Henry Schein - 10-K annual report 2022

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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 31, 2022

☐

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:

☐

☒

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 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

“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. YES:

☒

NO:

☐

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

check

mark

whether

any

those

error

corrections

are

restatements

that

required

recovery

analysis

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 Exchange 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 25, 2022, was approximately $

10,463,590,000

As of February 7, 2023, there were

131,283,515

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 31, 2022) are incorporated by reference in Part III hereof.

TABLE OF CONTENTS

Page

Number

Unresolved Staff Comments

Mine Safety Disclosures

PART II

ITEM 5.

Market for Registrant's Common Equity, Related Stockholder Matters

and Issuer Purchases of Equity Securities

ITEM 6.

[Reserved]

ITEM 7.

Management's Discussion and Analysis of Financial Condition

and Results of Operations

ITEM 7A.

Quantitative and Qualitative Disclosures About Market Risk

ITEM 8.

Financial Statements and Supplementary Data

ITEM 9.

Changes in and Disagreements with Accountants on Accounting

and Financial Disclosure

116

ITEM 9A.

Controls and Procedures

116

ITEM 9B.

Other Information

118

ITEM 9C.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspection

118

PART III

ITEM 10.

Directors, Executive Officers and Corporate Governance

118

ITEM 11.

Executive Compensation

118

ITEM 12.

Security Ownership of Certain Beneficial Owners and Management

and Related Stockholder Matters

119

ITEM 13.

Certain Relationships and Related Transactions, and Director Independence

119

ITEM 14.

Principal Accounting Fees and Services

119

PART IV.

ITEM 15.

Exhibits and Financial Statement Schedules

119

127

128

PART

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 more than 90 years of experience distributing health care products, we have built a vast set 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 more than 22,000 people.

Approximately 50% of our

workforce is based in the United States and approximately 50% is based

outside of the United States.

We have

operations or affiliates in 32 countries and territories.

Our broad global footprint has evolved over time through our

organic success as well as through contribution from strategic acquisitions.

We offer

a comprehensive selection of more than 300,000 branded products

and Henry Schein corporate brand

products through our distribution centers.

Our infrastructure, including over 3.8 million square

feet of space in 29

strategically located distribution and 19 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.

We conduct our business through two reportable segments: (i) health care distribution and (ii) technology and

value-added services.

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

Our dental

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

and other

institutions.

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

emergency

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

and large enterprises, such as

group practices

and integrated delivery networks, among other providers across a

wide range of specialties.

The health care distribution reportable segment, combining our global dental

and medical businesses, distributes

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

repair services, branded

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

(including implant, orthodontic

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

protective equipment products

(“PPE”) and vitamins.

While our primary go-to-market strategy is in our capacity

as a distributor, we also market

and sell under our own corporate brand portfolio of cost-effective, high-quality consumable

merchandise products,

and manufacture certain dental specialty products in the areas of oral

surgery, implants, orthodontics and

endodontics.

The technology and value-added services reportable segment provides

software, technology and other value-added

services to health care practitioners.

Henry Schein One, the largest contributor of sales to this category, offers

dental practice management solutions for dental and medical practitioners.

In addition, we offer dentists and

physicians a broad suite of electronic health records, patient communication

services including electronic marketing

and web-site design, analytics and patient demand generation.

Finally, our value-added practice solutions include

practice consultancy, education, integrated revenue cycle management and the facilitation of financial service

offerings (on a non-recourse basis) to help dentists and physicians operate and

expand their business operations.

We believe our hands-on consultative approach to provide solutions to support practice decision-making is a key

differentiator for our business.

Table of Contents

Recent Developments

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent

Developments” herein for a discussion related to the COVID-19

pandemic and recent corporate transactions.

Industry

The global health care 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 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), 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 health care distribution industry continues to experience growth due

to demand driven by the aging population,

increased health care awareness and the importance of preventative 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 health

maintenance organizations (“HMOs”), group practices, other managed care accounts

and collective buying groups,

which, in addition to their emphasis on obtaining products at competitive

prices, tend to favor distributors capable

of providing specialized management information support.

We believe that the trend towards cost containment has

the potential to favorably affect demand for technology solutions, including software,

which can enhance the

efficiency and facilitation of practice management.

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

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value-added products and services.

In the dental 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 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.

With regard to our dental

software, we compete against numerous companies, including the

Patterson Dental division of Patterson

Companies, Inc., Carestream Health, 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) and Curve Dental, LLC.

In other software end markets, including revenue cycle

management,

patient relationship management and patient demand generation, we

compete with companies such as Vyne

Therapeutics Inc., EDI-Health Group, Inc. (d.b.a. Dental X Change, Inc.),

Weave Communications, Inc., and

Solutionreach, Inc.

The medical practice management and electronic medical

records market is fragmented and we

compete with numerous companies such as the NextGen division of

Quality Systems, Inc., eClinicalWorks,

Allscripts Healthcare Solutions, Inc. and Epic Systems Corporation.

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, 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.

Competitive Strengths

We have more than 90 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 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.

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•

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.

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:

•

Consumable supplies 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 offer over 300,000 branded

products, through our distribution centers, to our customers.

We also market and sell our own corporate

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

and manufacture certain

dental specialty products in the areas of implants, orthodontics and endodontics.

•

Technology and other value-added products and services.

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, sourcing third party patient payment plans,

transition services and training

and education programs for practitioners.

We also sell medical software for practice management, certified

electronic health records (“EHR”) and e-Prescribe medications and prescription

solutions through

MicroMD®.

We have technical representatives supporting customers using our practice management

solutions and services.

As of December 31, 2022, we had an active user base of approximately

110,000

practices and 380,000 consumers, including users of AxiUm, Dentally®, Dentrix

Ascend®, Dental

Vision®, Dentrix® Dental Systems, Dentrix® Enterprise, Easy Dental®, EndoVision®, Evolution® and

EXACT®, Gesden®, Jarvis Analytics™, Julie® Software, Oasis, OMSVision®, Orisline®, PBS Endo®,

PerioVision®, Power Practice® Px, PowerDent,

and Viive® and subscriptions for Demandforce®, Sesame,

and Lighthouse360® for dental practices and DentalPlans.com®

for dental patients; and MicroMD® for

physician practices.

•

Repair services.

We have over 130 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.

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:

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•

Exceptional order fulfillment

We ship an average of approximately 157,000 cartons daily.

Historically,

approximately 99% of items have been shipped without back-ordering and were

shipped on the same

business day the order is received.

Due to supply chain disruptions during the year ended December

31,

2022, approximately 96% of items ordered were shipped without back-ordering.

As supply chains continue

to stabilize, we expect our percentage of items shipped without back-ordering and

shipped on the same day

to return to historical levels.

•

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.

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.

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 2022,

our top 10 health care distribution suppliers and our single largest supplier accounted for approximately

28% and

4%, respectively, of our aggregate purchases.

Efficient distribution

We distribute our products from our 29 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.

Products and Services

The following table sets forth the percentage of consolidated net sales

by principal categories of products and

services offered through our health care distribution and technology and value-added services

reportable segments:

December 31,

December 25,

December 26,

2022

2021

2020

Health care distribution:

Dental products

(1)

59.1

60.8

58.4

Medical products

(2)

35.2

34.0

35.8

Total

health care distribution

94.3

94.8

94.2

Technology

and value-added services:

Software and related products and

other value-added products

(3)

5.7

5.2

5.1

Total

excluding Corporate TSA net sales

100.0

99.3

Corporate TSA net sales

(4)

0.7

Total

100.0

(1)

Includes infection-control products, handpieces, preventatives, impression materials, composites, anesthetics, teeth, dental implants,

gypsum, acrylics, articulators, abrasives, dental chairs, delivery units and lights, X-ray supplies and equipment, PPE products,

equipment repair and high-tech and digital restoration equipment.

(2)

Includes branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products, X-ray

products, equipment, PPE products and vitamins.

(3)

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

and financial services on a non-recourse basis, e-services, continuing education services for practitioners, consulting and other

services.

(4)

Corporate TSA net sales represents sales of certain products to Covetrus under the transition services agreement entered into in

connection with the Animal Health Spin-off, which ended in December 2020.

See

Note-23 Related Party Transactions

for further

information.

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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”)

Drive digital transformation for our customers and for Henry Schein

•

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 1 million customers worldwide and we

intend to increase sales to our existing customer base and enhance 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.

settings of health care 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.

In the dental business, we have significant cross-

selling opportunities between our dental software users and our dental customers.

In the medical business,

we have 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 2022 and 2032, the 45 and

older population is expected to grow by approximately 11%.

Between 2022 and 2042, this age group is expected to

grow by approximately 21%.

This compares with expected total U.S. population growth

rates of approximately 6%

between 2022 and 2032 and approximately 12% between 2022 and 2042.

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

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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 3 – 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

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.

President Biden’s

administration (the “Biden Administration”) has indicated that it will be

more aggressive in its pursuit of alleged

violations of law, and has revoked certain guidance that would have limited governmental use of informal agency

guidance to pursue potential violations, and has stated that it is more prepared

to pursue individuals for corporate

law violations, including an aggressive approach to anti-corruption activities.

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 and sale of,

and/or third party payment for, pharmaceuticals and/or medical devices, and in this regard, we are subject

extensive local, state, federal and foreign governmental laws and regulations,

including as applicable to our

wholesale distribution of pharmaceuticals and medical devices, manufacturing

activities, and as part of our

specialty home medical supply business that distributes and sells medical equipment

and supplies directly to

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patients.

Federal, state and certain foreign governments have also increased enforcement

activity in the health care

sector, particularly in areas of fraud and abuse, anti-bribery and corruption, controlled substances handling,

medical

device regulations and data privacy and security standards.

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”).

In addition, activities to

control medical costs, including laws and regulations lowering reimbursement

rates for pharmaceuticals, medical

devices and/or medical treatments or services, are ongoing.

Many of these laws and regulations are subject to

change and their evolving implementation may impact our operations and our

financial performance.

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

impact our financial performance,

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

effect on our business.

Operating, Security and Licensure Standards

Certain of our businesses are subject to local, state and federal governmental

laws and regulations relating to the

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.

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, 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 brought about significant

changes with respect to

pharmaceutical supply chain requirements.

Title II of this measure, known as the Drug Supply Chain Security Act

(“DSCSA”), was first implemented in November 2014 and will be phased

in over a period of ten years. DSCSA is

intended to build a national electronic, interoperable system by November

27, 2023, that will identify and trace

certain prescription drugs as they are distributed in the United States.

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

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.

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.

In addition, with respect to our specialty home medical supply

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 and other third-party payers.

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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.

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.

Most compliance dates were reached as of September 24, 2018, with

a final set of requirements for low

risk devices being reached on September 24, 2022, which completed the

phase in.

However, in May 2021, the

FDA issued an enforcement policy stating that it does not intend to

object to the use of legacy identification

numbers on device labels and packages for finished devices manufactured

and labeled prior to September 24, 2023.

The UDI regulations require “labelers” to include unique device identifiers

(“UDIs”), with a content and format

prescribed by the FDA and issued under a system operated by an FDA-accredited

issuing agency, on the labels and

packages of medical devices (including, but not limited to, certain software

that qualifies as a medical device under

FDA rules), and to directly mark certain devices with UDIs.

The UDI regulations also require labelers to submit

certain information concerning UDI-labeled devices to the FDA, much of which

information is publicly available

on an FDA database, the Global Unique Device Identification Database.

On July 22, 2022, the FDA posted the

final guidance regarding the Global Unique Device Identification Database

called Unique Device Identification

Policy Regarding Compliance Dates for Class I and Unclassified Devices, Direct

Marketing, and Global Unique

Device Identification Database Requirements for Certain Devices.

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.

Under the Controlled Substances Act, as a distributor of controlled substances,

we are required 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.

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 certain human tissue (for example,

human bone products) for valuable

consideration, while generally permitting payments for the reasonable costs

incurred in procuring, processing,

storing and distributing that tissue.

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 healthcare 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.

“regulations” apply in all member states, whereas “directives” are implemented

by the individual laws of member

states.

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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 manufacturer, importer and distributor.

It includes market

surveillance, and non-compliance may result in the recall or withdrawal of

products, along with other sanctions.

In the EU, the EU Medical Device Regulation No. 2017/745 of 5 April 2017

(“EU MDR”) covers a wide scope of

our activities, from dental material 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, healthcare 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 a database

(EUDAMED, which is not fully functional for the time being and might

not be so before the end of 2024 at

the earliest; therefore, the use of this database is only possible through

a voluntary basis and, by a way of

consequence, is currently not mandatory).

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. Medical devices that have

been assessed and/or certified under the Directive No. 93/42/EEC of

14 June 1993

concerning medical devices

(“EU Medical Device Directive”) may for the moment continue to be placed

on the market until 2024 (or until the

expiry of their certificates, if applicable and earlier).

However, on January 6, 2023, the EU Commission submitted a

proposed amendment to extend the MDR transitional periods until December

31, 2027 for higher risk devices and

December 31, 2028, for other medical devices to ensure continued access

to medical devices for patients and to

allow medical devices already placed on the market in accordance with

the current legal framework to remain on

the market. We continue to monitor developments and whether the proposed amendment and new deadlines will be

approved by the European Parliament and Council. 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, which sets various obligations with respect to the labelling and

packaging of concerned substances and

mixtures.

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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 regulation, which

may affect our interactions with customers, including the design and functionality

of our products.

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

local and foreign laws and regulations,

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

disposal of hazardous or potentially

hazardous substances, and safe working conditions.

In addition, certain of our businesses must operate in

compliance with a variety of burdensome and complex billing and record-keeping

requirements in order to

substantiate claims for payment under federal, state and commercial healthcare

reimbursement programs.

One of

these businesses was suspended in October 2021 by CMS from receiving

payments from Medicare, although it was

permitted to continue to perform and bill for Medicare services.

On September 30, 2022, CMS terminated the

suspension of Medicare payments.

As a result of the termination of the suspension, we recognized

$4 million of

previously deferred revenue during the year ended December 31, 2022.

Certain of our businesses also maintain contracts with governmental agencies

and are subject to certain regulatory

requirements specific to government contractors.

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.

The Biden Administration has indicated increased antitrust enforcement and

has been more aggressive in

enforcement activities, including investigation and challenging non-compete

restrictions and other restrictive

contractual terms that it believes harm workers and competition.

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 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 Anti-Kickback Statutes 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

monitor which could have a material

adverse effect on our business.

Also, these measures may be interpreted or applied by a prosecutorial,

regulatory or

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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 on the one hand and physicians,

dentists and other healthcare

professionals on the other.

As a result, we regularly review and revise our marketing practices as necessary

facilitate compliance.

also are subject to certain United States and foreign laws and regulations

concerning the conduct of our foreign

operations, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery

Act, German anti-corruption laws

and other anti-bribery laws and laws pertaining to the accuracy of our internal

books and records, which have been

the focus of increasing enforcement activity globally in recent years.

While we believe that we are substantially compliant with applicable fraud and

abuse laws and regulations, and

have adequate compliance programs and controls in place to ensure substantial

compliance, we cannot predict

whether changes in applicable law, or interpretation of laws, or changes in our services or marketing practices in

response to changes in applicable law or interpretation of laws, or failure

to comply with applicable law, could have

a material adverse effect on our business.

Affordable Care Act 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 has faced frequent legal challenges, including litigation seeking

to invalidate and Congressional action

seeking to repeal some of or all of the law or the manner in which it has been

implemented.

In 2012, the United

States Supreme Court, in upholding the constitutionality of the

ACA and its individual mandate provision requiring

that people buy health insurance or else face a penalty, simultaneously limited ACA provisions requiring Medicaid

expansion, making such expansion a state-by-state decision.

In addition, one of the major political parties in the

United States remains committed to seeking the ACA’s legislative repeal, but legislative efforts to do so have

previously failed to pass both chambers of Congress.

Under President Trump’s administration, a number of

administrative actions were taken to materially weaken the ACA, including,

without limitation, by permitting the

use of less robust plans with lower coverage and eliminating “premium support”

for insurers providing policies

under the ACA.

The Tax Cuts and Jobs Act enacted in 2017, which contains a broad range of tax reform provisions

that impact the individual and corporate

tax rates, international tax provisions, income tax add-back provisions

and

deductions, also effectively repealed the ACA’s

individual mandate by zeroing out the penalty for non-compliance.

In the most recent ACA litigation, the federal Fifth Circuit Court of Appeals

found the individual mandate to be

unconstitutional, and returned the case to the District Court for the Northern

District of Texas for consideration of

whether the remainder of the ACA could survive the excision of the individual

mandate.

The Fifth Circuit’s

decision was appealed to the United States Supreme Court.

The Supreme Court issued a decision on June 17, 2021.

Without reaching the merits of the case, the Supreme Court held that the plaintiffs in the case did not have standing

to challenge the ACA.

Any outcomes of future cases that change the ACA, in addition

to future legislation,

regulation, guidance and/or Executive Orders that do the same, could have a

significant impact on the U.S.

healthcare industry.

For instance, the American Rescue Plan Act of 2021 enhanced

premium tax credits, which has

resulted in an expansion of the number of people covered under the ACA.

These changes are time-limited, with

some enhancements in place for 2021 only and others available through

the end of 2022.

An ACA provision, generally referred to as the Physician Payment 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

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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.

The Centers for Medicare and Medicaid Services (“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.

are also subject to

foreign regulations requiring transparency of certain interactions between

suppliers and their customers.

