consolidated
balance sheets, as of December 28, 2024 and December 30, 2023 was $108 million and $115 million, respectively,
of which $100 million and $107 million, respectively, would affect the effective tax rate if recognized. It is
possible that the amount of unrecognized tax benefits will change in the next 12 months, which may result in a
material impact on our consolidated statements of income.
All tax returns audited by the IRS are officially closed through 2020. The tax years subject to examination by the
IRS include years 2021 and forward. In addition, limited positions reported in the 2017 tax year are subject to IRS
examination.
The amount of tax interest expense included as a component of the provision for taxes was $2 million, $4 million
and $0 million in 2024, 2023 and 2022, respectively. The total amount of accrued interest is included in other
liabilities within our consolidated balance sheets, and was $18 million as of December 28, 2024 and $16 million as
of December 30, 2023. 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 28,
December 30,
December 31,
2024
2023
2022
Balance, beginning of period
$
98 $
82 $
71
Additions based on current year tax positions
5
9
14
Additions based on prior year tax positions
10
26
8
Reductions based on prior year tax positions
(14)
(2)
-
Reductions resulting from settlements with taxing authorities
-
(3)
(1)
Reductions resulting from lapse in statutes of limitations
(10)
(14)
(10)
Balance, end of period
$
89 $
98 $
82
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
121
Note 16 – Plans of Restructuring and Integration Costs
On August 6, 2024, we committed to a new restructuring plan (the “2024 Plan”) to integrate recent acquisitions,
right-size operations and further increase efficiencies. During the year ended December 28, 2024, we recorded
restructuring charges associated with the 2024 Plan of $73 million, which primarily related to severance and
employee-related costs, accelerated amortization of right-of-use lease assets and fixed assets, impairment of
intangible assets related to the disposal of a portion of a business and other exit costs. We expect to record
restructuring charges associated with the 2024 Plan in 2025; however an estimate of the amount of these charges
has not yet been determined.
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. This impairment is
included in the $73 million of restructuring charges discussed above and related to the Global Specialty Products
segment.
On August 1, 2022, we committed to a restructuring plan (the “2022 Plan”) focused on funding the priorities of the
BOLD+1 strategic plan, streamlining operations and other initiatives to increase efficiency. The 2022 Plan has
been completed as of July 31, 2024. During the years ended December 28, 2024, December 30, 2023, and
December 31, 2022, in connection with our 2022 Plan, we recorded restructuring costs of $37 million, $80 million,
and $128 million, respectively. The restructuring costs for these periods primarily related to severance and
employee-related costs, accelerated amortization of right-of-use lease assets and fixed assets, impairment of
intangible assets related to disposal of a U.S. business, 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. This impairment is included in the $80
million of restructuring costs discussed above and related to the Global Specialty Products segment. The disposal
was completed during the first quarter of 2024.
During the year ended December 31, 2022, in connection with the 2022 Plan, we vacated one of the buildings at our
corporate headquarters in Melville, New York, which resulted in an accelerated amortization of a right-of-use lease
asset of $34 million. We also initiated the disposal of a non-profitable U.S. business within the Global Specialty
Products segment and recorded related costs of $49 million, which primarily consisted of impairment of intangible
assets and goodwill, inventory impairment, and severance and employee-related costs, which are included in the
Global Specialty Products segment. These costs are included in the $128 million of restructuring charges discussed
above. The disposal was completed during the first quarter of 2023.