In the United States, government actions to seek to increase health-related

price transparency may also affect our

business.

For example, hospitals are currently required 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. 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. CMS may impose civil monetary penalties for

noncompliance with these price transparency requirements. Additionally, the No Surprises Act (“NSA”), generally

effective January 1, 2022, 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.

Another notable Medicare health care reform initiative, the Medicare Access

and CHIP Reauthorization Act of

2015 (“MACRA”), enacted on April 16, 2015, established a new payment framework,

which modified certain

Medicare 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 reimbursement to eligible

clinicians includes both positive and negative payment adjustments that take

into account quality, promoting

interoperability, cost and improvement activities.

Data collected in the first MIPS performance year (2017)

determined payment adjustments that began January 1, 2019.

MACRA standards and payment levels continue to

evolve, and reflect a fundamental change in physician reimbursement

that is expected to provide substantial

financial incentives for physicians to participate in risk contracts, and to increase

physician information technology

and reporting obligations.

The implications of the implementation of MACRA are uncertain and will

depend on

future regulatory activity and physician activity in the marketplace.

New state-level payment and delivery system

reform programs, including those modeled after such federal programs, are

also increasingly being rolled out

through Medicaid administrators, as well as through the private sector, which may further

alter the marketplace and

impact our business.

Recently, in addition to other government efforts to control health care costs, there has been increased scrutiny on

drug pricing and concurrent efforts to control or reduce drug costs by Congress, the

President, executive branch

agencies and various states.

At the state level, several states have adopted laws that require drug manufacturers

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, several related bills have been

introduced and regulations proposed which, if enacted or finalized,

respectively, would impact drug pricing and

related costs.

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.

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

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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 healthcare sector.

The scope of these laws varies from one member state to

another and may, for example, include the relations between healthcare 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

The FDA has become increasingly active in addressing the regulation of

computer software and digital health

products intended for use in health care settings.

The 21st Century Cures Act (the “Cures Act”), signed into law on

December 13, 2016, among other things, amended the medical device definition

to exclude certain software from

FDA regulation, including clinical decision

support software that meets certain criteria.

On September 27, 2019,

the FDA issued a suite of guidance documents on digital health products, which

incorporated applicable Cures Act

standards, including regarding the types of clinical decision support tools and other

software that are exempt from

regulation by the FDA as medical devices, and continues to issue new guidance

in this area.

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 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, and our specialty home

medical supply business, include electronic information technology systems

that store and process personal health,

clinical, financial and other sensitive information of individuals.

These information technology systems may be

vulnerable to breakdown, wrongful intrusions, data breaches and malicious

attack, which could require us to

expend significant resources to eliminate these problems and address related

security concerns and could involve

claims against us by private parties and/or governmental agencies.

For example, we are directly or indirectly

subject to numerous and evolving federal, state, local and foreign laws and

regulations that protect the privacy and

security of personal information, such as the federal Health Insurance Portability

and Accountability Act of 1996,

as amended, and implementing regulations (“HIPAA”), the Controlling the Assault of Non-Solicited Pornography

and Marketing Act, the Telephone Consumer Protection Act of 1991, Section 5 of the Federal Trade Commission

Act, the California Privacy Act (“CCPA”), and the California Privacy Rights Act (“CPRA”) that became effective

on January 1, 2023.

Additionally, Virginia,

Colorado, Connecticut and Utah recently passed comprehensive

privacy legislation, 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.

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.

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

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may seek damages.

Member states may individually impose additional requirements

and penalties regarding

certain limited matters (for which the GDPR let 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.

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.

In the United States, the CCPA, which increases the privacy protections afforded California residents, became

effective January 1, 2020.

The CCPA generally requires companies, such as us, to institute additional protections

regarding the collection, use and disclosure of certain personal information

of California residents.

Compliance

with the obligations imposed by the CCPA depends in part on how particular regulators interpret and apply them.

Regulations were released in August of 2020, but there remains some

uncertainty about how the CCPA will be

interpreted by the courts and enforced by the regulators.

If we fail to comply with the CCPA or if regulators assert

that we have failed to comply with the CCPA, we may be subject to certain fines or other penalties and litigation,

any of which may negatively impact our reputation, require us to expend

significant resources, and harm our

business.

Furthermore, California voters approved the CPRA on November 3,

2020, which amends and expands

the CCPA, including by providing consumers with additional rights with respect to their personal information, and

creating a new state agency, the California Privacy Protection Agency, to enforce the CCPA

and the CPRA.

The

CPRA came into effect on January 1, 2023, applying to information collected by

businesses on or after January 1,

2022.

Other states, as well as the federal government, have increasingly

considered the adoption of similarly expansive

personal privacy laws, backed by significant civil penalties for non-compliance.

Virginia and Colorado were both

successful in passing privacy legislation in 2021, becoming effective on January

1, 2023 and July 1, 2023,

respectively.

In 2022, privacy legislation passed in Connecticut, effective July 1, 2023, and

Utah, effective

December 31, 2023.

While we believe we have substantially compliant programs

and controls in place to comply

with the GDPR, CCPA, PIPL, CPRA and state law requirements, 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.

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.

Various

federal initiatives involve the adoption and use by health care

providers of certain electronic health care

records 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

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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.

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.

continue to explore ways and means to improve and expand our online

presence and capabilities, including our

online commerce offerings and our use of various social media outlets.

International Transactions

United States and foreign import and export laws and regulations require us to

abide by certain standards relating to

the importation and exportation of products.

We also are subject to certain laws and regulations concerning the

conduct of our foreign operations, including the U.S. Foreign Corrupt Practices

Act, the U.K. Bribery Act, German

anti-corruption laws and other anti-bribery laws and laws pertaining

to the accuracy of our internal books and

records, as well as other types of foreign requirements similar to those

imposed in the United States.

While we believe that we are substantially compliant with the foregoing laws

and regulations promulgated

thereunder and possess all material permits and licenses required for the conduct

of our business, there can be no

assurance that laws and regulations that impact our business or laws and

regulations as they apply to our customers’

practices will not have a material adverse effect on our business.

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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.

We intend

to protect our trademarks to the fullest extent practicable.

Employees and Human Capital

Environment, Social and Governance

Henry Schein has remained steadfastly committed over our nine-decade history

to the core philosophy that our

purpose-driven mission of "doing good" for our stakeholders is inextricably

linked to our Company "doing well" in

business through our stakeholder engagement model “our Mosaic of Success”.

We balance the needs of our five

key stakeholders – Team Schein Members (TSMs), our Customers, our Suppliers, our Stockholders, and Society –

to continue to drive our sustainability and ESG efforts to foster a healthier planet and healthier

people.

Overseen

by the Nominating and Governance Committee of our Board of Directors with the

Compensation Committee also

playing a role in ESG matters related to human capital engagement and executive

compensation, key 2022

sustainability and ESG highlights included:

●

With the backdrop of the ongoing COVID-19 pandemic and the humanitarian crises in Ukraine and other

regions, we continued our efforts to drive an overall culture of wellness and engagement

for our TSMs as

we navigated a new hybrid work environment and ensure supply chain resiliency

to support our customers

and our communities.

Henry Schein was named Chair of the Private Sector Roundtable

on Global Health

Security, and continued its work across sectors to support the creation of market intelligence platforms that

enable the appropriate sharing of real-time supply chain data, including through

the WHO's Pandemic

Supply Chain Network and various national efforts, including the U.S. Supply Chain

Control Tower.

●

(i) Publishing our annual Corporate Social Responsibility and Sustainability

Report according to the Global

Reporting Initiative and Sustainability Accounting Standards Board reporting

standards and issuing our

first Taskforce for Climate-related Financial Disclosures report; (ii) committing to announcing our carbon

reduction goal by the end of 2023; (iii) continued initiatives and programs

to advance health equity efforts

to promote access to care for underserved and underrepresented communities,

investing in diversity for

greater health equity in partnership with health care professionals, and

increasing awareness of health

equity needs globally; (iv) announced the top line findings of our pay equity

analysis across the U.S., which

reviews compensation across gender and ethnic groups; (v) expanding our

Diversity and Inclusion (“D&I”)

learning journey, such as by educating global directors and vice presidents on more advanced topics of D&I

including privilege and equity, as well as offering education to all global TSMs below director level on the

importance of D&I; and (vi) continuing to drive a culture of wellness for our

TSMs by fostering an

environment where they can feel engaged, included and psychologically

safe.

At Henry Schein, our employees are our greatest asset.

We employ more than 22,000 people, approximately 50%

of our workforce is based in the United States and approximately 50%

is based outside of the United States.

Approximately 12% of our employees are subject to collective bargaining agreements.

We believe that our

relations with our employees are excellent.

We refer to our employees as Team

Schein Members, or “TSMs.” Our TSMs are the cornerstone

of the Company.

We have a strong values-based culture that cultivates a meaningful employee experience that is centered around

people.

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.

As part of

this commitment, our highlights in 2022 included:

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●

Nurturing a connected community for a happier, more engaged, collaborative work environment.

continue to adapt to the new way of working for our TSMs by listening

to their needs.

With TSMs working

remotely, hybrid and in-person, our goal is to continue to create a collaborative community where every

TSM feels connected to our culture.

Through various virtual and in-person programming from our

Employee Resource Groups, Wellness Committee and Team Schein Engagement team, we continue to

bring TSMs together in a meaningful way through virtual education sessions

and networking events.

help create a sense of connection and belonging amongst the team, we

launched “TSM Experience Panels,”

which feature TSMs who share their authentic experiences and offer advice and

best practices on specific

topics. We offer a variety of opportunities to volunteer for team-building and engaging in their local

communities in which they live and work such as through the We Care Global Challenge, Back to School,

and Holiday Cheer. In addition, they can “help health happen” by participating in key programs and

initiatives (e.g., Gives Kids A Smile, Healthy Lifestyles, Healthy Communities

and Release the Pressure)

that partner with industry associations, customers, and suppliers to support

access to quality health care for

underserved and underrepresented communities.

We continue to evaluate the engagement of our team

through various listening mechanisms including roundtables, hosted

by our CEO and Executive

Management Committee (“EMC”), and various surveys, including The

Pulse, our global culture survey that

evaluates TSM engagement globally with results reviewed by senior leaders,

reported to the Board of

Directors (“BOD”).

Throughout 2022, we held 10 solutions-focused roundtables

hosted by our EMC

members with over 100 TSMs to dive in deeper and influence our

strategy on programs and processes

designed to further enhance our culture.

●

Driving a culture of wellness for our team members and society.

In 2020, we launched a Mental Wellness

Committee with a mission to drive a culture of wellness and empower

every TSM to be their best self,

mentally, emotionally and physically.

The Committee provides resources, guidance and support,

and

works across our businesses to establish enhanced workplace norms to

help improve and safeguard our

TSMs’ wellness.

We actively engage leadership, including our CEO, EMC, BOD and TSMs alike in

conversations around the importance of wellness in the workplace.

In 2022, we rolled-out an EMC video

series that focused on being more intentional in the way we work across

our business.

These new

workplace norms focused on meeting and technology etiquette, successful

calendaring, establishing and

communicating reasonable expectations and prioritization, the importance

of taking and respecting time

off, and the importance of making time for social connection. In addition to expanding

education on key

mental health topics in partnership with our employee assistance vendor, we also rolled-out manager-

specific education to provide tips on how to identify signs of burnout

and have conversations around

wellness with their teams.

With the rise of suicide rates around the world, the Wellness Committee held

seminars for the team on suicide prevention and hosted in-person community walks

that resulted in

donations to local suicide prevention organizations globally.

●

Being committed to enhancing our D&I initiatives.

We believe a diverse workforce fosters innovation and

cultivates an environment filled with unique perspectives.

As a result, D&I helps us meet the needs of

customers around the world and provide our TSMs an inclusive environment

where they feel they belong.

We measure our success in D&I through, among other things, our global culture survey, where results in

2021 showed D&I is our top strength out of 14 focus areas. To guide our efforts and education related to

D&I, our Diversity and Inclusion Council, with engagement from our

BOD and EMC, drives the

Company’s overall D&I strategy.

To deepen our commitment to D&I across the Company, Global

Directors and Vice Presidents each have a goal tied to their compensation to champion D&I and attend

education.

We continue to expand our D&I learning journey, educating global Directors and Vice

Presidents on key D&I topics including leading inclusively, bias and equity.

We also continue to educate

our global TSMs on the importance of D&I. Additionally, we promote engagement by utilizing our

Employee Resource Groups (“ERGs”), which we continue to expand,

as an inclusive and diverse vehicle

for all TSMs to share, connect, learn and develop both personally

and professionally.

Each of our ERGs

has a sponsor from our Executive Management Committee and our BOD

and our CEO engages directly in

many of our ERG programs.

While inclusion continues to remain a top priority, we also understand the

importance of ensuring our internal team reflects the diversity of our customers

and society.

In addition to

our current gender parity by 2030 goal, we announced a new goal in 2022 with

an enhanced focus on

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increasing the diversity of all underrepresented groups in senior leadership

levels through our talent

planning, compensation and recruitment processes, in alignment with

our corporate strategic planning

objectives to achieve concrete results.

We continue to disclose additional diversity data, with frequent

reporting to the EMC and BOD.

In 2022, we published our United States Equal Employment Opportunity

Commission (“EEOC”) EEO-1 data for the U.S. for the first time.

We continue to enhance our recruiting

strategy by developing and investing in strategic hires who complement

our D&I mission.

We believe that

these efforts will serve as a critical steppingstone as we continue to strengthen our

D&I initiatives in an

effort to meet the evolving needs of our customers, supplier partners, TSMs, stockholders

and society.

●

Understanding that growth, recognition and purpose are key pillars to TSM fulfillment.

Personal and

professional development of our TSMs is important to us.

As such, we invest in our employees by

providing both formal and informal learning opportunities that are

focused on growing and enhancing

knowledge, skills and abilities.

TSMs globally are offered a broad suite of professional development

training programs targeted to specific learning opportunities based on their current

and potential future role

within the Company.

We also offer over 50 organizational and development training courses designed to

aid in the overall development and advancement of skills and competencies

to enable organizational

success.

Executive education, mentorship and coaching programs also

form an important part of our

development and career support initiatives.

Additionally, we continued to see an increase in participation

in our Organizational Development initiatives in 2022 with our TSMs reporting

a high utilization of skills

learned.

Talent planning efforts are also an integral part of our commitment to ensure a strong diverse

leadership pipeline across the organization.

Through a formal global process, we strategically identify and

develop talent through targeted development opportunities and intentional succession

plans.

continuously identify potential management successors as part

of our succession planning process.

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 BOD is provided with periodic updates regarding our

talent and succession planning

efforts and participates in professional development activities with our TSMs.

We know recognition and

purpose are also key pillars to TSM engagement, so we continue to find

ways to recognize our TSMs

through our annual performance review process, and various recognition

opportunities including our Teddy

Philson Team Schein Award,

which highlights TSMs who exemplify our Team Schein Values.

In addition,

we continue to focus on ensuring every TSM understands the importance

in the role they play within the

organization, how they contribute to a larger purpose of creating a healthier world, as well as

continue to

provide opportunities for TSMs to engage in meaningful ways

that connect back to their own personal

purpose, such as helping the community through CSR activities.

Available Information

We make available free of charge through our Internet 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:

Name

Age

Position

Stanley M. Bergman

Chairman, Chief Executive Officer, Director

James P.

Breslawski

Vice Chairman, President, Director

David Brous

Chief Executive Officer, Strategic Business Group

Brad Connett

Chief Executive Officer, North America Distribution Group

Michael S. Ettinger

Executive Vice President and Chief Operating Officer

Lorelei McGlynn

Senior Vice President, Chief Human Resources Officer

Mark E. Mlotek

Executive Vice President, Chief Strategic Officer, Director

Ronald N. South

Senior Vice President, Chief Financial Officer

Walter Siegel

Senior Vice President and Chief Legal 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.

James P. Breslawski

has been our Vice Chairman since 2018, President since 2005 and a director since 1992.

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.

David Brous

has been our Chief Executive Officer, Strategic Business Group since 2021.

Mr. Brous joined us in

2002 and has held many positions within the organization, including President, Strategic Business

Units Group and

Asia Pacific & Brazil Dental, leading and managing the Corporate Business

Development Group and the

International Healthcare Group (managing our International Animal Health business,

International Medical

business and Australia / New Zealand Dental business).

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 July 2022.

Prior to

his current position, Mr. Ettinger served as Senior Vice President, Corporate & Legal Affairs, Chief of Staff and

Secretary from 2015 to July 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.

Lorelei McGlynn

has been our Senior Vice President, Chief Human Resources Officer since 2013.

Since joining

us in 1999, Ms. McGlynn has served as Vice President, Global Human Resources and Financial Operations from

2008 to 2013, Chief Financial Officer, International Group and Vice President of Global Financial Operations from

2002 to 2008 and Vice President, Finance, North America from 1999 to 2002.

Prior to joining us, Ms. McGlynn

served as Assistant Vice President of Finance at Adecco Corporation.

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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.

Ronald N. South

has been our Senior Vice President

and Chief Financial Officer (and principal financial officer

and principal accounting officer) since April 2022.

Prior to holding his current position, Mr. South was our

Corporate Finance and Chief Accounting Officer from 2013 until April 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.

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.

Other Executive Management

The following table sets forth certain information regarding other Executive

Management:

Name

Age

Position

Andrea Albertini

Chief Executive Officer, International Distribution Group

Leigh Benowitz

Senior Vice President and Chief Global Digital Transformation Officer

Trinh Clark

Senior Vice President and Chief Global Customer Experience Officer

James Mullins

Senior Vice President, Global Supply Chain

Kelly Murphy

Senior Vice President and General Counsel

Christopher Pendergast

Senior Vice President and Chief Technology Officer

Michael Racioppi

Senior Vice President, Chief Merchandising Officer

René Willi, Ph.D.

Chief Executive Officer, Global Oral Reconstruction Group

Andrea Albertini

has been Chief Executive Officer, International Distribution Group since 2023.

Mr. Albertini

joined us in 2013 and has held several positions within the organization including

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.

Leigh Benowitz

has been our Senior Vice President and Chief Global Digital Transformation Officer since August

2022.

Ms. Benowitz joined us in 2017 and has held several key positions

including Vice President Digital &

Customer Experience and Global eCommerce Platform Digital Transformation Officer.

Prior to joining Henry

Schein, Ms. Benowitz held various positions with increasing responsibilities

at Citi.

Trinh Clark

has been our Senior Vice President and Chief Global Customer Experience Officer since August

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 responsibilities 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 the 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.

Michael Racioppi

has been our Senior Vice President, Chief Merchandising Officer since 2008.

Prior to holding

his current position, Mr. Racioppi was President of the Medical Division from 2000 to 2008 and Interim President

from 1999 to 2000, and Corporate Vice President from 1994 to 2008, with primary responsibility for the Medical

Group, Marketing and Merchandising departments.

Mr. Racioppi served as Senior Director, Corporate

Merchandising from 1992 to 1994.

Before joining us in 1992, Mr. Racioppi was employed by Ketchum

Distributors, Inc. as the Vice President of Purchasing and Marketing.

He currently serves on the board of National

Distribution and Contracting and previously served on the board of Health

Distribution Management Association

and Health Industry Distributors Association (HIDA).

René Willi, Ph.D.

has been our Chief Executive Officer, Global Oral Reconstruction Group since 2021.

Previously, Dr.

Willi was the President of our Global Dental Surgical Group.

Prior to joining Henry Schein, Dr.

Willi held senior level roles with Institut Straumann AG as Executive Vice President, Surgical Business Unit from

2005 to 2013.

Prior to Straumann, he held roles of increasing responsibility

in Medtronic Plc’s cardiovascular

division from 2003 to 2005 and with McKinsey & Company as

a management consultant from 2000 to 2003.

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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, financial

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

Our business, 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 disasters

The COVID-19 pandemic and the responses of governments

to it had, and may again have, a

material adverse effect on our business, results of operations and cash flows and may result

in a material

adverse effect on our financial condition and liquidity.

Our business, 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

disasters. The COVID-19 pandemic has had, and continues to have, an

unprecedented impact on society, worldwide

economic activity, and the health care sector (particularly, the dental market). As a global healthcare solutions

company, the COVID-19 pandemic and the governmental responses to it had, and may again have, a material

adverse effect on our business, results of operations and cash flows and may result

in a material adverse effect on

our financial condition and liquidity. Even after the COVID-19 pandemic has begun to subside, we may again

experience material adverse impacts to our business, results of operations

and cash flows as a result of, among other

things, its global economic impact, including any recession that

may occur in the future, or a prolonged period of

economic slowdown or the reluctance of patients to return for elective dental

or medical care. The impacts and

potential impacts from the COVID-19 pandemic include, but are not

limited to:

•

Significant volatility in supply, demand and selling prices for personal protective equipment (PPE), COVID-19

tests and other COVID-19 related products.

Available supply,

customer demand and selling prices for PPE,

COVID-19 tests and other COVID-19 related products

fluctuated in fiscal 2022 and we expect such volatility to

continue for the duration of the COVID-19 pandemic. This has resulted

in inventory reserves, fluctuating margins

and increased revenue related to such products.

The volatility in sales of COVID-19 test kits has moderated,

albeit

at a significantly lower level of sales compared with 2021, resulting in

us recording an inventory obsolescence

reserve of $17 million for COVID-19 test kits during the year

ended December 31, 2022 and we expect further

declines in sales volumes.

Our estimates for supply, demand and selling prices are inherently uncertain and if

supply, demand, selling prices or other market dynamics significantly fluctuate in the future beyond our current

assumptions, additional inventory reserves may be required, margins may be reduced and/or

revenue may decline

for such products, each which could materially adversely impact our business,

results of operations and cash flows.

Additionally, governmental policies designed to reduce the transmission of COVID-19 and variants thereof could

once again lead to the closure of dental offices or deferral of elective procedures and

wellness exams by medical

and dental patients. Such previous closures and restrictions impacted our

customers’ spending with us and had, and

if reinstated may again have, a material adverse effect on our business, results of operations

and cash flows.

Although we believe that most practices currently are able to access

adequate supply, we still may be unable to

supply our customers with the specific brand and/or quantity of certain PPE products,

COVID-19 tests and other

COVID-19 related products they demand, which may lead to our

customers seeking alternative sources of supply.

Healthcare professionals’ inability to obtain a sufficient quantity and/or brand of certain PPE, COVID-19

tests and

other COVID-19 related products would adversely impact our business,

results of operations and cash flows, and

could materially adversely affect our financial condition and liquidity;

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•

Reduction in Peoples’ Ability and Willingness to be in Public.

Restrictions recommended by several public health

organizations, and implemented, from time to time, by federal, state and local governments,

to slow and limit the

transmission of COVID-19 and variants thereof has caused and may in

the future cause some people to be less

willing to go to elective medical and dental appointments, which could

again materially adversely affect demand

for our products.

A lengthened period of materially suppressed demand could again cause

material adverse impacts

on our business, results of operations and cash flows and could materially

adversely affect our financial condition

and liquidity;

•

Negative impact on our workforce and impact of adapted business practices.

The spread of COVID-19 and

variants thereof caused us to modify our business practices (including

employee travel, employee work locations,

and physical participation in meetings, events and conferences), and

we may take further actions as may be required

by government authorities or our customers or that we determine are in the

best interests of our employees. As the

COVID-19 pandemic continues to unfold, we continue to evaluate

appropriate actions for our business. At the onset

of the COVID-19 pandemic, many of our office-based workers shifted abruptly to

working remotely. As the

COVID-19 pandemic has evolved, we have modified our work

arrangements to implement more flexible working

arrangements for our office-based workers, including permanent work from home,

hybrid and office-based

arrangements. Implementing these modified business practices

to include remote work arrangements could have a

negative impact on employee morale, strain our business continuity plans,

introduce operational risk (including but

not limited to cybersecurity risks), and impair our ability

to efficiently operate our business;

•

Significant changes in political conditions.

Significant changes in political conditions in markets in which

purchase and distribute our products have occurred and are expected to

continue at least during the pendency of the

pandemic, including quarantines, governmental or regulatory actions, closures

or other restrictions that limit or

close our operating facilities, restrict our employees’ ability to

travel or perform necessary business functions, or

otherwise constrain the operations of our business partners, suppliers or

customers, which may materially adversely

affect our business, results of operations, cash flows, financial condition

and liquidity;

•

Volatility

in the financial markets.

Volatility

in the financial markets may materially adversely affect the

availability and cost of credit to us;

The impact of the COVID-19 pandemic may also exacerbate other risks discussed

below, any of which could have

a material adverse effect on us.

We are dependent upon third parties for the manufacture and supply of a significant volume of our products.

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 2022, our top 10 health care distribution suppliers

and our single largest supplier accounted for approximately 28% and 4%, respectively, of our aggregate purchases.

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 identify

and obtain acceptable replacement sources on a timely basis.

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 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 addition, 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.

Forced labor legislation affecting the supply chain has increased around the

world, and the United States

recently passed the Uyghur Forced Labor Prevention Act.

Our supply chain could be materially disrupted if our

suppliers fail to comply with, or are unable to satisfy our demand

for products, as a result of applicable forced labor

legislation and regulations.

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Our

future

growth

(especially

for

our

technology

and

value-added

services

segment)

dependent

upon

our

ability

develop

acquire

and

maintain

and

protect

new

products

and

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 technology and value-added services segment)

products and services and to market 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 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.

Additionally, our software and e-services products,

like software products generally, may contain undetected errors or bugs when introduced or as new versions are

released.

Any such defective software may result in increased expenses related

to the software and could adversely

affect our relationships with customers as well as our reputation.

With respect to certain software and e-services

that we develop, we rely primarily upon copyright, trademark and

trade secret laws, as well as contractual and

common law protections and confidentiality obligations.

We cannot provide assurance that such legal protections

will be available, adequate or enforceable in a timely manner to protect

our software or e-services products.

Risks inherent in acquisitions,

dispositions and joint ventures could offset the anticipated benefits.

One of our business strategies has been to expand our domestic and

international markets in part through

acquisitions and joint ventures and we expect to continue to make acquisitions

and enter into joint ventures in the

future. Such transactions require significant management attention,

may place significant demands on our

operations, information systems, legal, regulatory, compliance-functions and financial resources, and 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 acquisitions or joint ventures 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, services,

products and personnel with

our culture, management policies, legal, regulatory and compliance policies,

cybersecurity systems and

policies, internal procedures, working capital management, financial

and operational 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

executing alternative exit strategies on acceptable terms in a timely manner, which could delay

the accomplishment

of our strategic objectives. Alternatively, we may dispose of assets or a business at a price or on terms that are

less

than we had anticipated.

Dispositions may also involve continued financial involvement

in a divested business,

such as through transition service agreements, indemnities or other current

or contingent financial obligations.

Under these arrangements, performance by the acquired or divested

business, or other conditions outside our

control, could affect our future financial results.

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.

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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 stock options and other 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

incentives

offered

under

their

programs,

increase

the

growth

goals

other

conditions

must

meet

earn

rebates

incentives

levels

that

cannot

achieve.

Increased

competition

either

from

generic

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. The occurrence of any of these events

could have

an adverse impact on our business, financial condition or operating

results.

Sales of corporate brand products entail additional risks, including the risk that such sales could

adversely affect

our relationships with suppliers.

offer certain corporate brand products that are available exclusively from us. The sale

of such products subjects

us to the risks generally encountered by entities that source, market and sell corporate brand products, including but

not

limited to

potential product

liability risks,

mandatory or

voluntary product

recalls, potential

supply chain

and

distribution

chain

disruptions,

and

potential

intellectual

property

infringement

risks.

Any

failure

adequately

address

some

all

these

risks

could

have

adverse

effect

our

business, financial

condition

operating

results.

addition,

increase

the

sales

our

corporate

brand

products may

negatively

affect

our

sales

products

owned

our

suppliers

which,

consequently,

could

adversely

impact

certain

our

supplier

relationships.

Our

ability

locate

qualified,

economically

stable

suppliers

who

satisfy

our

requirements,

and

acquire

sufficient

products in

a timely

and effective

manner,

is critical

to ensuring,

among other

things, that

customer confidence

not diminished.

Any failure

to develop

sourcing relationships

with a

broad and

deep supplier

base could

have an

adverse effect on our business, financial condition or operating results.

INDUSTRY RISKS

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

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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 electronic online commerce

solutions.

The continued advancement of online commerce by third

parties will require 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 on a timely basis.

The

emergence of such potential competition and our inability to anticipate and

effectively respond to changes on a

timely basis could have a material adverse effect on our business.

The repeal or judicial prohibition on implementation of the Affordable Care Act

could materially adversely

affect our business.

The ACA greatly expanded health insurance coverage in the United States

and has been the target of litigation and

Congressional reform efforts since its adoption.

The U.S. Supreme Court, in upholding the constitutionality of the

ACA and its individual mandate provision in 2012, simultaneously

limited ACA provisions requiring Medicaid

expansion, making such expansion a state-by-state decision.

In 2017, the U.S. Congress effectively repealed the

ACA’s

individual mandate provision by eliminating the financial penalty for non-compliance.

In the most recent

ACA litigation, a federal appeals court found the individual mandate to be unconstitutional,

and returned the case to

a lower federal court for consideration of whether the remainder of the ACA

could survive the excision of the

individual mandate.

This decision was appealed to the U.S. Supreme Court, and the Supreme

Court issued a

decision on June 17, 2021.

Without reaching the merits of the case, the Supreme Court held that the plaintiffs in

the case did not have standing to challenge the ACA.

Any outcome of future cases that change the ACA, in

addition to future legislation, regulation, guidance and/or Executive Orders

that do the same, could have a

significant impact on the U.S. healthcare industry.

For instance, the American Rescue Plan Act of 2021 enhanced

premium tax credits, which has resulted in an expansion of the number of people

covered under the ACA.

These

changes are time-limited, with some enhancements in place for 2021

only and others available through the end of

2022.

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 undergone, and is in the process of 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

growing enforcement activities (and related monetary recoveries) by governmental

officials.

Both our profitability

and the profitability 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.

Expansion of group purchasing organizations (“GPO”), dental support organizations

(“DSO”) 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 and DSOs, demand more favorable

pricing terms.

Additionally, the formation of provider networks, GPOs and DSOs 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.

Although we are seeking to obtain similar

terms from manufacturers to access lower prices demanded by GPO and

DSO contracts or other contracts, and to

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develop relationships with existing and emerging provider networks, GPOs and DSOs,

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 the cost of shipping,

we do not expect these

additional expenses to be material to our results.

However, it is possible that such costs 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.

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 materially adversely affect our results

of operations and financial condition.

These uncertainties, include, among other things:

•

election results;

•

changes to laws and policies governing foreign trade (including, without

limitation, the United States-

Mexico-Canada Agreement (USMCA), the EU-UK Trade and Cooperation Agreement of December

2020 (that went into effect in 2021) and other international trade agreements);

•

greater restrictions on imports and exports;

•

supply chain disruptions;

•

changes in laws and policies governing health care or data privacy;

•

tariffs and sanctions;

•

changes to the relationship between the United States and China;

•

sovereign debt levels;

•

the inability of political institutions to effectively resolve actual or perceived

economic, currency or

budgetary crises or issues;

•

consumer confidence;

•

unemployment levels (and a corresponding increase in the uninsured

and underinsured population);

•

changes in regulatory and tax regulations;

•

interest rate fluctuations,

and strengthening of the dollar, which have and will continue to impact our

results of operations;

•

availability of capital;

•

increases in fuel and energy costs;

•

the effect of inflation on our ability to procure products and our ability to increase

prices over time and

pass through to our customers price increases we may receive;

•

changes in tax rates and the availability of certain tax deductions;

•

increases in labor costs;

•

increases in health care costs;

•

our aspirations, goals and disclosures related to environmental, social and

governance (ESG) matters;

•

the threat or outbreak of war, terrorism or public unrest (including, without limitation, the war in

Ukraine and the possibility of a wider European or global conflict);

and

•

changes in laws and policies governing manufacturing, development and

investment in territories and

countries where we do business.

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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 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.

Although 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 unable to absorb price

increases, thus positioning us to protect our gross profit.

The strengthening of the dollar, likewise, has impacted

our revenues and costs, but neither inflation nor exchange rates have materially

impacted our results of operations

in fiscal year 2022.

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.

When we discover

situations of non-compliance we seek to remedy them and bring

the affected area back into compliance.

The Biden

Administration has indicated that it will be more aggressive in its pursuing

alleged violations of law, and it has

revoked certain guidance that would have limited governmental use of informal

agency guidance to pursue such

violations, as well as indicating it was more prepared to pursue individuals

for corporate law violations, including

an aggressive approach to anti-corruption activities.

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 toward healthcare cost containment continue to exert pressure on

product pricing.

In the United

States, 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

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, several related bills have been

introduced and regulations proposed which, if enacted or finalized,

respectively, would impact drug pricing and

related costs.

Under the Sunshine Act, we are required to collect and report detailed

information regarding certain financial

relationships we have with covered recipients, including physicians, dentists,

teaching hospitals, and certain other

non-physician practitioners.

We and our subsidiaries may be required to report information 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.

While we believe we have substantially compliant programs

and controls in place satisfying the above laws and requirements, such

compliance imposes additional costs on us

and the requirements are sometimes unclear.

In the United States, government actions to seek to increase health-

related price transparency may also affect our business.

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Our business is subject to additional requirements under various local, state,

federal and international 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,

Section 361 of the Public Health

Services Act and Section 401 of the Consolidated Appropriations Act

of the Social Security Act.

Among other

things, such laws, and the regulations promulgated thereunder:

•

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 drugs, HCT/P products and

medical devices,

including

requirements with respect to unique medical device identifiers;

•

subject us to inspection by the FDA and DEA and similar state authorities;

•

regulate the storage, transportation and disposal of certain of our products

that are considered

hazardous materials;

•

require us to advertise and promote our drugs and devices in accordance

with applicable FDA

requirements;

•

require us to report average sales price (ASP) for drugs or biologicals payable

under Medicare Part B to

CMS with or without a Medicaid drug rebate agreement;

•

require registration with the FDA and the DEA and various state agencies;

•

require record keeping and documentation of transactions involving drug

products;

•

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

serious illness, injury or death;

•

require manufacturers, wholesalers, repackagers 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

and handling of prescription drugs,

and associated reporting requirements.

The FDA has become increasingly active in addressing the regulation of

computer software and digital health

products intended for use in health care settings.

The Cures Act, signed into law on December 13, 2016, among

other things, amended the medical device definition to exclude certain software

from FDA regulation, including

certain clinical decision support software.