On August 26, 2022, we acquired Midway Dental Supply. In connection with this acquisition, during the year
ended December 31, 2022, we recorded integration costs of $3 million related to one-time employee and other
costs, as well as restructuring charges of $9 million, which are included in the $128 million of restructuring charges
discussed above. The integration and restructuring costs related to Midway Dental Supply are recorded in the
Global Distribution and Value-Added Services segment.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
122
Restructuring and integration costs recorded during our 2024, 2023 and 2022 fiscal years consisted of the
following:
Year Ended December 28, 2024
Global Distribution and
Value-Added Services
Global
Specialty
Products
Global
Technology Corporate
Restructuring
Costs
Integration
Costs
Restructuring Costs
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 integration 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
Restructuring and integration costs-2022 Plan $
30 $
-
$
7 $
1
$
(1) $
37
Total restructuring and integration costs
$
68 $
-
$
30 $
11
$
1 $
110
Year Ended December 30, 2023
Global Distribution and
Value-Added Services
Global
Specialty
Products
Global
Technology
Corporate
Restructuring
Costs
Integration
Costs
Restructuring Costs
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
Total restructuring and integration costs
$
45 $
-
$
19 $
7
$
9 $
80
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
123
Year Ended December 31, 2022
Global Distribution and
Value-Added Services
Global
Specialty
Products
Global
Technology
Corporate
Restructuring
Costs
Integration
Costs
Restructuring Costs
Total
2022 Plan
Severance and employee-related costs
$
21 $
-
$
3 $
3
$
2 $
29
Impairment and accelerated depreciation and
amortization of right-of-use lease assets and other
long-lived assets
11
-
-
-
36
47
Exit and other related costs
2
-
-
-
1
3
Loss on disposal of a business
-
-
49
-
-
49
Integration employee-related and other costs
-
3
-
-
-
3
Total restructuring and integration costs
$
34 $
3
$
52 $
3
$
39 $
131
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 28, 2024. The remaining accrued
balance of restructuring costs as of December 28, 2024, 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 31, 2022
$
24 $
-
$
24
Restructuring costs
80
-
80
Non-cash accelerated depreciation and amortization
(15)
-
(15)
Non-cash impairment on disposal of a business
(12)
-
(12)
Cash payments and other adjustments
(54)
-
(54)
Balance, December 30, 2023
23
-
23
Restructuring costs
37
73
110
Non-cash 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
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 28, 2024 were:
2025
$
9
2026
5
2027
-
2028
-
2029
-
Thereafter
-
Total minimum inventory purchase commitment payments
$
14
Employment, Consulting and Non-Compete Agreements
We have employment, consulting and non-compete agreements that have varying base aggregate annual payments
for the years 2025 through 2029 and thereafter of approximately $20 million, $4 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. has been named as a defendant in multiple opioid related lawsuits (currently less than one-
hundred and seventy-five (175); one or more of Henry Schein, Inc.’s subsidiaries is also named as a defendant in a
number of those cases). Generally, the lawsuits allege that the manufacturers of prescription opioid drugs engaged
in a false advertising campaign to expand the market for such drugs and their own market share and that the entities
in the supply chain (including Henry Schein, Inc. and its subsidiaries) reaped financial rewards by refusing or
otherwise failing to monitor appropriately and restrict the improper distribution of those drugs. These actions
consist of some that have been consolidated within the MultiDistrict Litigation (“MDL”) proceeding In Re National
Prescription Opiate Litigation (MDL No. 2804; Case No. 17-md-2804) and are currently stayed, and others which
remain pending in state courts and are proceeding independently and outside of the MDL. On January 29, 2025,
the court granted our motion for summary judgment in the action filed by Mobile County Board of Health, et al. in
Alabama state court and dismissed all claims against Henry Schein with prejudice. We have settled the action filed
by DCH Health Care Authority, et al. in Alabama state court (thirty-four plaintiffs) for an immaterial amount and
the claims against Henry Schein have been dismissed with prejudice. We have also settled forty-four cases (plus
one case in which we were not yet named a defendant) filed by plaintiffs represented by the Napoli Shkolnik PLLC
law firm for an immaterial amount. Stipulations of Discontinuance with Prejudice in those cases are pending. At
this time, the following case is set for trial: the action filed by Florida Health Sciences Center, Inc. (and 25 other
hospitals located throughout the State of Florida) in Florida state court, which is currently scheduled for a jury trial
in September 2025. Of Henry Schein’s 2024 net sales of approximately $12.7 billion, sales of opioids represented
less than four-tenths of 1 percent. Opioids represent a negligible part of our business. We intend to defend
ourselves vigorously against these actions.
On January 18, 2024, a putative class action was filed against the Company in the U.S. District Court for the
Eastern District of New York (“EDNY”), Case No. 24-cv-387 (the “Cruz-Bermudez Action”), based on the
October 2023 cyber incident described in Note 3 – Cyber Incident. On January 26, 2024, a second putative class
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
125
action was filed against the Company based on the cyber incident, also in the EDNY, Case No. 24-cv-550 (the
“Depperschmidt Action”). On February 12, 2024, the Depperschmidt Action was voluntarily dismissed without
prejudice. On February 16, 2024, an amended complaint was filed in the Cruz-Bermudez Action with additional
plaintiffs’ counsel from the Depperschmidt Action and an additional new plaintiff.
Plaintiffs in the Cruz-Bermudez Action seek to represent a class of all individuals whose personally identifying
information and personal health information was compromised by the incident. Plaintiffs generally claim to have
been harmed by alleged actions and/or omissions by the Company in connection with the incident and that the
Company made deceptive public statements regarding privacy and data protection. Plaintiffs assert a variety of
claims seeking monetary damages, injunctive relief, costs and attorneys’ fees, and other related relief. On March
22, 2024, plaintiffs voluntarily withdrew two of their five causes of action. On April 8, 2024, the court denied the
Company’s motion to dismiss the remaining claims.