On September 27, 2019, the FDA issued a suite of guidance documents

on digital health products, which incorporated applicable Cures Act standards,

and on September 28, 2022, the

FDA subsequently finalized certain of these guidance documents, including

regarding the types of clinical decision

support tools and other software that are exempt from regulation by the FDA as

medical devices, and the FDA

continues to issue new guidance in this area.

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 us or one or more of 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 or 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), 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.

One of our businesses was

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suspended in October 2021 by CMS from receiving payments from

Medicare, although it was permitted to continue

to perform and bill for Medicare services.

On September 30, 2022, CMS terminated the suspension of Medicare

payments.

As a result of the termination of the suspension, we recognized $4

million of previously deferred

revenue during the year ended December 31, 2022.

Our business is also subject to requirements of similar and

other foreign governmental laws and regulations affecting our operations abroad.

The failure to comply with any of these laws or regulations, or new interpretations

of existing laws and regulations,

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 believe we have adequate

compliance programs and controls in place to

ensure substantial compliance, if it is determined that we have not complied

with these laws, we are potentially

subject to warning letters, substantial civil and criminal penalties,

mandatory recall of product, seizure of product

and injunction, consent decrees and suspension or limitation of payments

to us, product sale and distribution.

If we

enter into settlement agreements to resolve allegations of non-compliance, we

could be required to make settlement

payments or be subject to civil and criminal penalties, including fines

and the loss of licenses.

Non-compliance

with government requirements could also adversely affect our ability to participate

in important federal and state

government health care programs, such as Medicare and Medicaid,

and damage our reputation.

The EU Medical Device Regulation may adversely affect our business.

The EU MDR, applicable since May 26, 2021, 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 reinforce 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, healthcare 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 a database

(EUDAMED not due until 2024 and after as mentioned above).

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.

Medical devices that have

been assessed and/or certified under the EU Medical Device Directive

may continue to be placed on the market

until 2024 (or until the expiry of their certificates, if applicable and earlier).

However, on January 6, 2023, the EU

Commission submitted a proposed amendment to extend the MDR transitional

periods until December 31, 2028,

for certain medical devices to ensure continued access to medical devices

for patients and to allow medical devices

already placed on the market in accordance with the current legal framework

to remain on the market. We continue

to monitor developments and whether the proposed amendment and

new deadlines will be approved by the

European Parliament and Council. 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., May 26, 2021).

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 European Economic Area.

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If we fail to comply with laws and regulations relating to health care

fraud or other laws and regulations, we

could suffer penalties or be required to make significant changes to our operations,

which could materially

adversely affect our business.

Certain of our businesses are subject to federal and state (and similar

foreign) health care fraud and abuse, referral

and reimbursement laws and regulations with

respect to their operations.

Some of these laws, referred to as “false

claims laws,” prohibit the submission or causing the submission of false or fraudulent

claims for reimbursement to

federal, state and other health care payers and programs.

Other laws, referred to as “anti-kickback laws,” prohibit

soliciting, offering, receiving or paying remuneration in order to induce 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 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 Anti-Kickback statutes 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 compliance monitor, which could have a material adverse effect on our business.

Also,

these measures may be interpreted or applied by a prosecutorial, regulatory or

judicial authority in a manner that

could require us to make changes in our operations or incur substantial defense

and settlement expenses.

Even

unsuccessful challenges by regulatory authorities or 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 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.

In the EU, the 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 certain EU laws, in particular as regards public health, the above-mentioned

Directive No. 2001/83,

Regulation No. 726/2004 or, as regards data protection, the GDPR. The Directive protects a wide range of

people

and includes former employees. All private companies with 50 or

more employees are required to create effective

internal reporting channels. Though it was required before December 17, 2021,

at the latest, the implementation of

this Directive by EU member states is still underway for some of

them. At the end of January 2023 and according

to information available on public sources, sixteen EU member states have

fully implemented it (France, Belgium,

Denmark, Finland, Latvia, The Netherlands, Ireland, Croatia, Cyprus, Greece, Lithuania,

Romania, Malta, Portugal,

Sweden and Bulgaria) while the process is ongoing in the others with varying

degrees of progress.

We also are subject to the requirements of the new Directive No. 2022/2464 on corporate sustainability reporting

("CSR Directive") adopted on December 14, 2022 and has to be

implemented by EU members states by July 6,

2024, at the latest. By amending Directives No. 2004/109, No. 2006/43, No.

2013/34 and Regulation No. 537/2014,

the CSR Directive strengthens the existing rules on non-financial

reporting by setting new requirements for large

companies to publish sustainability-related information and, in particular, disclose details about their

risks and

impacts on environmental matters.

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.

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 bribery 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 consent decrees could

materially adversely

affect our business.

While we believe that we are substantially compliant with applicable fraud and

abuse and other laws and

regulations, and believe we have adequate compliance programs and controls

in place to ensure substantial

compliance, we cannot predict whether changes in applicable law, or interpretation of laws, or changes in our

services or marketing practices in response to changes in applicable law or

interpretation of laws, could have a

material adverse effect on our business.

If we fail to comply with laws and regulations relating to the collection,

storage and processing of sensitive

personal information or standards in electronic health records or transmissions,

we could be required to make

significant changes to our products, or incur substantial fines, penalties or

other liabilities.

Our businesses that involve physician and dental practice management

products, and our specialty home medical

supply business, include electronic information technology systems that

store and process personal health, clinical,

financial and other sensitive information of individuals.

These information technology systems may be vulnerable

to breakdown, wrongful intrusions, data breaches and malicious attack,

which could require us to expend

significant resources to eliminate these problems and address related security

concerns, and could involve claims

against us by private parties and/or governmental agencies.

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 HIPAA, the Controlling the Assault of Non-

Solicited Pornography and Marketing Act, the Telephone Consumer Protection Act of 1991, Section 5 of the

Federal Trade Commission Act, the CCPA, and the CPRA that becomes effective on January 1, 2023.

Laws and

regulations relating to privacy and data protection are continually evolving

and subject to potentially differing

interpretations.

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.

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.

In addition, the European Parliament and the Council of the EU adopted

the 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

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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.

On August 20, 2021, China promulgated the 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.

In the United States, the CCPA, which increases the privacy protections afforded California residents, became

effective January 1, 2020.

The CCPA generally requires companies, such as us, to institute additional protections

regarding the collection, use and disclosure of certain personal information

of California residents.

Compliance

with the obligations imposed by the CCPA depends in part on how particular regulators interpret and apply them.

Regulations were released in August of 2020, but there remains some

uncertainty about how the CCPA will be

interpreted by the courts and enforced by the regulators.

If we fail to comply with the CCPA or if regulators assert

that we have failed to comply with the CCPA, we may be subject to certain fines or other penalties and litigation,

any of which may negatively impact our reputation, require us to expend

significant resources, and harm our

business.

Furthermore, California voters approved the CPRA on November 3,

2020, which will amend and expand

the CCPA, including by providing consumers with additional rights with respect to their personal information, and

creating a new state agency to enforce CCPA and CPRA.

The CPRA came into effect on January 1, 2023, applying

to information collected by businesses on or after January 1, 2022.

Other states, as well as the federal government, have increasingly

considered the adoption of similarly expansive

personal privacy laws, backed

by significant civil penalties for non-compliance.

Virginia and Colorado were both

successful in passing privacy legislation in 2021, becoming effective on January

1, 2023 and July 1, 2023,

respectively.

Connecticut and Utah also passed comprehensive privacy laws

that will go into effect in July 1, 2023

and December 31, 2023.

While we believe we have substantially compliant programs and controls

in place to

comply with the GDPR, CCPA, PIPL and CPRA requirements, 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.

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.

Under the GDPR, health data belong to the category of “sensitive data” and benefit

from specific protections.

Processing of such data is generally prohibited, except for specific exceptions.

Certain of our businesses involve the manufacture and sale of EHR systems

and other products linked to

government supported incentive programs, where the EHR systems

must be certified as having certain capabilities

designated in evolving standards, such as those adopted by CMS and ONC.

In order to maintain certification of our

EHR products, we must satisfy the changing governmental standards.

If any 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

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exposed to risk, such as under federal health care fraud and abuse

laws, including the False Claims Act.

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, 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 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.

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 interests in companies that manufacture certain dental 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.

While the Company has policies against and seeks to

avoid the import of goods that are manufactured in whole or in part by forced

labor or through human trafficking,

as a result of legislative and governmental policy initiatives, we may be subject

to increasing potential delays,

added costs, supply chain disruption and other restrictions.

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GENERAL RISKS

Security risks generally associated with our information systems and our

technology products and services could

materially adversely affect our business, and our results of operations could be

materially adversely affected 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 thousands of

customers;

•

process payments to suppliers; and

•

provide products and services that maintain certain of our customers’ electronic

medical or dental

records (including protected health information of their patients).

Information security risks have generally increased in recent years, and a cyberattack

that bypasses our IS security

systems (including third-party systems we rely on) causing an IS security breach

may lead to a material disruption

of our IS business systems (including third-party systems we rely on) and/or

the loss of business information, as

well as claims against us by affected parties and/or governmental agencies, and involve

fines and penalties, costs

for remediation, and substantial defense and settlement expenses.

In addition, we develop products and provide

services to our customers that are technology-based, and a cyberattack

that bypasses the IS security systems of 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 particular, 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.

These customers 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.

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

to comply with applicable legal

requirements, may not only cause reputational harm and loss of business,

but may also lead to claims against us by

our customers and/or governmental agencies and involve damages, fines and

penalties, costs for remediation, and

substantial defense and settlement expenses.

In addition, a cyberattack on a third-party that we use to manage

portion of our information systems could result in the same effects.

Additionally, legislative or regulatory action

related to cybersecurity may increase our costs to develop or implement

new technology products and services.

From time to time, we have had to address immaterial security incidents

(“security incidents”).

There can be no

assurance that we will not experience material security incidents in the future. Security

incidents can be difficult to

detect and any delay in identifying them could increase their harm.

While we have implemented measures to

protect our IS systems, such measures may not prevent these events.

Any such security incidents could disrupt our

operations, harm our reputation or otherwise have a material adverse effect on our

business.

We have various

insurance policies, including cybersecurity insurance, covering risks and

in amounts that we consider adequate.

There can be no assurance that the insurance coverage we maintain is sufficient or

will be available in adequate

amounts or at a reasonable cost to cover costs and expenses related

to security incidents.

Furthermore, procedures and safeguards must continually evolve to meet new

IS challenges, and enhancing

protections, and conducting investigations and remediation, may impose additional

costs on us.

Finally, our business may be interrupted by shortfalls of IS systems providers engaged by our customers, such

Internet-based services upon which our customers depend to access certain of

our products.

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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.

The risks that our

global operations are subject to include, 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 (including, without limitation,

in connection with

Brexit);

•

uncertainties relating to the EU-UK Trade and Cooperation Agreement of December 2020, which

went

into effect in 2021, including for example potential implementation issues, potential

disputes over the

interpretation of the provisions of the Agreement and possible changes

to the Agreement restricting the

free movement of goods between the U.K. and the European Union;

•

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, new or unanticipated litigation developments and

the status of litigation matters;

•

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;

•

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; and

•

public health emergencies, including COVID-19.

Our future success is substantially dependent upon our senior

management, and our revenues and profitability

depend on our relationships with capable sales 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.

The loss of the services of

Mr. Bergman could have a material adverse effect on our business. We have an employment agreement with Mr.

Bergman.

We do not currently have “key man” life insurance policies on any of our employees.

Competition for

senior management is intense, burnout and turn-over rates are increasing workplace

concerns during and after the

COVID-19 pandemic, 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 sales

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.

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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 2022 fiscal year.

ITEM 2. Properties

Within our health care distribution segment (for properties with more than 100,000 square feet) we lease

and/or

own approximately 5.8 million square feet of properties, consisting of distribution,

office, showroom,

manufacturing and sales space, in locations including the United States, Australia,

Austria, Belgium, Brazil,

Canada, Chile, China, the Czech Republic, France, Germany, Hong Kong SAR, Ireland, Israel, Italy, Japan,

Liechtenstein, Luxembourg, Malaysia, Mexico, the Netherlands, New Zealand, Poland,

Portugal, Singapore, South

Africa, Spain, Sweden, Switzerland, Thailand,

United Arab Emirates and the United Kingdom.

Lease expirations

range from 2023 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 15 – Commitments and Contingencies

of the Notes to the

Consolidated Financial Statements included under Item 8.

ITEM 4.

Mine Safety Disclosures

Not applicable.

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PART

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 7, 2023, there were approximately 88,000 holders of record of

our common stock and the last reported

sales price was $87.14.

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 $4.5 billion, authorized by our Board of Directors,

to the repurchase program provide for a total

of $4.6 billion (including $400 million authorized on August 17, 2022) of shares

of our common stock to be

repurchased under this program.

As of December 31, 2022,

we had repurchased approximately $4.5 billion of common stock (87,180,669

shares)

under these initiatives, with $115 million available for future common stock share repurchases.

On February 8, 2023, our Board of Directors authorized the repurchase

of up to an additional $400 million in shares

of our common stock.

The following table summarizes repurchases of our common stock

under our stock repurchase program during the

fiscal quarter ended December 31, 2022:

Total Number

Maximum Number

Total

of Shares

Number

Average

Purchased as Part

that May Yet

of Shares

Price Paid

of Our Publicly

Be Purchased Under

Fiscal Month

Purchased (1)

Per Share

Announced Program

Our Program (2)

9/25/2022 through 10/29/2022

5,703,693

10/30/2022 through 11/26/2022

1,249,083

76.29

1,249,083

3,741,485

11/27/2022 through 12/31/2022

2,333,467

81.30

2,333,467

1,439,841

3,582,550

(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 2022 or 2021.

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 of

Directors and

will depend upon the earnings, financial condition, capital requirements,

level of indebtedness, contractual

restrictions with respect to payment of dividends and other factors.

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$50

$100

$150

$200

$250

$300

December

2017

December

2018

December

2019

December

2020

December

2021

December

2022

Henry Schein, Inc.

Dow Jones US Health Care Index

NASDAQ Composite Index

Stock Performance Graph

The graph below compares the cumulative total stockholder return

on $100 invested, assuming the reinvestment of

all dividends, on December 30, 2017, the last trading day before the

beginning of our 2018 fiscal year, through the

end of our 2022 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 30, 2017

ASSUMES DIVIDENDS REINVESTED

December 30,

December 29,

December 28,

December 26,

December 25,

December 31,

2017

2018

2019

2020

2021

2022

Henry Schein, Inc.

100.00

111.49

122.98

121.58

138.37

147.48

Dow Jones U.S. Health

Care Index

100.00

104.72

129.31

147.48

183.33

176.40

NASDAQ Stock Market

Composite Index

100.00

96.41

133.30

191.21

235.27

158.65

ITEM 6.

[Reserved]

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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).

Forward looking statements include the overall impact of the Novel Coronavirus

Disease 2019

(COVID-19) on us, our results of operations, liquidity and financial condition

(including any estimates of the

impact on these items), the rate and consistency with which dental

and other practices resume or maintain normal

operations in the United States and internationally, expectations regarding personal protective equipment (“PPE”)

products and COVID-19 related product sales and inventory levels, whether

additional resurgences or variants of

the virus will adversely impact the resumption of normal operations, whether

supply chain disruptions will

adversely impact our business, the impact of integration and restructuring

programs as well as of any future

acquisitions, general economic conditions including exchange rates,

inflation and recession, and more generally

current expectations regarding performance in current and future periods.

Forward looking statements also include

the (i) our ability to have continued access to a variety of COVID-19

test types, expectations regarding COVID-19

test sales, demand and inventory levels, as well as the efficacy or relative efficacy of the test

results given that the

test efficacy has not been, or will not have been, independently verified under

normal FDA procedures and (ii)

potential for us to distribute the COVID-19 vaccines and ancillary supplies.

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

current and historical results

include, but are not limited to: risks associated with COVID-19

and any variants thereof, as well as other disease

outbreaks, epidemics, pandemics, or similar wide-spread public health concerns

and other natural disasters; our

dependence on third parties for the manufacture and supply of our products;

our ability to develop or acquire and

maintain and protect new products (particularly technology products) and

technologies that achieve market

acceptance with acceptable margins; transitional challenges associated with acquisitions,

dispositions and joint

ventures, including the failure to achieve anticipated synergies/benefits; legal, regulatory, compliance,

cybersecurity, financial and tax risks associated 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; effects of a highly competitive

(including, without limitation, competition from third-party online commerce

sites) and consolidating market; the

repeal or judicial prohibition on implementation of the Affordable Care Act; changes in the health

care industry;

risks from expansion of customer purchasing power and multi-tiered

costing structures; increases in shipping costs

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

global and domestic macro-economic

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

in energy pricing and the value of the

U.S. dollar as compared to foreign currencies, and changes to other economic

indicators, international trade

agreements, potential trade barriers and terrorism; failure to comply with existing

and future regulatory

requirements; risks associated with the EU Medical Device Regulation; failure

to comply with laws and regulations

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

laws and regulations relating to

the collection, storage and processing of sensitive personal information

or standards in electronic health records or

transmissions; changes in tax legislation; risks related to product liability, intellectual property and other claims;

litigation risks;

new or unanticipated litigation developments and the status of litigation

matters; risks associated

with customs policies or legislative import restrictions; cyberattacks

or other privacy or data security breaches; risks

associated with our global operations; our dependence on our senior management,

employee hiring and retention,

and our relationships with customers, suppliers and manufacturers;

and disruptions in financial markets.

The order

in which these factors appear should not be construed to indicate their

relative importance or priority.

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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 Newsroom page of our website.

Recent Developments

The COVID-19 pandemic negatively impacted the global economy, disrupted global supply chains and created

significant volatility and disruption of global financial markets in

2020 and 2021.

The impact of COVID-19 had a

material adverse effect on our business, results of operations and cash flows in 2020.

During the year ended

December 25, 2021, patient traffic levels returned to levels approaching pre-pandemic

levels.

Demand for dental

products and certain medical products throughout 2021 was driven

by sales of PPE and COVID-19 test kits.

During the year ended December 31, 2022 we experienced a decrease

in the sales volume of PPE and COVID-19

test kits.

The volatility in sales of COVID-19 test kits has moderated, albeit at a significantly

lower level of sales

compared with 2021, resulting in us recording an inventory obsolescence

reserve of $17 million for COVID-19 test

kits during the year ended December 31, 2022.

While the U.S. economy has recently experienced inflationary

pressures and strengthening of the U.S dollar, their

impacts have not been material to our results of operations in the

fourth quarter or full year ended December 31,

2022, and we currently expect moderating of inflation and foreign currency

fluctuations.

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 unable to

absorb price increases, thus positioning us to protect our gross profit.

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 doubtful accounts; hedging activity; supplier

rebates; measurement of

compensation cost for certain share-based performance awards and cash

bonus plans; and pension plan

assumptions.

Due to the significant uncertainty surrounding the future impact

of COVID-19, our judgments

regarding estimates and impairments could change in the future.

There is an ongoing risk that the COVID-19

pandemic may again have a material adverse effect on our business, results of operations

and cash flows and may

result in a material adverse effect on our financial condition and liquidity.

However, the extent of the potential

impact cannot be reasonably estimated at this time.

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Executive-Level Overview

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

by a network of people and

technology.

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.

serve more than one million customers

worldwide including dental practitioners, laboratories, physician practices, and

ambulatory surgery centers, as well

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

believe that we have a strong

brand identity due to our more than 90 years of experience distributing health

care products.

We are headquartered in Melville, New York,

employ approximately 22,000 people (of which approximately

10,700 are based outside of the United States) and have operations or

affiliates in 32 countries and territories.

Our

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

through contribution from

strategic acquisitions.

have established strategically located distribution centers around

the world to enable us to better serve our

customers and increase our operating efficiency.

This infrastructure, together with broad product and service

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

us to be a single source of

supply for our customers’ needs.

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

our own

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

and manufacture certain

dental specialty products in the areas of implants, orthodontics and endodontics.

have achieved scale in these

global businesses primarily through acquisitions as manufacturers of these

products typically do not utilize a

distribution channel to serve customers.

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

care distribution and (ii) technology and

value-added services.

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

Our global

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

and other

institutions.

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

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

and large enterprises, such as

group practices and integrated delivery networks, among other providers

across a wide range of specialties.

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

medical operating segments,

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

repair services,

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

products (including implant,

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

PPE products and vitamins.

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

and other value-added

services to health care practitioners.

Our technology business offerings include practice management software

systems for dental and medical practitioners.

Our value-added practice solutions include practice consultancy,

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

basis, e-services, practice

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

practitioners.

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

is a unified go-to-market

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

equipment sales and service and

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

combined value that we offer through a single

program.

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

national brand products, our corporate brand products and proprietary specialty

products and solutions (including

implant, orthodontic and endodontic products).

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

including software and other value-added services.

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Industry Overview

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

This trend has benefited

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

prices.

It also has accelerated the

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

groups, which, in addition to

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

capable of providing

specialized management information support.

believe that the trend towards cost containment has the potential

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

enhance the efficiency and

facilitation of practice management.

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

and transactions that we

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

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

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

Our current and future results have been and could be impacted by the COVID-19

pandemic, the current economic

environment and continued economic and public health uncertainty.

Since the onset of the COVID-19 pandemic in

early 2020, we have been carefully monitoring its impact on our global

operations and have taken appropriate steps

to minimize the risk to our employees.

have seen and expect to continue to see changes in demand trends

for

some of our products and services, supply chain challenges and labor

challenges, as rates of infection fluctuate, new

strains or variants of COVID-19 emerge and spread, governments adapt their approaches

to combatting the virus,

and local conditions change across geographies.

As a result, we expect to see continued volatility.

Industry Consolidation

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

and diverse.

The industry ranges from sole practitioners working out of

relatively small offices to group practices

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

combined or otherwise associated their practices.

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

large quantities of supplies

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

care practitioners

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

reliable and substantially complete

order fulfillment.

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

made by the

practitioner or an administrative assistant.

Supplies and small equipment are generally purchased from more

than

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

The trend of consolidation extends to our customer base.

Health care practitioners are increasingly seeking to

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

hospital organizations.

In many cases, purchasing decisions for consolidated groups

are made at a centralized or

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

believe that consolidation within the industry will continue to

result in a number of distributors, particularly

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

combine with larger companies that can

provide growth opportunities.

This consolidation also may continue to result in distributors seeking

to acquire

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

opportunities to serve a broader

customer base.

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

a provider of products and services

to the health care industry.

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

our existing

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

businesses.

As industry

consolidation continues, we believe that we are positioned to capitalize

on this trend, as we believe we

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

there can be no assurances

that we will be able to successfully accomplish this.

also have invested in expanding our sales/marketing

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infrastructure to include a focus 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 pharmacology treatments,

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

coverage.

In addition, the physician market continues to benefit from

the shift of procedures and diagnostic testing

from acute care settings to alternate-care sites, particularly physicians’

offices.

According to the U.S. Census Bureau’s International Database, between 2022 and 2032, the 45 and older

population is expected to grow by approximately 11%.

Between 2022 and 2042, this age group is expected to grow

by approximately 21%.

This compares with expected total U.S. population growth

rates of approximately 6%

between 2022 and 2032 and approximately 12% between 2022 and 2042.

According to the U.S. Census Bureau’s International Database, in 2022 there are approximately seven million

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

and elder-care

services.

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

19 million.

The population

aged 65 to 84 years is projected to increase by approximately 27% 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 $4.3 trillion in 2021, or 18.3% of the nation’s gross domestic product, the benchmark

measure for

annual production of goods and services in the United States.

Health care spending is projected to reach

approximately $6.2 trillion in 2028, 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.

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Results of Operations

Refer to Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations in

our 2021 Annual Report on Form 10-K for management’s discussion and analysis of financial condition and results

of operations for the fiscal year 2021 compared to fiscal year 2020.

The following tables summarize the significant components of our operating

results and cash flows from continuing

operations:

Years

Ended

December 31,

December 25,

December 26,

2022

2021

2020

Operating results:

Net sales

12,647

12,401

10,119

Cost of sales

8,816

8,727

7,303

Gross profit

3,831

3,674

2,816

Operating expenses:

Selling, general and administrative

2,771

2,634

2,086

Depreciation and amortization

182

180

163

Restructuring and integration costs

131

Operating income

747

852

535

Other expense, net

(26)

(21)

(35)

Gain on sale of equity investments, net of tax

Net income from continuing operations

566

660

419

Income from discontinued operations, net of tax

Net income attributable to Henry Schein, Inc.

538

631

404

Years

Ended

December 31,

December 25,

December 26,

2022

2021

2020

Cash flows:

Net cash provided by operating activities from continuing operations

602

710

594

Net cash used in investing activities from continuing operations

(276)

(677)

(115)

Net cash used in financing activities from continuing operations

(315)

(333)

(182)

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Plans of Restructuring and Integration Costs

On August 1, 2022, we committed to a restructuring plan focused on

funding the priorities of the strategic plan and

streamlining operations and other initiatives to increase efficiency.

We expect this initiative to extend through

2023.

We are currently unable in good faith to make a determination of an estimate of the amount or range of

amounts expected to be incurred in connection with these activities, both with

respect to each major type of cost

associated therewith and with respect to the total cost, or an estimate of the

amount or range of amounts that will

result in future cash expenditures.

During the year ended December 31, 2022, we recorded restructuring charges of $128

million primarily related to

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

lease assets, impairment of other

long-lived assets and lease exit costs.

During the three months ended December 31, 2022, in connection with our restructuring

plan, we vacated one of

the buildings at our corporate headquarters in Melville NY, which resulted in an accelerated amortization of right-

of-use lease asset of $34 million.

We also initiated the disposal of a non-profitable US business 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.

These expenses are included in the $128 million of

restructuring charges discussed above.

The disposal is expected to be completed in 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.

On November 20, 2019, we committed to a contemplated restructuring

initiative intended to mitigate stranded costs

associated with the spin-off of our animal health business and to rationalize operations

and provide expense

efficiencies.

These activities were originally expected to be completed by

the end of 2020 but we extended them to

the end of 2021 in light of the changes to the business environment brought

on by the COVID-19 pandemic.

The

restructuring activities under this prior initiative were completed

in 2021.

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2022 Compared to 2021

Net Sales

Net sales were as follows:

% of

Increase / (Decrease)

2022

Total

2021

Total

Health care distribution

(1)

Dental

7,473

59.1

7,544

60.8

(71)

(0.9)

Medical

4,451

35.2

4,210

34.0

241

5.7

Total health care distribution

11,924

94.3

11,754

94.8

170

1.4

Technology and value-added services

(2)

723

5.7

647

5.2

11.8

Total

12,647

100.0

12,401

100.0

246

2.0

The components of our sales growth were as follows:

Local Currency Growth

Total Sales

Growth

Foreign

Exchange

Impact

Total Local

Currency

Growth

Acquisition

Growth

Extra Week

Impact

Local Internal

Growth

Health care distribution

(1)

Dental Merchandise

(2.6)

(3.5)

0.9

1.3

1.0

(1.4)

Dental Equipment

4.7

(4.6)

9.3

0.6

2.3

6.4

Total Dental

(0.9)

(3.7)

2.8

1.2

0.4

Medical

5.7

(0.3)

6.0

2.4

1.5

2.1

Total Health Care Distribution

1.4

(2.5)

3.9

1.6

1.3

1.0

Technology and value-added services

(2)

11.8

(1.5)

13.3

5.4

0.8

7.1

Total

2.0

(2.4)

4.4

1.8

1.3

Note: Percentages for Net Sales; Gross Profit; Selling, General and Administrative; Other Expense, Net; and Income Taxes are based on

actual values and may not recalculate due to rounding.

(1)

Consists of consumable products, small equipment, laboratory products, large equipment, equipment repair services, branded and

generic pharmaceuticals, vaccines, surgical products, dental specialty products (including implant, orthodontic and endodontic

products), diagnostic tests, infection-control products, PPE products and vitamins.

(2)

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

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

education services for practitioners, consulting and other services.

Global Sales

Global net sales for the year ended December 31, 2022 increased 2.0% based

upon the components presented in the

table above.

We estimate that sales for the year ended

December 31, 2022 of PPE products and COVID-19 test kits

were approximately $1,245 million, an estimated decrease of 34.7% versus the prior

year.

Excluding PPE products

and COVID-19 test kits,

the estimated increase in internally generated local currency sales was 6.7%.

Dental

Dental net sales for the year ended December 31, 2022 decreased 0.9% based

upon the components presented in the

table above.

Our sales growth in local currency for dental merchandise decreased

primarily due to a decrease in

PPE product sales.

We estimate that global dental sales for the year ended December 31, 2022 of PPE products

were approximately $447 million, an estimated decrease of 32.5% versus the prior

year.

Excluding PPE products,

the estimated increase in internally generated local currency dental sales

was 3.8%.

Dental equipment sales in local

currency increased in both our North American and international markets,

primarily due to increased demand.

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Medical

Medical net sales for the year ended December 31, 2022 increased 5.7% based

upon the components presented in

the table above.

Globally, we estimate our medical business recorded sales of approximately $798 million of

sales

of PPE products

and COVID-19 test kits for the year ended December 31, 2022, an estimated

decrease of

approximately 27.4% compared to the prior year.

Excluding PPE products and COVID-19 test kits, the estimated

increase in internally generated local currency medical sales was

2.1%.

chnology and value-added services

Technology and value-added services net sales for the year ended December 31, 2022 increased 11.8% based upon

the components presented in the table above.

During the year ended December 31, 2022, the trend for transactional

software sales improved as we increased the number of users, generating demand

for our sales cycle management

solutions, and also from cloud-based solutions that drive practice efficiency and patient engagement.

Gross Profit

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

Gross

Increase

2022

Margin %

2021

Margin %

Health care distribution

3,357

28.2

3,239

27.6

118

3.6

Technology and value-added services

474

65.5

435

67.2

9.0

Total

3,831

30.3

3,674

29.6

157

4.3

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

throughout our

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

Additionally, we

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

segment than in

our health care distribution segment.

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

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

The software industry typically realizes higher

gross margins to recover investments in research and development.

Within our health care distribution segment, gross profit margins may vary from one period to the next.

Changes in

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

been the most significant drivers affecting

our gross profit margin.

For example, sales of our corporate brand products achieve

gross profit margins that are

higher than average total gross profit margins of all products.

With respect to customer mix, sales to our large-

group customers are typically completed at lower gross margins due to the higher

volumes sold as opposed to the

gross margin on sales to office-based practitioners, who normally purchase lower volumes.

Health care distribution gross profit increased primarily due to the increase

in net sales discussed above.

The

overall increase in our health care distribution gross profit was attributable to

$67 million of gross profit from

acquisitions and gross margin expansion, mainly as a result of increased sales

mix of higher-margin products.

Technology and value-added services gross profit increased as a result of an increase in gross profit from internally

generated sales and gross profit from acquisitions, partially offset by a decrease in

gross margin rates.

Gross

margin rates decreased primarily due to lower gross margins of recently acquired companies in

the business

services sector and our continued investment in product development and customer

service.

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Operating Expenses

Operating expenses (consisting of selling, general and administrative

expenses; depreciation and amortization,

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

% of

Respective

Increase

2022

Net Sales

2021

Net Sales

Health care distribution

2,738

23.0

2,512

21.4

226

9.0

Technology and value-added services

346

47.8

310

48.0

11.4

Total

3,084

24.4

2,822

22.8

262

9.3

The net increase in operating expenses is attributable to the

following:

Change in

Restructuring and

Integration Costs

Increase in

Operating Costs

Acquisitions

Total

Health care distribution

121

226

Technology and value-added services

Total

123

262

The increase in restructuring and integration costs is attributable to our disposal

of an unprofitable business,

acceleration of amortization of right-of-use lease assets related

to the exit from one of the properties at our

corporate headquarters, severance costs, and other costs relating to

the exit of some facilities.

The increase in

operating costs includes a $20 million intangible assets impairment charge within

our health care distribution

segment, and increases in payroll and payroll related costs and travel and convention

expenses in both of our

reportable segments.

While the U.S. economy has recently experienced inflationary

pressures and strengthening of

the U.S dollar, their impacts have not been material to our results of operations.

Other Expense, Net

Other expense, net was as follows:

Variance

2022

2021

Interest income

158.9

Interest expense

(44)

(28)

(16)

(59.1)

Other, net

n/a

Other expense, net

(26)

(21)

(5)

(26.0)

Interest income increased primarily due to increased interest rates.

Interest expense increased primarily due to

increased borrowings and increased interest rates.

Income Taxes

For the year ended December 31, 2022, our effective tax rate was 23.5% compared to 23.8%

for the prior year

period.

In 2022, the difference between our effective tax rate and the federal statutory tax rate primarily

relates to

state and foreign income taxes and interest expense.

In 2021, the difference between our effective tax rate and the

federal statutory tax rate was primarily due to state and foreign income

taxes and interest expense.

Gain on Sale of Equity Investment

In the third quarter of 2021, we received contingent proceeds of $10 million

from the 2019 sale of Hu-Friedy

resulting in the recognition of an additional after-tax gain of $7

million.

No further proceeds are expected from this

sale.

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Liquidity and Capital Resources

Our principal capital requirements have included funding of acquisitions, purchases

of additional noncontrolling

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

purchases of fixed assets and

repurchases of common stock.

Working capital requirements generally result from increased sales, special

inventory forward buy-in opportunities and payment terms for receivables

and payables.

Historically, sales have

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

forward buy-in opportunities have

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

to be higher

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

the following year.

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

placements.

Please see

Note 12 – Debt

for further information.

Our ability to generate sufficient cash flows from

operations is dependent on the continued demand of our customers for our

products and services, and access to

products and services from our suppliers.

Our business requires a substantial investment in working capital, which

is susceptible to fluctuations during the

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

Inventory purchase activity is a function of

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

We anticipate

future increases in our working capital requirements.

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

Funding requirements are based on

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

change.

Consequently, we may change

our funding structure to reflect any new requirements.

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

and our available funds under existing credit facilities provide us with

sufficient liquidity to meet our currently

foreseeable short-term and long-term capital needs.

Net cash provided by operating activities was $602 million for the

year ended December 31, 2022, compared to net

cash from continuing operations provided by operating activities of $710 million

for the prior year.

The net change

of $108 million was primarily due to unfavorable net cash used by our working

capital accounts, net of

acquisitions, driven by an impact of timing of payments which

resulted in an increase in other current assets and

relative decreases in accounts payable and accrued expenses, partially offset by the

relative year over year impact

of inventory increases (2021 increase was more significant than the

2022 increase).

Net cash used in investing activities was $276 million for the year

ended December 31, 2022, compared to $677

million for the prior year.

The net change of $401 million was primarily attributable to decreased payments

for

equity investments and business acquisitions.

Net cash used in financing activities was $315 million for the year

ended December 31, 2022, compared to net cash

used in financing activities of $333 million for the prior year.