On June 6, 2024, plaintiffs and the Company informed the court that they had agreed to a term sheet for a class
action settlement of the Cruz-Bermudez Action. Plaintiffs and the Company entered into a class action settlement
agreement on September 13, 2024, and the court preliminarily approved the settlement on September 16,
2024. Under the terms of the settlement, all claims in the Cruz-Bermudez Action will be dismissed, the Cruz-
Bermudez Action will be terminated, the Company will receive a release of claims from the class, and the
Company will pay $2.9 million into a fund for class members. The court has approved the settlement and entered
the final approval order on February 20, 2025. The settlement agreement’s effective date is 35 days after the final
approval order assuming no appeals have been filed.
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 28, 2024, we had accrued our best estimate of potential losses relating to claims that were probable
to result in liability and for which we were able to reasonably estimate a loss. This accrued amount, as well as
related expenses, was not material to our financial position, results of operations or cash flows. Our method for
determining estimated losses considers currently available facts, presently enacted laws and regulations and other
factors, including probable recoveries from third parties.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
126
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. Starting with our 2023
plan year, we returned to granting our employees equity-based awards solely in the form of time-based and
performance-based RSUs. Our non-employee directors receive equity-based awards solely in the form of time-
based RSUs.
As of December 28, 2024, there were 75,742,657 shares authorized and 9,973,475 shares available to be granted
under the 2024 Stock Incentive Plan and 2,075,000 shares authorized and 361,724 shares available to be granted
under the 2023 Non-Employee Director Stock Incentive Plan.
RSUs are stock-based awards granted to recipients with specified vesting provisions. In the case of RSUs, common
stock is delivered on or following satisfaction of vesting conditions. We issue RSUs to employees that primarily
vest (i) solely based on the recipient’s continued service over time, primarily with four-year cliff vesting and/or (ii)
based on achieving specified performance measurements and the recipient’s continued service over time, primarily
with three-year cliff vesting. RSUs granted to our non-employee directors primarily include 12-month cliff vesting.
For these RSUs, we recognize the cost as compensation expense on a straight-line basis.
For all RSUs, we estimate the fair value based on our closing stock price on the grant date. With respect to
performance-based RSUs, the number of shares that ultimately vest and are received by the recipient is based upon
our performance as measured against specified targets over a specified period, as determined by the Compensation
Committee. Although there is no guarantee that performance targets will be achieved, we estimate the fair value of
performance-based RSUs based on our closing stock price at time of grant.
Each of the Plans provide for certain adjustments to the performance measurement in connection with awards under
the Plans. With respect to the performance-based RSUs granted under our 2024 Stock Incentive Plan, such
performance measurement adjustments relate to significant events, including, without limitation, acquisitions,
divestitures, new business ventures, certain capital transactions (including share repurchases), differences in
budgeted average outstanding shares (other than those resulting from capital transactions referred to above),
restructuring costs, if any, amortization expense recorded for acquisition-related intangible assets (solely with
respect to performance-based RSUs granted in the 2023 and 2024 plan years), certain litigation settlements or
payments, if any, changes in accounting principles or in applicable laws or regulations, changes in income tax rates
in certain markets, foreign exchange fluctuations, the financial impact either positive or negative, of the difference
in projected earnings generated by COVID-19 test kits (solely with respect to performance-based RSUs granted in
the 2022 and 2023 plan years) and impairment charges (solely with respect to performance-based RSUs granted in
the 2023 and 2024 plan years), and unforeseen events or circumstances affecting us.
Over the performance period, the number of RSUs that will ultimately vest and be issued and the related
compensation expense is adjusted upward or downward based upon our estimation of achieving such performance
targets. The ultimate number of shares delivered to recipients and the related compensation cost recognized as an
expense is based on our actual performance against the pre-determined performance metrics (in each case as
adjusted).
Stock options are awards that allow the recipient to purchase shares of our common stock after vesting at a fixed
price set at the time of grant. Stock options were granted at an exercise price equal to our closing stock price on the
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
127
date of grant. Stock options issued in 2021 and 2022 vest one-third per year based on the recipient’s continued
service, subject to the terms and conditions of the 2020 Stock Incentive Plan, are fully vested three years from the
grant date and have a contractual term of ten years from the grant date, subject to earlier termination of term and
term acceleration upon certain events. Compensation expense for stock options is recognized using a graded
vesting method. We estimate grant date fair value of stock options using the Black-Scholes valuation model.