The net change of $18 million was primarily due to

increased net borrowings from debt, partially offset by increased repurchases of common

stock.

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The following table summarizes selected measures of liquidity and capital

resources:

December 31,

December 25,

2022

2021

Cash and cash equivalents

117

118

Working

capital

(1)

1,764

1,537

Debt:

Bank credit lines

103

Current maturities of long-term debt

Long-term debt

1,040

811

Total debt

1,149

873

Leases:

Current operating lease liabilities

Non-current operating lease liabilities

275

268

(1)

Includes $327 million and $138 million of certain accounts receivable which serve as security for U.S. trade accounts receivable

securitization at December 31, 2022 and December 25, 2021, 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 41.9 days as of December 31, 2022

from 41.8 days as of December 25, 2021.

During the years ended December 31, 2022 and December

25, 2021, we

wrote off approximately $10 million and $8 million, respectively, of fully reserved accounts receivable against our

trade receivable reserve.

Our inventory turns from operations was 4.7 as of December

31, 2022 and 5.2 as of

December 25, 2021.

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 4.3%), as well as

inventory purchase commitments and operating lease obligations

as of December 31, 2022:

Payments due by period

< 1 year

2 - 3 years

4 - 5 years

> 5 years

Total

Contractual obligations:

Long-term debt, including interest

508

134

538

1,221

Inventory purchase commitments

Operating lease obligations

122

381

Transition tax obligations

Finance lease obligations, including interest

Total

152

665

222

637

1,676

For information relating to our debt please see

Note 12 – Debt

Table of Contents

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

19 years, some of

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

As of December 31, 2022, our right-of-use

assets related to operating leases were $284 million and our current and non-current

operating lease liabilities were

$73 million and $275 million, respectively.

Please see

Note 6 – Leases

for further information.

Stock Repurchases

On March 8, 2021, we announced the reinstatement of our share repurchase

program, which had been temporarily

suspended in April of 2020.

From March 3, 2003 through December 31, 2022, we repurchased $4.5

billion, or 87,180,669 shares, under our

common stock repurchase programs, with $115 million available as of December 31, 2022 for future

common stock

share repurchases.

On February 8, 2023, our Board of Directors authorized the repurchase

of up to an additional $400 million in shares

of our common stock.

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.

Accounting Standards Codification (“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.

As of December 31, 2022 and December 25, 2021, our balance

for

redeemable noncontrolling interests was $576 million and $613 million, respectively.

Please see

Note 18 –

Redeemable Noncontrolling Interests

for further information.

Unrecognized tax benefits

As more fully disclosed in

Note 13 – Income Taxes

of “Notes to Consolidated Financial Statements,” we cannot

reasonably estimate the timing of future cash flows related to the unrecognized

tax benefits, including accrued

interest, of $94 million as of December 31, 2022.

Critical Accounting Policies and Estimates

Our accounting policies are more fully 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 of Directors, affect the significant estimates and judgments used in

the preparation of our financial

statements:

Table of Contents

Inventories and Reserves

Inventories consist primarily of finished goods and are valued at

the lower of cost or net realizable value.

Cost is

determined by the first-in, first-out method for merchandise or actual cost

for large equipment and high tech

equipment.

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.

Certain of our products, specifically PPE and COVID-19 test kits, have experienced

changes in

net realizable value, due to volatility of pricing and changes in demand

for these products.

Business Combinations

The estimated fair value of acquired identifiable intangible assets (trademarks

and trade names, customer

relationships and lists, non-compete agreements and product development)

is based on critical estimates, judgments

and assumptions derived from: analysis of market conditions; discount

rates; projected cash flows; customer

retention rates; and estimated useful lives.

Please see

Note 4 – Business Acquisitions and Divestitures

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 the fair value of a reporting unit

below its carrying value.

Such impairment analyses for goodwill require a comparison of

the fair value to the

carrying value of reporting units.

We regard our reporting units to be our operating segments: global dental,

global

medical, and technology and value-added services.

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 annual and

medium-term financial projections.

These projections are based on

input from our leadership and are presented annually to our Board of Directors.

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.

Our third-party valuation specialists provide inputs into our determination

of the discount rate.

The rate is

dependent on a number of underlying assumptions, including the risk-free rate,

tax rate, equity risk premium, debt

to equity ratio

and pre-tax cost of debt.

Long-term growth rates are applied to our estimation of future cash flows.

The long-term growth rates are tied to

growth rates we expect to achieve beyond the years for which we have

forecasted operating results.

We also

consider external benchmarks, and other data points which we believe are

applicable to our industry and the

composition of our global operations.

Based on our quantitative assessment for the year ended December 31, 2022,

we recorded a $20 million impairment

of goodwill relating to the disposal of an unprofitable business whose

estimated fair value was lower than its

carrying value.

As part of our analysis for the rest of the goodwill balance,

we performed a sensitivity analysis on

the discount rate and long-term growth rate assumptions.

The sensitivities did not result in any additional

impairment charges.

Table of Contents

Definite-Lived Intangible Assets

Annually, 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, probability-weighted value

of the 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 would 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 years ended December 31, 2022, December 25, 2021

and December 26, 2020, we recorded total

impairment charges on intangible assets of approximately $49 million ($34 million

related to impairment of

customer lists and relationships attributable to customer attrition rates being higher

than expected in certain

businesses and $15 million due to the disposal of an unprofitable

business), $1 million and $20 million,

respectively.

For the year ended December 31, 2022 impairment charges were recorded

within our health care

distribution segment.

For the years ended December 25, 2021 and December 26,

2020, impairment charges were

recorded within our health care distribution and technology and value-added services

segments.

Income Tax

When determining if the realization of the deferred tax asset is likely by assessing

the need for a valuation

allowance, estimates and judgement are required.

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.

Our intention is to evaluate the realizability of our deferred tax assets quarterly.

ASC Topic 740 prescribes the accounting for uncertainty in income taxes recognized in the financial statements in

accordance with other provisions contained within this 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% likely 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 13 – Income Taxes

for further discussion.

The FASB Staff Q&A, Topic

740 No. 5, Accounting for Global Intangible Low-Taxed Income (“GILTI”), states

that an entity can make an accounting policy election to either recognize deferred

taxes for temporary differences

expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is

incurred.

We elected to recognize the tax on GILTI

as a period expense in the period the tax is incurred.

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.

Table of Contents

ITEM 7A.

Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market 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 by primarily 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 Agreements

The value of certain foreign currencies as compared to the U.S. dollar

and the value of certain underlying functional

currencies of the Company, including its foreign subsidiaries, 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 regard this as an accounting

exposure, not an economic

exposure.

A hypothetical 5% change in the average value of the U.S. dollar

in 2022 compared to foreign currencies

would have changed our 2022 reported Net income attributable to Henry

Schein, Inc. by approximately $7 million.

As of December 31, 2022, we had forward foreign currency exchange

agreements, which expire through November

16, 2023, with a fair value of $23 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 €200 million, with a reported fair value

of these contracts of $20 million.

5% increase in the value of the Euro to the USD from December 31, 2022,

with all other variables held constant,

would have had an unfavorable effect on the fair value of these forward contracts

by decreasing the value of these

instruments by $10 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 (“SERP”) and our deferred compensation

plan (“DCP”).

This swap will

offset changes in our SERP and DCP liabilities.

At the inception, the notional value of the investments in these

plans was $43 million.

At December 31, 2022, the notional value of the investments

in these plans was $78

million.

At December 31, 2022, the financing blended rate for

this swap was based on LIBOR of 4.03% plus

0.55%, for a combined rate of 4.58%.

For the years ended December 31, 2022 ended and December

25, 2021, we

have recorded a gain/(loss), within the selling, general and administrative

line item in our consolidated statement of

income, of approximately $(17) million and $12 million, respectively, net of transaction costs, related to this

undesignated swap.

This swap is expected to be renewed on an annual basis after its current

expiration date of

March 31, 2023, and is expected to result in a neutral impact to our results

of operations.

Short-Term Investments

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.

Table of Contents

Variable

Interest Rate Debt

As of December 31, 2022, 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 August 20, 2021

and expires on August 20, 2026, has an

interest rate that is based on the U.S. Dollar LIBOR plus a spread based on

our leverage ratio at the end of each

financial reporting quarter.

As of December 31, 2022, there was $0 million outstanding under this

revolving credit

facility.

During the year ended December 31, 2022, we had no borrowings under

this revolving credit facility.

Our U.S trade accounts receivable securitization, which we entered

into on April 17, 2013 and expires on

December 15, 2025, has an interest rate that is based upon the asset-backed

commercial paper rate.

As of

December 31, 2022, the commercial paper rate was 4.58% plus 0.75%,

for a combined rate of 5.33%.

December 31, 2022 the outstanding balance was $330 million under

this securitization facility.

During the year

ended December 31, 2022, the average outstanding balance under this securitization

facility was approximately

$166 million.

Based upon our average outstanding balance for this securitization

facility, for each hypothetical

increase of 25 basis points, our interest expense thereunder would have

increased by $0.4 million.

Table of Contents

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, LLP; New York,

NY; PCAOB

ID#

243

)

Consolidated Financial Statements

Balance Sheets as of December 31, 2022 and December 25, 2021

Statements of Income for the years ended December 31, 2022,

December 25, 2021 and December 26, 2020

Statements of Comprehensive Income for the years ended December 31, 2022,

December 25, 2021 and December 26, 2020

Statements of Changes in Stockholders’ Equity for the years ended

December 31, 2022, December 25, 2021 and December 26, 2020

Statements of Cash Flows for the years ended December 31, 2022,

December 25, 2021 and December 26, 2020

Notes to Consolidated Financial Statements

Note 1 – Basis of Presentation and Significant Accounting Policies

Note 2 – Net Sales from Contracts with Customers

Note 3 – Segment and Geographic Data

Note 4 – Business Acquisitions and Divestiture

Note 5 – Property and Equipment, Net

Note 6 – Leases

Note 7 – Goodwill and Other Intangibles, Net

Note 8 – Investments and Other

Note 9 – Fair Value Measurements

Note 10 – Concentrations of Risk

Note 11 – Derivatives and Hedging Activities

Note 12 – Debt

Note 13 – Income Taxes

Note 14 – Plans of Restructuring and Integration Costs

101

Note 15 – Commitments and Contingencies

103

Note 16 – Stock-Based Compensation

105

Note 17 – Employee Benefit Plans

108

Note 18 – Redeemable Noncontrolling Interests

111

Note 19 – Comprehensive Income

111

Note 20 – Discontinued Operations

113

Note 21 – Earnings Per Share

114

Note 22 – Supplemental Cash Flow Information

115

Note 23 – Related Party Transactions

115

All other schedules are omitted because the required information is either

inapplicable or is included in the consolidated

financial statements or the notes thereto.

Table of Contents

Report Of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

Henry Schein, Inc.

Melville, NY

Opinion on the Consolidated Financial Statements

have

audited

the

accompanying

consolidated

balance

sheets

Henry

Schein,

Inc.

(the

“Company”)

December 31, 2022 and December 25, 2021, the related consolidated statements of income, comprehensive income,

stockholders’ equity,

and cash

flows for

each of

the three

years in

the

period ended

December 31,

2022, 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

31,

2022 and

December 25, 2021,

and the

results of its

operations and its

cash flows for

each of

the three

years in the

period ended December 31,

2022, in conformity with

accounting principles generally accepted in

the United States

of America.

also

have

audited,

accordance

with

the

standards

the

Public

Company

Accounting

Oversight

Board

(United

States)

(“PCAOB”),

the

Company's

internal

control

over

financial

reporting

December

31,

2022,

based

criteria

established

Internal

Control

–

Integrated

Framework

(2013)

issued

the

Committee

Sponsoring

Organizations

the

Treadway

Commission

(“COSO”)

and

our

report

dated

February

21,

2023,

expressed an unqualified opinion thereon.

Basis for Opinion

These consolidated financial statements are

the responsibility of the

Company’s management. Our

responsibility is

express

opinion

the

Company’s

consolidated

financial

statements

based

our

audits.

are

public

accounting

firm

registered

with

the

PCAOB

and

are

required

independent

with

respect

the

Company

accordance

with

the

U.S.

federal

securities

laws

and

the

applicable

rules

and

regulations

the

Securities

and

Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and

perform

the

audit

obtain

reasonable

assurance

about

whether

the

consolidated

financial

statements

are

free

material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks

material

misstatement

the

consolidated

financial

statements,

whether

due

error

fraud,

and

performing

procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the

amounts

and

disclosures

the

consolidated

financial

statements.

Our

audits

also

included

evaluating

the

accounting

principles

used

and

significant

estimates

made

management,

well

evaluating

the

overall

presentation of the consolidated financial

statements.

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.

Table of Contents

Revenue growth rates utilized in

the determination of the fair

value of acquired customer relationships

for a

certain acquisition

As described in

Note 4 of

the consolidated financial

statements, the Company

acquired several companies in

the

current year.

As a

result of

the acquisitions,

management was

required to

determine estimated

fair values

of the

assets

acquired

and

liabilities

assumed,

including

certain

identifiable

intangible

assets.

some

instances,

management

utilized

third-party

valuation

specialists

assist

the

preparation

the

valuation

certain

identifiable intangible assets.

Management exercised judgment to

develop and select

revenue growth rates

in the

measurement of the fair value of the customer relationships.

identified

the

revenue

growth

rates

utilized

the

determination

the

fair

value

acquired

customer

relationships

for

certain

acquisition,

critical

audit

matter.

The

principal

considerations

for

our

determination included the

subjectivity and judgment

required to determine

the revenue growth

rates used

in the

fair

value

measurement

acquired

customer

relationships

for

certain

acquisition.

Auditing

these

revenue

growth rates involved especially subjective auditor judgment due to

the nature and extent of audit effort required.

The primary procedures we performed to address this critical audit matter

included:

●

Evaluating the reasonableness of the revenue growth rates by i)

reviewing the historical performance

of the acquired company using its audited financial statements and

(ii) assessing revenue projections

against industry metrics and peer-group companies.

/s/

BDO USA, LLP

We have served as the Company's auditor since 1984.

New York, NY

February 21, 2023

Table of Contents

HENRY SCHEIN, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

December 31,

December 25,

2022

2021

ASSETS

Current assets:

Cash and cash equivalents

117

118

Accounts receivable, net of reserves of $

and $

1,442

1,452

Inventories, net

1,963

1,861

Prepaid expenses and other

466

413

Total current assets

3,988

3,844

Property and equipment, net

383

366

Operating lease right-of-use assets

284

325

Goodwill

2,893

2,854

Other intangibles, net

587

668

Investments and other

472

424

Total assets

8,607

8,481

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND

STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

1,004

1,054

Bank credit lines

103

Current maturities of long-term debt

Operating lease liabilities

Accrued expenses:

Payroll and related

314

385

Taxes

132

137

Other

592

593

Total current liabilities

2,224

2,307

Long-term debt

1,040

811

Deferred income taxes

Operating lease liabilities

275

268

Other liabilities

361

377

Total liabilities

3,936

3,805

Redeemable noncontrolling interests

576

613

Commitments and contingencies

(nil)

Stockholders' equity:

Preferred stock, $

0.01

par value,

1,000,000

shares authorized,

none

outstanding

Common stock, $

0.01

par value,

480,000,000

shares authorized,

131,792,817

outstanding on December 31, 2022 and

137,145,558

outstanding on December 25, 2021

Additional paid-in capital

Retained earnings

3,678

3,595

Accumulated other comprehensive loss

(233)

(171)

Total Henry Schein, Inc. stockholders' equity

3,446

3,425

Noncontrolling interests

649

638

Total stockholders' equity

4,095

4,063

Total liabilities, redeemable noncontrolling

interests and stockholders' equity

8,607

8,481

Table of Contents

HENRY SCHEIN, INC.

CONSOLIDATED STATEMENTS

OF INCOME

(in millions, except share and per share data)

Years

Ended

December 31,

December 25,

December 26,

2022

2021

2020

Net sales

12,647

12,401

10,119

Cost of sales

8,816

8,727

7,303

Gross profit

3,831

3,674

2,816

Operating expenses:

Selling, general and administrative

2,771

2,634

2,086

Depreciation and amortization

182

180

163

Restructuring and integration costs

131

Operating income

747

852

535

Other income (expense):

Interest income

Interest expense

(44)

(28)

(41)

Other, net

(4)

Income from continuing operations before taxes, equity in

earnings of affiliates and noncontrolling interests

721

831

500

Income taxes

(170)

(198)

(95)

Equity in earnings of affiliates

Gain on sale of equity investment

Net income from continuing operations

566

660

419

Income from discontinued operations, net of tax

Net Income

566

660

420

Less: Net income attributable to noncontrolling interests

(28)

(29)

(16)

Net income attributable to Henry Schein, Inc.

538

631

404

Amounts attributable to Henry Schein, Inc.:

Continuing operations

538

631

403

Discontinued operations

Net income attributable to Henry Schein, Inc.

538

631

404

Earnings per share from continuing operations attributable to

Henry Schein, Inc.:

Basic

3.95

4.51

2.83

Diluted

3.91

4.45

2.81

Earnings per share from discontinued operations attributable to Henry

Schein, Inc.:

Basic

0.01

Diluted

0.01

Earnings per share attributable to Henry Schein, Inc.:

Basic

3.95

4.51

2.83

Diluted

3.91

4.45

2.82

Weighted-average common

shares outstanding:

Basic

136,064,221

140,090,889

142,504,193

Diluted

137,755,670

141,772,781

143,403,682

Table of Contents

HENRY SCHEIN, INC.