During the year ended December 28, 2024, we did not grant any stock options.
Our consolidated statements of income reflect pre-tax share-based compensation expense of $39 million, $39
million and $54 million for the years ended December 28, 2024, December 30, 2023 and December 31, 2022,
respectively.
Total unrecognized compensation cost related to unvested awards as of December 28, 2024 was $66 million, which
is expected to be recognized over a weighted-average period of approximately 2.6 years.
The weighted-average grant date fair value of stock-based awards granted was $75.12, $76.43 and $85.51 per share
during the years ended December 28, 2024, December 30, 2023 and December 31, 2022, 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 28, 2024, December 30, 2023 and December 31, 2022.
The following weighted-average assumptions were used in determining the most recent fair values of stock options
using the Black-Scholes valuation model:
2022
Expected dividend yield
0.00%
Expected stock price volatility
27.80%
Risk-free interest rate
3.62%
Expected life of options (in years)
6.00
We have not declared cash dividends on our stock in the past and we do not anticipate declaring cash dividends in
the foreseeable future. The expected stock price volatility is based on implied volatilities from traded options on
our stock, historical volatility of our stock and other factors. The risk-free interest rate is based on the U.S.
Treasury yield curve in effect at the time of grant that most closely aligns to the expected life of options. The six-
year expected life of the options was determined using the simplified method for estimating the expected term as
permitted under Staff Accounting Bulletin Topic 14.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
128
The following table summarizes the stock option activity for the year ended December 28, 2024:
Stock Options
Weighted Average
Aggregate
Weighted Average
Remaining Contractual
Intrinsic
Shares
Exercise Price
Life (in years)
Value
Outstanding at beginning of year
1,078,459 $
71.46
Granted
-
-
Exercised
(100,077)
62.71
Forfeited
(14,891)
85.18
Outstanding at end of year
963,491 $
72.16
6.6 $
4
Options exercisable at end of year
837,341 $
70.11
Weighted Average
Aggregate
Number of
Weighted Average
Remaining Contractual
Intrinsic
Options
Exercise Price
Life (in years)
Value
Expected to vest
126,150 $
85.77
7.2 $
-
The following tables summarize the activity of our unvested RSUs for the year ended December 28, 2024:
Time-Based Restricted Stock Units
Performance-Based Restricted Stock Units
Weighted Average
Weighted Average
Grant Date Fair Intrinsic Value
Grant Date Fair Intrinsic Value
Shares/Units Value Per Share
Per Share
Shares/Units Value Per Share
Per Share
Outstanding at beginning of period
1,655,393 $
70.34
208,742 $
78.02
Granted
465,861
75.84
253,896
76.88
Vested
(332,084)
63.09
(8,262)
66.53
Forfeited
(103,620)
76.95
(65,265)
79.60
Outstanding at end of period
1,685,550 $
72.92 $
70.42
389,111 $
75.98 $
70.42
The fair value of time and performance RSUs that vested was $21 million and $1 million, respectively, for the year
ended December 28, 2024; $27 million and $38 million, respectively, for the year ended December 30, 2023; and
$31 million and $23 million, respectively, for the year ended December 31, 2022.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
129
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 28,
December 30,
2024
2023
Obligation and funded status:
Change in benefit obligation
Projected benefit obligation, beginning of period
$
125
$
108
Service costs
4
3
Interest cost
3
3
Past service cost (credit)
(1)
1
Actuarial gain
6
6
Participant contributions
2
1
Settlements
(1)
(3)
Effect of foreign currency translation
(9)
6
Projected benefit obligation, end of period
$
129
$
125
Change in plan assets
Fair value of plan assets at beginning of period
$
86
$
73
Actual return on plan assets
3
4
Employer contributions
3
2
Plan participant contributions
2
1
Expected return on plan assets
3
1
Benefit received
1
2
Settlements
(2)
(2)
Effect of foreign currency translation
(6)
5
Fair value of plan assets at end of period
$
90
$
86
Unfunded status at end of period
$
39
$
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 $7 million as of
December 28, 2024 and December 30, 2023, respectively. At December 28, 2024 and December 30, 2023 the
accumulated benefit obligations were $125 million and $121 million, respectively.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
130
The following table provides the amounts recognized in our consolidated balance sheets for our defined benefit
pension plans:
Years Ended
December 28,
December 30,
2024
2023
Non-current assets
$
28
$
27
Current liabilities
(1)
(1)
Non-current liabilities
(68)
(65)
Accumulated other comprehensive loss, pre-tax
10
8
The following table provides the components of net periodic pension cost for our defined benefit plans:
Years Ended
December 28,
December 30,
December 31,
2024
2023
2022
Service cost
$
4
$
3
$
3
Interest cost
3
3
1
Expected return on plan assets
(3)
(3)
(1)
Employee contributions
(1)
(1)
-
Amortization of prior service credit
-
-
1
Net periodic pension cost
$
3
$
2
$
4
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 28,
December 30,
Pension Benefit Obligation
2024
2023
Weighted average discount rate
2.23 %
2.71 %
Years Ended
December 28,
December 30,
December 31,
Net Periodic Pension Cost
2024
2023
2022
Discount rate-pension benefit
1.70 %
1.50 %
1.25 %
Expected return on plan assets
1.13 %
0.51 %
0.81 %
Rate of compensation increase
1.98 %
1.64 %
1.68 %
Pension increase rate
0.63 %
0.80 %
0.61 %
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
131
The following table presents the estimated pension benefit payments that are payable to the plan’s participants as of
December 28, 2024:
Year
2025
$
7
2026
6
2027
7
2028
8
2029
6
2030 to 2034
41
Total
$
75
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 7% 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 28, 2024, December 30, 2023 and December 31, 2022 amounted to $48 million,
$50 million and $45 million, respectively. Within our consolidated statements of income, $40 million, $42 million,
and $37 million, is included in selling, general and administrative; and $8 million, $8 million, and $8 million is
included in cost of goods sold for the years ended December 28, 2024, December 30, 2023, and December 31,
2022, 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 28, 2024,
December 30, 2023 and December 31, 2022 amounted to $2 million, $3 million and $(1) 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 (credited)/charged to operations during the years ended December 28, 2024,
December 30, 2023 and December 31, 2022 were approximately $12 million, $12 million and $(11) 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.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
132
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 28, 2024,
December 30, 2023 and December 31, 2022, are presented in the following table:
December 28,
December 30,
December 31,
2024
2023
2022
Balance, beginning of period
$
864 $
576 $
613
Decrease in redeemable noncontrolling interests due to acquisitions of
noncontrolling interests in subsidiaries
(273)
(19)
(31)
Increase in redeemable noncontrolling interests due to business
acquisitions
171
326
4
Net income (loss) attributable to redeemable noncontrolling interests
(1)
6
21
Distributions declared, net of capital contributions
(50)
(19)
(21)
Effect of foreign currency translation gain (loss) attributable to
redeemable noncontrolling interests
(24)
5
(6)
Change in fair value of redeemable securities
119
(11)
(4)
Balance, end of period
$
806 $
864 $
576
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 28,
December 30,
December 31,
2024
2023
2022
Attributable to redeemable noncontrolling interests:
Foreign currency translation adjustment
$
(56) $
(32) $
(37)
Attributable to noncontrolling interests:
Foreign currency translation adjustment
$
(1) $
(1) $
(1)
Attributable to Henry Schein, Inc.:
Foreign currency translation adjustment
$
(371) $
(188) $
(236)
Unrealized gain (loss) from hedging activities
-
(13)
5
Pension adjustment loss
(8)
(5)
(2)
Accumulated other comprehensive loss
$
(379) $
(206) $
(233)
Total Accumulated other comprehensive loss
$
(436) $
(239) $
(271)
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
133
The following table summarizes the components of comprehensive income, net of applicable taxes as follows:
December 28,
December 30,
December 31,
2024
2023
2022
Net income
$
398 $
436 $
566
Foreign currency translation gain (loss)
(207)
53
(88)
Tax effect
-
-
-
Foreign currency translation gain (loss)
(207)
53
(88)
Unrealized gain (loss) from hedging activities
18
(25)
10
Tax effect
(5)
7
(3)
Unrealized gain (loss) from hedging activities
13
(18)
7
Pension adjustment gain (loss)
(5)
(3)
16
Tax effect
2
-
(4)
Pension adjustment gain (loss)
(3)
(3)
12
Comprehensive income
$
201 $
468 $
497
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 28, 2024, December 30, 2023 and December 31, 2022 was
primarily due to changes in foreign currency exchange rates of the Brazilian Real, Euro, British Pound, Canadian
Dollar, Australian Dollar, Swiss Franc, and New Zealand Dollar.
The hedging gain (loss) during the years ended December 28, 2024, December 30, 2023, and December 31, 2022
was attributable to a net investment hedge. See Note 11 – Derivatives and Hedging Activities for further
information.
The following table summarizes our total comprehensive income, net of applicable taxes as follows:
December 28,
December 30,
December 31,
2024
2023
2022
Comprehensive income attributable to
Henry Schein, Inc.