CONSOLIDATED STATEMENTS

OF COMPREHENSIVE INCOME

(in millions)

Years

Ended

December 31,

December 25,

December 26,

2022

2021

2020

Net income

566

660

420

Other comprehensive income, net of tax:

Foreign currency translation gain (loss)

(88)

(84)

Unrealized gain (loss) from foreign currency hedging activities

(7)

Pension adjustment gain

Other comprehensive income (loss), net of tax

(69)

Comprehensive income

497

591

476

Comprehensive income attributable to noncontrolling interests:

Net income

(28)

(29)

(16)

Foreign currency translation loss

Comprehensive income attributable to noncontrolling interests

(21)

(23)

(13)

Comprehensive income attributable to Henry Schein, Inc.

476

568

463

Table of Contents

HENRY SCHEIN, INC.

CONSOLIDATED STATEMENTS

OF CHANGES IN STOCKHOLDERS' EQUITY

(In millions, except share and per share data)

Accumulated

Common Stock

Additional

Other

Total

$.01 Par Value

Paid-in

Retained

Comprehensive

Noncontrolling

Stockholders'

Amount

Capital

Earnings

Income (Loss)

Interests

Equity

Balance, December 28, 2019

143,353,459

3,116

(167)

632

3,630

Net income (excluding $

attributable to Redeemable

noncontrolling interests from continuing operations)

404

406

Foreign currency translation gain (excluding loss of $

attributable to Redeemable noncontrolling interests)

Unrealized loss from foreign currency hedging activities,

net of tax benefit of $

(7)

Dividends paid

(1)

Purchase of noncontrolling interests

(2)

(1)

(3)

Change in fair value of redeemable securities

(33)

Noncontrolling interests and adjustments related to

business acquisitions

Repurchase and retirement of common stock

(1,200,000)

(11)

(63)

(74)

Stock-based compensation expense

545,864

Shares withheld for payroll taxes

(236,752)

(15)

Separation of Animal Health business

Transfer of charges in excess of capital

(2)

Balance, December 26, 2020

142,462,571

3,455

(108)

636

3,984

Net income (excluding $

attributable to Redeemable

noncontrolling interests from continuing operations)

631

637

Foreign currency translation loss (excluding loss of $

attributable to Redeemable noncontrolling interests)

(78)

Unrealized gain from foreign currency hedging activities,

net of tax of $

Pension adjustment gain, including tax of $

Dividends paid

(11)

Change in fair value of redeemable securities

(160)

Noncontrolling interests and adjustments related to

business acquisitions

Repurchase and retirement of common stock

(5,505,704)

(53)

(348)

(401)

Stock-based compensation expense

303,643

Shares withheld for payroll taxes

(114,952)

(8)

Transfer of charges in excess of capital

143

(143)

Balance, December 25, 2021

137,145,558

3,595

(171)

638

4,063

Net income (excluding $

attributable to Redeemable

noncontrolling interests from continuing operations)

538

545

Foreign currency translation loss (excluding loss of $

attributable to Redeemable noncontrolling interests)

(81)

(1)

(82)

Unrealized gain from foreign currency hedging activities,

net of tax of $

Pension adjustment gain, including tax of $

Dividends paid

(1)

Purchase of noncontrolling interests

(7)

Change in fair value of redeemable securities

Noncontrolling interests and adjustments related to

business acquisitions

Repurchase and retirement of common stock

(6,111,676)

(65)

(420)

(485)

Stock issued upon exercise of stock options

35,792

Stock-based compensation expense

1,102,108

Shares withheld for payroll taxes

(376,034)

(32)

Settlement of stock-based compensation awards

(2,931)

Transfer of charges in excess of capital

(35)

Balance, December 31, 2022

131,792,817

3,678

(233)

649

4,095

Table of Contents

HENRY SCHEIN, INC.

CONSOLIDATED STATEMENTS

OF CASH FLOWS

(in millions)

Years Ended

December 31,

December 25,

December 26,

2022

2021

2020

Cash flows from operating activities:

Net income

566

660

420

Income from discontinued operations

Income from continuing operations

566

660

419

Adjustments to reconcile net income to net cash provided

by operating activities:

Depreciation and amortization

212

210

186

Impairment charge on intangible assets

Non-cash restructuring charges

Gain on sale of equity investment

(10)

(2)

Stock-based compensation expense

Provision for (benefits from) losses on trade and other

accounts receivable

(8)

Benefit from deferred income taxes

(73)

(11)

(53)

Equity in earnings of affiliates

(15)

(20)

(12)

Distributions from equity affiliates

Changes in unrecognized tax benefits

(2)

(25)

Other

(20)

(10)

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

(7)

(189)

Inventories

(126)

(295)

(32)

Other current assets

(52)

(6)

Accounts payable and accrued expenses

(96)

196

Net cash provided by operating activities from continuing

operations

602

710

594

Net cash provided by operating activities from discontinued operations

Net cash provided by operating activities

602

710

599

Cash flows from investing activities:

Purchases of fixed assets

(96)

(79)

(49)

Payments related to equity investments and business

acquisitions, net of cash acquired

(158)

(571)

(60)

Proceeds from sale of equity investment

Proceeds from (repayments to) loan to affiliate

(4)

(1)

Other

(33)

(19)

Net cash used in investing activities

(276)

(677)

(115)

Cash flows from financing activities:

Net change in bank borrowings

(18)

Proceeds from issuance of long-term debt

270

305

501

Principal payments for long-term debt

(59)

(122)

(611)

Debt issuance costs

(3)

(4)

Proceeds from issuance of stock upon exercise of stock options

Payments for repurchases of common stock

(485)

(401)

(74)

Payments for taxes related to shares withheld for employee

taxes

(32)

(8)

(14)

Distributions to noncontrolling shareholders

(21)

(26)

(8)

Acquisitions of noncontrolling interests in subsidiaries

(38)

(60)

(19)

Proceeds from Henry Schein Animal Health Business

Net cash used in financing activities from continuing

operations

(315)

(333)

(182)

Net cash used in financing activities from discontinued

operations

(5)

Net cash used in financing activities

(315)

(333)

(187)

Effect of exchange rate changes on cash and cash equivalents from continuing

operations

(12)

(3)

Net change in cash and cash equivalents from continuing

operations

(1)

(303)

315

Cash and cash equivalents, beginning of period

118

421

106

Cash and cash equivalents, end of period

117

118

421

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 1 –Basis of Presentation and Significant Accounting Policies

Nature of Operations

We distribute health care products and 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, technology and other value-

added 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, Australia, Austria, Belgium, Brazil, Canada, Chile, China, the

Czech Republic, France, Germany, Hong Kong SAR, Ireland, Israel, Italy, Japan, Liechtenstein, Luxembourg,

Malaysia, Mexico, the Netherlands, New Zealand, Poland, Portugal, Singapore, 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.

All intercompany accounts and transactions are eliminated in

consolidation.

Investments in

unconsolidated affiliates in 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.

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

we consider a Variable Interest Entity (“VIE”) because we are the primary beneficiary, and we have the power to

direct activities that most significantly affect the economic performance and have

the obligation to absorb the

majority of the losses or benefits.

For this VIE, the trade accounts receivable transferred to the VIE are

pledged as

collateral to the related debt.

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

December 31, 2022 and December 25, 2021, certain trade accounts receivable that

can only be used to settle

obligations of this VIE were $

327

million and $

138

million, respectively, and the liabilities of this VIE where the

creditors have recourse to us were $

255

million and $

105

million, respectively.

Use of Estimates

The preparation of financial statements in conformity with accounting principles

generally accepted in the United

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

assets and liabilities and

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

statements and the reported amounts of

revenues and expenses during the reporting period.

Actual results could differ from those estimates.

In March 2020, the World Health Organization declared the Novel Coronavirus Disease 2019 (“COVID-19”) a

pandemic.

The COVID-19 pandemic negatively impacted the global economy, disrupted global supply chains and

created significant volatility and disruption

of global financial markets.

In response, many countries implemented

business closures and restrictions, stay-at-home and social distancing ordinances

and similar measures to combat

the pandemic, which significantly impacted global business and dramatically

reduced demand for dental products

and certain medical products in the second quarter of 2020.

Demand for these non-PPE products increased in the

second half of 2020 and continued throughout the years ended December 25,

2021 and December 31, 2022,

resulting in growth over the prior years.

Demand for PPE products declined during the year ended

December 31,

2022.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

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 doubtful accounts; hedging activity; supplier

rebates; measurement of

compensation cost for certain share-based performance awards and cash bonus

plans; and pension plan

assumptions.

Due to the significant uncertainty surrounding the future impact of

COVID-19, our judgments

regarding estimates and impairments could change in the future.

There is an ongoing risk that the COVID-19

pandemic may again have a material adverse effect on our business, results of operations

and cash flows and may

result in a material adverse effect on our financial condition and liquidity.

However, the extent of the potential

impact cannot be reasonably estimated at this time.

Fiscal Year

We report our results of operations and cash flows on a

week basis ending on the last Saturday of December.

The year ended December 31, 2022 consisted of

weeks, and the years ended, December 25, 2021 and December

26, 2020 consisted of

weeks.

Revenue Recognition

Revenue is recognized when a customer obtains control of promised goods

or services in an amount that reflects the

consideration that we expect to receive for those goods or services.

To recognize revenue, we do the following:

•

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, the entity satisfies a performance obligation.

We generate revenue from the sale of dental and medical consumable products, equipment (Health care distribution

revenues), software products and services and other sources (Technology and value-added services revenues).

Provisions for discounts, rebates to customers, customer returns and other

contra revenue adjustments are included

in the transaction price at contract inception by estimating the most likely

amount based upon historical data and

estimates and are provided for in the period in which the related sales are

recognized.

Revenue derived from the sale of consumable products is recognized at a point

in time when control transfers to the

customer.

Such sales typically entail high-volume, low-dollar orders shipped

using third-party common carriers.

We believe that the shipment date is the most appropriate point in time indicating control has transferred to the

customer because we have no post-shipment obligations and this is when

legal title and risks and rewards of

ownership transfer to the customer and the point at which we have an

enforceable right to payment.

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

equipment service technicians.

Most equipment requires minimal installation, which is

typically completed at the

time of delivery.

Our product generally carries standard warranty terms provided

by the manufacturer, however, in

instances where we provide warranty labor services, the warranty costs

are accrued in accordance with Accounting

Standards Codification (“ASC”) 460 “Guarantees”.

At December 31, 2022 and December 25, 2021, we had

accrued approximately $

million and $

million, respectively, for warranty costs.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

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 due to the nature of its design.

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 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.

Certain 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 revenue to software using the residual

method, using an estimate of the

standalone selling price to estimate the fair value of the undelivered

elements.

Bundled arrangements that include

elements that are not considered software consist primarily of equipment

and the related installation service.

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., we 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 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 2 – Revenue from Contracts with Customers

for additional disclosures of disaggregated net sales and

Note 3 – Segment and Geographic Data

for disclosures of net sales by segment and geographic data.

Sales Returns

Sales returns are recognized as a reduction of revenue by the amount

of expected returns and are recorded as refund

liability within current liabilities.

We estimate the amount of revenue expected to be reversed to calculate 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 an inventory asset (and a corresponding

adjustment to cost of sales) for any products that we expect to be returned.

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 $

103

million, $

million and $

million for the years ended December 31,

2022, December 25, 2021 and December 26, 2020.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

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 and sales, in

conjunction with supplier rebate contract terms, which generally provide

for increasing rebates based on either

increased purchase or sales volume.

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 $

million, $

million and $

million for the years ended December 31, 2022, December 25, 2021

and

December 26, 2020.

Advertising and Promotional Costs

We generally expense advertising and promotional costs as incurred.

Total advertising and promotional expenses

were $

million, $

million and $

million for the years ended December 31, 2022, December 25, 2021

and

December 26, 2020.

Stock Compensation Costs

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.

Employment Benefit Plans and other Postretirement Benefit Plans

Certain 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 benefit

obligation, of each applicable plan, within accumulated other comprehensive

income in the consolidated balance

sheets, whereby 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.

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 $

million and $

million, primarily related to

payments for inventory, were classified as accounts payable as of December 31, 2022 and December 25, 2021.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Contract Balances

Contract balances represent amounts presented in our consolidated balance

sheets when either we have transferred

goods or services to the customer or the customer has paid consideration to us

under the contract.

These contract

balances include accounts receivable,

contract assets and contract liabilities.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable are generally recognized when health care distribution

and technology and value-added

services 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.

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.

write-off a receivable and charge it against its recorded

allowance when we deem them uncollectible.

Our allowance for doubtful accounts was $

million, $

million and $

million as of December 31, 2022,

December 25, 2021 and December 26, 2020, respectively.

Additions to the allowance for the years ended

December 31, 2022, December 25, 2021 and December 26, 2020 were $

million, $

million and $

million.

Deductions to the allowance for the years ended December 31, 2022, December

25, 2021 and December 26, 2020

were $

million, $

million and $

million.

Contract Assets

Contract assets include amounts related to any conditional right to consideration

for work completed but not billed

as of the reporting date, and generally represent amounts owed to us by

customers, but not yet billed.

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 31, 2022 and December 25, 2021 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.

December 25, 2021, the current portion of contract liabilities of $

million was reported in accrued expenses:

Other, and $

million related to non-current contract liabilities was reported

in other liabilities.

During the year

ended December 31, 2022,

we recognized substantially all of the current contract liability amounts

that were

previously deferred at December 25, 2021.

At December 31, 2022, the current and non-current portion of contract

liabilities were $

million and $

million, respectively.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Inventories and Reserves

Inventories consist primarily of finished goods and are valued at the

lower of cost or net realizable value.

Cost is

determined by the first-in, first-out method for merchandise or actual cost

for large equipment and high tech

equipment.

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 primarily under the straight-line method

(see

Note 5 – 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 lease term.

Capitalized Software Development Costs

Capitalized internal-use software costs consist of costs to purchase and

develop software.

For software to be used

solely to meet internal needs and cloud-based applications used to deliver

our services, we capitalize costs incurred

during the application development stage and include such costs within

property and equipment, net within our

consolidated balance sheets.

For software to be sold, leased, or marketed to external users, we capitalize

software

development costs when technological feasibility is reached and

include such costs in Investments and other within

our consolidated balance sheets.

Leases

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.

During the years ended December 31, 2022, December

25, 2021 and December 26, 2020, such short-term lease expense was

million, $

million, and $

million,

respectively.

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.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Goodwill

Goodwill represents 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 regard our reporting units to be our operating segments: global dental; global

medical; and technology and value-added services.

Goodwill was allocated to such reporting units, for the

purposes of preparing our impairment analyses, based on a specific identification

basis.

For the years ended December 31, 2022 and December 25, 2021, we tested goodwill

for impairment, on the first

day of the fourth quarter, using a quantitative analysis comparing the carrying value of our reporting

units,

including goodwill, to the estimated fair value of our reporting units using

a discounted cash flow methodology.

the fair value of a reporting unit exceeds its carrying amount, goodwill

of the reporting unit is considered not

impaired.

Conversely, impairment loss would be equivalent to the excess of a reporting unit’s carrying value over

its fair value limited to the total amount of goodwill allocated to that

reporting unit.

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.

For the year ended December 31, 2022, we recorded a $

million impairment of goodwill relating to the disposal

of an unprofitable business whose estimated fair value was lower than

its carrying value.

The disposal of this

business is part of our restructuring initiative as more fully discussed

Note 14 – Plans of Restructuring and

Integration Costs

For the year ended December 25, 2021, the results of our goodwill

impairment analysis did

result in any impairments.

Intangible Assets

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 estimated undiscounted future

cash flows to be derived from such assets.

Definite-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’s

carrying amount is not recoverable through its undiscounted, probability-weighted

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 31, 2022, December 25, 2021

and December 26, 2020, we recorded total

impairment charges on intangible assets of $

million, $

million and $

million, respectively, as more fully

discussed in

Note 7 – Goodwill and Other Intangibles, Net

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

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

events other than 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 expected future

earnings and cash flow and, if such

earnings and cash flow 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

reflect a fair value redemption feature do not impact the calculation of earnings

per share.

Our net income is

reduced by the portion of the subsidiaries’ net income that is attributable

to redeemable noncontrolling interests.

Noncontrolling Interests

Non-controlling 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 foreign currency

hedging activities and pension adjustment gain.

Risk Management and Derivative Financial Instruments

We use derivative instruments to minimize our exposure to fluctuations in foreign currency exchange rates.

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.

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 as a hedge at the inception

of the contract.

We do not enter into

derivative instruments for speculative purposes.

Our derivative instruments primarily include foreign currency

forward agreements related to certain intercompany loans, certain forecasted

inventory purchase commitments with

foreign suppliers and foreign currency forward contracts to hedge a portion of

our euro-denominated foreign

operations which are designated as net investment hedges.

Foreign currency forward agreements related to forecasted inventory

purchase commitments with foreign suppliers

and foreign currency swaps related to foreign currency denominated 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 derivative is

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 transaction

affects earnings.

We classify the

cash flows related to our hedging activities in the same category on our consolidated

statements of cash flows as the

cash flows related to the hedged item.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

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, the changes in the fair

value of the derivative is 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.

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 unfunded non-qualified

supplemental retirement plan (“SERP”) and our deferred compensation plan

(“DCP”).

This swap will offset

changes in our SERP and DCP liabilities.