$
217 $
443 $
476
Comprehensive income attributable to
noncontrolling interests
9
14
6
Comprehensive income (loss) attributable to
Redeemable noncontrolling interests
(25)
11
15
Comprehensive income
$
201 $
468 $
497
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
134
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 28, December 30, December 31,
2024
2023
2022
Basic
126,788,997
130,618,990
136,064,221
Effect of dilutive securities:
Stock options and restricted stock units
990,231
1,129,181
1,691,449
Diluted
127,779,228
131,748,171
137,755,670
The number of antidilutive securities that were excluded from the calculation of diluted weighted average common
shares outstanding are as follows:
Years Ended
December 28, December 30, December 31,
2024
2023
2022
Stock options
406,676
424,695
342,716
Restricted stock units
9,287
15,040
19,466
Total anti-dilutive securities excluded from earnings per share
computation
415,963
439,735
362,182
Note 23 – Supplemental Cash Flow Information
Cash paid for interest and income taxes was:
Years ended
December 28,
December 30,
December 31,
2024
2023
2022
Interest
$
132 $
84 $
47
Income taxes
144
218
265
For the years ended December 28, 2024, December 30, 2023 and December 31, 2022, we had $18 million, $(25)
million and $10 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.
For the year ended December 30, 2023, there was approximately $143 million of debt assumed as part of the
acquisitions of Biotech Dental and S.I.N.
HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
135
Note 24 – Related Party Transactions
In connection with the formation of Henry Schein One, LLC, our joint venture with Internet Brands, which was
formed on July 1, 2018, we entered into a ten-year royalty agreement with Internet Brands whereby we will pay
Internet Brands approximately $31 million annually for the use of their intellectual property. During the years
ended December 28, 2024, December 30, 2023 and December 31, 2022, 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 28, 2024 and December 30, 2023, Henry
Schein One, LLC had a net payable balance to Internet Brands of $1 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 28, 2024, December 30, 2023 and December 31, 2022, we recorded net
sales of $52 million, $47 million, and $46 million respectively, to such entities. During the years ended December
28, 2024, December 30, 2023 and December 31, 2022, we purchased $11 million, $10 million and $9 million
respectively, from such entities. At December 28, 2024 and December 30, 2023, we had an aggregate $31 million
and $32 million, respectively, due from our equity affiliates, and $6 million and $5 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.
Note 25 – Subsequent Event
On January 29, 2025, Henry Schein, Inc. announced a strategic investment by funds affiliated with KKR, a leading
global investment firm. In addition to KKR’s current holdings, KKR will make an additional $250 million
investment in the Company’s common stock. As a result, KKR will own approximately 12% of the Company’s
stock. KKR will also have the ability to purchase additional shares via open market purchases up to a total equity
stake of 14.9% of the outstanding common shares of the Company. In addition, under the agreement
between Henry Schein and KKR, two independent directors will join our Board of Directors. Upon consummation
of this strategic investment, we will issue new shares of common stock to funds affiliated with KKR for an
investment of $250 million, at approximately $76.10 per share. As part of the agreement, KKR has also agreed to
customary voting and other provisions. Consummation of these transactions is subject to customary closing
conditions, including the expiration or termination of any waiting period under the Hart-Scott-Rodino Act and
certain foreign regulatory approvals.
136
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 28, 2024, to ensure that all
material information required to be disclosed by us in reports that we file or submit under the Exchange Act is
accumulated and communicated to them as appropriate to allow timely decisions regarding required disclosure and
that all such information is recorded, processed, summarized and reported within the time periods specified in the
SEC’s rules and forms, and the rules of the Nasdaq stock exchange.
Changes in Internal Control over Financial Reporting
The combination of continued acquisition integrations and systems implementation activity undertaken during the
quarter and carried over from prior quarters, when considered in the aggregate, represents a material change in our
internal control over financial reporting. As previously reported, the full integration of TriMed Inc. (“TriMed”)
will extend beyond year-end and, therefore, we excluded TriMed, which represents less than 0.5% of our total net
sales, from our annual assessment of internal control over financial reporting as of December 28, 2024, as permitted
by related SEC staff interpretive guidance for newly acquired businesses.
During the quarter ended December 28, 2024, post-acquisition integration related activities continued for our dental
and medical businesses acquired during prior quarters. These acquisitions, the majority of which utilize separate
information and financial accounting systems, have been included in our consolidated financial statements since
their respective dates of acquisition.
Also, during the quarter ended December 28, 2024, we completed the systems implementation activities for
implementing a new e-commerce system for our dental and medical businesses in the UK. Finally, we continued
systems implementation activities for our dental business in France and Ireland.
All acquisitions, continued acquisition integrations and systems implementation activities involve necessary and
appropriate change-management controls that are considered in our quarterly assessment of the design and
operating effectiveness of our internal control over financial reporting.
The deficiencies in internal control over financial reporting identified as of December 30, 2023 at the application
control level related to logical and user access management and segregation of duties have continued to be the
subject of ongoing remediation, including implementation of specific action plans and the testing/validation of
control operating effectiveness, which were substantially completed as of our year-end on December 28, 2024.
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
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
137
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 28, 2024.
The effectiveness of our internal control over financial reporting as of December 28, 2024, 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.
138
Report of Independent Registered Public Accounting Firm
Shareholders and Board of Directors
Henry Schein, Inc.
Melville, NY
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
28, 2024, 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 28, 2024,
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 28, 2024 and December
30, 2023, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity,
and cash flows for each of the three years in the period ended December 28, 2024, and the related notes and our
report dated February 25, 2025 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, Management’s Report on Internal Control over Financial Reporting”,
management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not
include the internal controls of TriMed Inc., which was acquired on April 1, 2024, and which is included in the
consolidated balance sheets of the Company as of December 28, 2024, and the related consolidated statements of
income, comprehensive income, changes in stockholders’ equity, and cash flows for the year then ended. TriMed
Inc. constituted less than 0.5% of total net sales for the year ended December 28, 2024. Management did not assess
the effectiveness of internal control over financial reporting of TriMed Inc. because of the timing of the acquisition
which was completed on April 1, 2024. 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 TriMed Inc.
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
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
139
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, NY
February 25, 2025
140
ITEM 9B. Other Information
Not 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 2025 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 2024 Proxy Statement filed pursuant to
Regulation 14A on April 10, 2024.
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 2025 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
attached 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 2025 Proxy Statement to be filed pursuant to Regulation 14A.
141
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 28, 2024:
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
- $
-
10,335,199
Plans Not Approved by Stockholders
-
-
-
Total
- $
-
10,335,199
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 2025 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 2025 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 2025 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 72.
2. Index to Exhibits:
See exhibits listed under Item 15(b) below.
142
(b) Exhibits
3.1
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
1, 2018.)
3.2
Fourth Amended and Restated By-Laws of Henry Schein, Inc., effective March 23, 2023.
(Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on
March 24, 2023.)
4.1
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
October 21, 2021.)
4.2
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
on October 21, 2021.)
4.3
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
on October 21, 2021.)
4.4
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
October 21, 2021.)
4.5
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.)
10.1
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 May 26, 2020.)**
10.2
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.)**
10.3
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.)**
10.4
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
3, 2022.)**
143
10.5
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.)**
10.6
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
7, 2024.)**
10.7
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 8-
K filed on May 24, 2024.)**
10.8
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.)**
10.9
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
filed on May 8, 2018.)**
10.10
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).**
10.11
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
filed on May 7, 2024.)**
10.12
Henry Schein, Inc. Supplemental Executive Retirement Plan, amended and restated
effective as of January 1, 2014. (Incorporated by reference to Exhibit 10.1 to our Quarterly
Report on Form 10-Q for the fiscal quarter ended September 28, 2013 filed on November
5, 2013.)**
10.13
Amendment Number One to the Henry Schein, Inc. Supplemental Executive Retirement
Plan, amended and restated effective as of January 1, 2014. (Incorporated by reference to
Exhibit 10.18 to our Annual Report on Form 10-K for the fiscal year ended December 28,
2019 filed on February 20, 2020.)**
10.14
Amendment Number Two to the Henry Schein, Inc. Supplemental Executive Retirement
Plan, amended and restated effective as of January 1, 2014. (Incorporated by reference to
Exhibit 10.3 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 28,
2020 filed on May 5, 2020.)**
10.15
Amendment Number Three to the Henry Schein, Inc. Supplemental Executive Retirement
Plan, amended and restated effective as of January 1, 2014. (Incorporated by reference to
Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended September
26, 2020 filed on November 2, 2020.)**
144
10.16
Amendment Number Four to the Henry Schein, Inc. Supplemental Executive Retirement
Plan, amended and restated effective as of January 1, 2014. (Incorporated by reference to
Exhibit 10.1 to our Current Report on Form 8-K filed on December 18, 2023.)**
10.17
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.)**
10.18
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.)**
10.19
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.)**
10.20
Henry Schein, Inc. Incentive Plan and Plan Summary, effective as of January 1, 2024.
(Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the
fiscal quarter ended March 30, 2024 filed on May 7, 2024.)**
10.21
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.)**
10.22
Form of Amended and Restated Change in Control Agreement dated December 12, 2008
between us and certain executive officers who are a party thereto (James Breslawski,
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, 2009.)**
10.23
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 (James
Breslawski, 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.)**
10.24
Henry Schein, Inc. Executive Change in Control Plan, effective as of May 2, 2022 between
us and certain executive officers who are a party thereto (Ronald N. South). (Incorporated
by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the fiscal quarter
ended March 26, 2022 filed on May 3, 2022.)**
10.25
Form of Indemnification Agreement between us and certain directors and executive
officers who are a party thereto (Mohamed Ali, Deborah Derby, Carole T. Faig, Joseph L.
Herring, Robert J. Hombach, Kurt P. Kuehn, Philip A. Laskawy, Anne H. Margulies, Carol
Raphael, Scott P. Serota, Bradley T. Sheares, Ph.D., Reed V. Tuckson, M.D., FACP,
Stanley M. Bergman, James P. Breslawski, 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, 2015.)**
145
10.26
Second Amended and Restated Revolving Credit Agreement, dated as of July 11, 2023,
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 TD Bank,
N.A., 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 July 13, 2023.)
10.27
Term Loan Credit Agreement, dated as of July 11, 2023, among us, the several lenders
parties thereto, JPMorgan Chase Bank, N.A., as administrative agent,
U.S. Bank National Association, as syndication agent, and TD Bank, N.A.,
Bank of America, N.A. and UniCredit Bank, A.G., as co-documentation agents.
(Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K
filed on July 13, 2023.)
10.28
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.)
10.29
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.)
10.30
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.)
10.31
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.)
10.32
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
6, 2017.)
10.33
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.)
146
10.34
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.)
10.35
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.)
10.36
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.)
10.37
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.)
10.38
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.)
10.39
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.)
10.40
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.)
10.41
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.)
10.42
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
January 29, 2025.)
19.1
Henry Schein, Inc. Insider Trading Policy (amended and restated as of January 1, 2025)+
21.1
List of our Subsidiaries.+
147
23.1
Consent of BDO USA, P.C.+
31.1
Certification of our Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.+
31.2
Certification of our Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.+
32.1
Certification of our Chief Executive Officer and Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.+
97.1
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.)**
99.1
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.)
99.2
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.)
99.3
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.)
99.4
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.+
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 28, 2024, formatted in Inline XBRL (included within Exhibit 101
attachments).+
_________
+ Filed or furnished herewith.
** Indicates management contract or compensatory plan or agreement.
148
ITEM 16. Form 10-K Summary
None.
149
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 25, 2025
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 25, 2025
Stanley M. Bergman
and Director (principal executive officer)
/s/ RONALD N. SOUTH
Senior Vice President, Chief Financial Officer
February 25, 2025
Ronald N. South
(principal financial and accounting officer)
/s/ MARK E. MLOTEK
Executive Vice President, Chief Strategic Officer, and
February 25, 2025
Mark E. Mlotek
Director
/s/ MOHAMAD ALI
Director
February 25, 2025
Mohamad Ali
/s/ DEBORAH DERBY
Director
February 25, 2025
Deborah Derby
/s/ CAROLE T. FAIG
Director
February 25, 2025
Carole T. Faig
/s/ JOSEPH L. HERRING
Director
February 25, 2025
Joseph L. Herring
/s/ ROBERT J. HOMBACH
Director
February 25, 2025
Robert J. Hombach
/s/ KURT P. KUEHN
Director
February 25, 2025
Kurt P. Kuehn
/s/ PHILIP A. LASKAWY
Director
February 25, 2025
Philip A. Laskawy
/s/ ANNE H. MARGULIES
Director
February 25, 2025
Anne H. Margulies
/s/ CAROL RAPHAEL
Director
February 25, 2025
Carol Raphael
/s/ SCOTT SEROTA
Director
February 25, 2025
Scott Serota
/s/ BRADLEY T. SHEARES, PH.D.
Director
February 25, 2025
Bradley T. Sheares, Ph.D.
/s/ REED V. TUCKSON, M.D., FACP
Director
February 25, 2025
Reed V. Tuckson, M.D., FACP
11
Henry Schein, Inc.
135 Duryea Road
Melville, New York 11747
U.S.A.
(631) 843-5500
www.henryschein.com
24CC9796
FOLLOW HENRY SCHEIN ON
@HenrySchein
@HenrySchein
@HenrySchein
@Henry Schein
@HenryScheinInc