This swap is expected to be renewed on an annual basis and is

recorded

in selling, general, and administrative expenses within our consolidated

statements of income.

Foreign Currency Translation

and Transactions

The financial position and results of operations of our foreign subsidiaries

are determined using local currency as

the functional currency.

Assets and liabilities of these 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

Accumulated other comprehensive income in stockholders’ equity.

Gains and losses resulting from foreign

currency transactions are included in earnings.

Accounting Pronouncements Adopted

On December 26, 2021 we adopted Accounting Standards Update

(“ASU”) No. 2021 – 08, “Accounting for

Contract Assets and Contract Liabilities from Contracts with Customers”

(Subtopic 805).

ASU 2021 – 08 requires

an acquirer to recognize and measure contract assets and contract liabilities acquired

in a business combination in

accordance with ASU No. 2014 - 09, “Revenue from Contracts with Customers”

(Topic 606).

At the acquisition

date, an acquirer should account for the related revenue contracts in accordance

with Topic 606 as if it had

originated the contracts.

To achieve this, an acquirer may assess how the acquiree applied Topic 606 to determine

what to record for the acquired revenue contracts.

Generally, this should result in an acquirer recognizing and

measuring the acquired contract assets and contract liabilities consistent with how

they were recognized and

measured in the acquiree’s financial statements.

Our adoption of ASU 2021 - 08 did not have a material impact on

our consolidated financial statements.

On December 27, 2020 we adopted ASU No. 2019-12, “Income Taxes” (Topic 740): Simplifying the Accounting

for Income Taxes (“ASU 2019-12”).

ASU 2019-12 simplifies the accounting for income taxes by

removing certain

exceptions to the general principles in Topic 740.

The amendments also improve consistent application of and

simplify U.S. GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

Our adoption of

ASU 2019-12 did not have a material impact on our consolidated

financial statements.

Recently Issued Accounting Standards

In September 2022, the FASB issued ASU No. 2022-04, “Liabilities – Supplier Finance Programs (Subtopic 405-

50): Disclosure of Supplier Finance Program Obligations” which will

increase transparency of supplier finance

programs by requiring entities that use such programs in connection with

the purchase of goods and services to

disclose certain qualitative and quantitative information about such

programs.

ASU 2022-04 is effective for fiscal

years beginning after December 15, 2022, including interim periods within

those fiscal years, except for amended

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

rollforward information, which is effective for fiscal years beginning after December

15, 2023.

We do not expect

that the requirements of this guidance will have a material impact on our consolidated

financial statements.

In March 2020, the FASB issued ASU No. 2020-04, “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 (“LIBOR”) or by another reference rate expected

to be discontinued because of

reference rate reform.

The guidance was effective beginning March 12, 2020 and can be applied prospectively

through December 31, 2022.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic

848): Scope (“ASU 2021-01”).

ASU 2021-01 provides temporary optional expedients and exceptions

to certain

guidance in U.S. GAAP to ease the financial reporting burdens related

to the expected market transition from

LIBOR and other interbank offered rates to alternative reference rates, such as

the Secured Overnight Financing

Rate.

The guidance became effective upon issuance, on January 7, 2021, and can

be applied through December 31,

2022.

In December 2022, the FASB issued ASU No. 2022-06, “Reference Rate Reform (Topic 848): Deferral of

the Sunset Date of Topic 848,” which extends the period of application of temporary optional expedients from

December 21, 2022 to December 31, 2024.

We do not expect that the requirements of this guidance will have a

material impact on our consolidated financial statements.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 2 – Net Sales from Contracts with Customers

Net sales is recognized in accordance with policies disclosed in

Note 1 – Basis of Presentation and Significant

Accounting Policies

Disaggregation of Net sales

The following table disaggregates our Net sales by reportable segment and

geographic area:

Year

Ended

December 31, 2022

North America

International

Global

Net Sales:

Health care distribution

Dental

4,628

2,845

7,473

Medical

4,375

4,451

Total health care distribution

9,003

2,921

11,924

Technology

and value-added services

633

723

Net sales

9,636

3,011

12,647

Year

Ended

December 25, 2021

North America

International

Global

Net Sales:

Health care distribution

Dental

4,506

3,038

7,544

Medical

4,107

103

4,210

Total health care distribution

8,613

3,141

11,754

Technology

and value-added services

560

647

Net sales

9,173

3,228

12,401

Year

Ended

December 26, 2020

North America

International

Global

Net Sales:

Health care distribution

Dental

3,472

2,441

5,913

Medical

3,515

102

3,617

Total health care distribution

6,987

2,543

9,530

Technology

and value-added services

447

514

Total excluding

Corporate TSA net sales

(1)

7,434

2,610

10,044

Corporate TSA net sales

(1)

Net sales

7,434

2,685

10,119

(1)

Corporate TSA net sales represents sales of certain animal health products to Covetrus under the transition services agreement

entered into in connection with the Animal Health Spin-off, which ended in December 2020.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 3 – Segment and Geographic Data

We conduct our business through

two

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

and

value-added services.

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

Our global

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

and other

institutions.

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

emergency

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

and large enterprises, such as

group practices and integrated delivery networks, among other providers

across a wide range of specialties.

Our

global dental and medical groups serve practitioners in

countries worldwide.

The health care distribution reportable segment aggregates our global dental

and medical operating segments.

This

segment distributes consumable products, dental specialty products, small

equipment, laboratory products, large

equipment, equipment repair services, branded and generic pharmaceuticals,

vaccines, surgical products, diagnostic

tests, infection-control products, PPE and vitamins.

Our global technology and value-added services reportable segment provides

software, technology and other value-

added services to health care practitioners.

Our technology offerings include practice management software

systems for dental and medical practitioners.

Our value-added practice solutions include practice consultancy,

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

basis, e-services, practice

technology, network and hardware services, as well as continuing education services for practitioners.

The following tables present information about our reportable and operating

segments:

Years

Ended

December 31,

December 25,

December 26,

2022

2021

2020

Net Sales:

Health care distribution

(1)

Dental

7,473

7,544

5,913

Medical

4,451

4,210

3,617

Total health care distribution

11,924

11,754

9,530

Technology

and value-added services

(2)

723

647

514

Total excluding

Corporate TSA net sales

12,647

12,401

10,044

Corporate TSA net sales

(3)

Total

12,647

12,401

10,119

(1)

Consists of consumable products, small equipment, laboratory products, large equipment, equipment repair services, branded and

generic pharmaceuticals, vaccines, surgical products, dental specialty products (including implant, orthodontic and endodontic

products), diagnostic tests, infection-control products, PPE and vitamins.

(2)

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

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

education services for practitioners, consulting and other services.

(3)

Corporate TSA net sales represents sales of certain products to Covetrus under the transition services agreement entered into in

connection with the Animal Health Spin-off, which ended in December 2020.

See

Note-23 Related Party Transactions

for further

information.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Years

ended

December 31,

December 25,

December 26,

2022

2021

2020

Operating Income:

Health care distribution

619

727

436

Technology

and value-added services

128

125

Total

747

852

535

Income from continuing operations before

taxes

and equity in earnings of affiliates:

Health care distribution

592

706

400

Technology

and value-added services

129

125

100

Total

721

831

500

Depreciation and Amortization:

Health care distribution

160

157

143

Technology

and value-added services

Total

212

210

186

Interest Income:

Health care distribution

Technology

and value-added services

Total

Interest Expense:

Health care distribution

Total

Income Tax

Expense:

Health care distribution

141

168

Technology

and value-added services

Total

170

198

Purchases of Fixed Assets:

Health care distribution

Technology

and value-added services

Total

As of

December 31,

December 25,

December 26,

2022

2021

2020

Total

Assets:

Health care distribution

7,287

7,157

6,503

Technology

and value-added services

1,320

1,324

1,270

Total

8,607

8,481

7,773

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

The following table presents information about our operations by geographic

area as of and for the three years

ended 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

% 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.

2022

2021

2020

Net Sales

Long-Lived

Assets

Net Sales

Long-Lived

Assets

Net Sales

Long-Lived

Assets

United States

9,190

2,891

8,722

2,981

7,090

2,363

Other

3,457

1,256

3,679

1,232

3,029

1,252

Consolidated total

12,647

4,147

12,401

4,213

10,119

3,615

Note 4 – Business Acquisitions and Divestiture

Acquisitions

We account for business acquisitions and combinations under the acquisition method of accounting, where the net

assets of acquired businesses are recorded at their fair value at the acquisition

date and our consolidated financial

statements include their results of operations from that date.

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.

Excluding goodwill, the major classes of assets and liabilities to which

we generally allocate acquisition

consideration 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.

These assumptions

are forward-looking and could be affected by future economic and market conditions.

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.

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 expenses 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 as well as contingent consideration, where applicable,

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.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

2022 Acquisitions

We completed several acquisitions during the year ended December 31, 2022, which were immaterial to our

consolidated financial statements. Our acquired ownership interest ranged between

% to

100

Acquisitions

within our health care distribution segment included companies that

specialize in the distribution of dental products.

Within our technology and value-added services segment, we acquired a company that educates and

connects

dental office managers, practice administrators and dental business leaders across

North America.

The following table aggregates the estimated fair value, as of the

date of acquisition, of consideration paid and net

assets acquired for acquisitions during the year ended December 31, 2022.

Approximately half of the acquired

goodwill is deductible for tax purposes.

2022

Acquisition consideration:

Cash

158

Deferred consideration

Fair value of previously held equity method investment

Redeemable noncontrolling interests

Total consideration

193

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

Other noncurrent assets

Current liabilities

(29)

Deferred income taxes

(6)

Other noncurrent liabilities

(8)

Total identifiable

net assets

107

Goodwill

Total net assets acquired

193

The following table summarizes the identifiable intangible assets acquired during

the year ended December 31,

2022 and their estimated useful lives as of the date of the acquisition:

Estimated

Useful Lives

2022

(in years)

Customer relationships and lists

Trademark / Tradename

Non-compete agreements

Other

The accounting for certain of our acquisitions during the year ended December

31, 2022 had not been completed in

several areas, including but not limited to pending assessments of accounts

receivable, inventory, intangible assets,

right-of-use lease assets,

accrued liabilities and income and non-income based taxes.

The pro forma financial information has not been presented because the impact

of the acquisitions during the year

ended December 31, 2022 to our consolidated financial statements was immaterial.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

2021 Acquisitions

We completed several acquisitions during the year ended December 25, 2021, which were immaterial to our

financial statements.

Our acquired ownership interests ranged from between approximately

% to

100

Acquisitions within our health care distribution segment included companies

that specialize in the distribution and

manufacturing of dental and medical products, a provider of home

medical supplies, and a provider of product

kitting and sterile packaging.

Within our technology and value-added services segment, we acquired companies

that focus on dental marketing and website solutions, practice transition

services, revenue cycle management, and

business analytics and intelligence software.

Approximately half of the acquired goodwill is deductible for tax

purposes.

The following table aggregates the estimated fair value, as of the date of

acquisition, of consideration paid and net

assets acquired for acquisitions during the year ended December 25, 2021.

2021

Acquisition consideration:

Cash

579

Deferred consideration

Estimated fair value of contingent consideration receivable

(5)

Fair value of previously held equity method investment

Redeemable noncontrolling interests

181

Total consideration

774

Identifiable assets acquired and liabilities assumed:

Current assets

195

Intangible assets

317

Other noncurrent assets

Current liabilities

(93)

Deferred income taxes

(26)

Other noncurrent liabilities

(46)

Total identifiable

net assets

398

Goodwill

376

Total net assets acquired

774

The following table summarizes the identifiable intangible assets acquired during

the year ended December 25,

2021 and their estimated useful lives as of the date of the acquisition:

Estimated

Useful Lives

2021

(in years)

Customer relationships and lists

220

Trademark / Tradename

Product development

Non-compete agreements

Other

317

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

2020 Acquisitions

We completed several acquisitions during the year ended December 26, 2020, which were immaterial to our

financial statements.

Our acquired ownership interests ranged from between approximately

% to

100

Acquisitions within our health care distribution segment included companies

that manufacture endodontic files and

companies that distribute dental supplies.

Within our technology and value-added services segment, we acquired

companies that focus on practice management software and provide software

as a solution for dental practices.

Approximately half of the acquired goodwill is deductible for tax purposes.

The following table aggregates the estimated fair value, as of the

date of acquisition, of consideration paid and net

assets acquired for acquisitions during the year ended December 26, 2020:

2020

Acquisition consideration:

Cash

Deferred consideration

Fair value of previously held equity method investment

Redeemable noncontrolling interests

Total consideration

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

Other noncurrent assets

Current liabilities

(21)

Deferred income taxes

(4)

Other noncurrent liabilities

(1)

Total identifiable

net assets

Goodwill

Total net assets acquired

The following table summarizes the identifiable intangible assets acquired during

the year ended December 26,

2020 and their estimated useful lives as of the date of the acquisition:

Estimated

Useful Lives

2020

(in years)

Customer relationships and lists

Product development

Trademark / Tradename

Non-compete agreements

For the years ended December 31, 2022, December 25, 2021 and December 26,

2020, there were no material

adjustments recorded in our consolidated balance sheets relating to

accounting for acquisitions incomplete in prior

periods.

At December 25, 2021 we recorded an estimated contingent

consideration receivable of $

million, which

was subsequently increased by additional $

million during 2022 based on delays in timing of government approval

of a certain product.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

During the years ended December 31, 2022, December 25, 2021

and December 26, 2020 we incurred $

million, $

million and $

million in acquisition costs reported within income from continuing

operations.

Divestiture

In the third quarter of 2021 we received contingent proceeds of $

million from the 2019 sale of Hu-Friedy,

resulting in the recognition of an additional after-tax gain of $

million.

During the fourth quarter of 2020 we

received contingent proceeds of $

million from the 2019 sale of Hu-Friedy, resulting in the recognition of an

additional after-tax gain of $

million.

We do expect to receive any additional proceeds from the sale of Hu-Friedy.

Note 5 – Property and Equipment, Net

Property and equipment, including related estimated useful lives, consisted

of the following:

December 31,

December 25,

2022

2021

Land

Buildings and permanent improvements

135

140

Leasehold improvements

Machinery and warehouse equipment

169

153

Furniture, fixtures and other

127

119

Computer equipment and software

411

385

956

916

Less accumulated depreciation

(573)

(550)

Property and equipment, net

383

366

Estimated Useful

Lives (in years)

Buildings and permanent improvements

Machinery and warehouse equipment

Furniture, fixtures and other

Computer equipment and software

Amortization of leasehold improvements is computed using the straight-line

method over the lesser of the useful

life of the assets or the lease term.

Property and equipment related depreciation expense for the years

ended December 31, 2022, December 25, 2021

and December 26, 2020 was $

million, $

million

and $

million, respectively.

Please see

Note 6 – Leases

for

finance lease amounts included in property and equipment, net within our

consolidated balance sheets.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 6 – 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

years, some of

which may include options to extend the leases for up to

years.

The components of lease expense were as

follows:

Years

Ended

December 31,

December 25,

December 26,

2022

2021

2020

Operating lease cost:

(1) (2)

150

103

Finance

lease cost:

Amortization of right-of-use assets

Total finance

lease cost

(1)

Includes variable lease expenses.

(2)

Operating lease cost for the years ended December 31, 2022, December 25, 2021, and December 26, 2020, include accelerated

amortization of right-of-use assets of $

million, $

million and $

million, respectively, related to facility leases recorded in

“Restructuring and integration costs” within our consolidated statements of income.

Further, for the years ended December 31, 2022,

December 25, 2021 and December 26, 2020, we recognized

impairment of right-of-use assets of $

million, $

million, and $

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 31,

December 25,

2022

2021

Operating Leases:

Operating lease right-of-use assets

284

325

Current operating lease liabilities

Non-current operating lease liabilities

275

268

Total operating lease liabilities

348

344

Finance Leases:

Property and equipment, at cost

Accumulated depreciation

(6)

(5)

Property and equipment, net of accumulated depreciation

Current maturities of long-term debt

Long-term debt

Total finance

lease liabilities

Weighted Average

Remaining Lease Term in

Years:

Operating leases

6.7

7.3

Finance leases

3.1

3.6

Weighted

Average Discount

Rate:

Operating leases

2.8

2.4

Finance leases

3.3

1.7

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Supplemental cash flow information related to leases is as follows:

Years

Ended

December 31,

December 25,

2022

2021

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases

Financing cash flows for finance leases

Right-of-use assets obtained in exchange for lease obligations:

Operating leases

121

Finance leases

Maturities of lease liabilities are as follows:

December 31, 2022

Operating

Finance

Leases

2023

2024

2025

2026

2027

Thereafter

Total future

lease payments

381

Less imputed interest

(33)

(1)

Total

348

As of December 31, 2022, we have additional operating leases with

total lease payments of $

million for buildings

and vehicles that have not yet commenced.

These operating leases will commence subsequent to December 31,

2022, with lease terms of

two years

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

4 months

9 years

As of

December 31, 2022, current and non-current liabilities associated with

related party operating leases were $

million and $

million, respectively.

Related party leases represented

5.0

% and

5.3

% of the total current and non-

current operating lease liabilities, respectively.

The present value of lease payments under these related party

leases

is not material to our consolidated financial statements.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 7 – Goodwill and Other Intangibles, Net

The changes in the carrying amount of goodwill for the years ended December

31, 2022 and December 25, 2021

were as follows:

Health Care

Distribution

Technology

and

Value-Added

Services

Total

Balance as of December 26, 2020

1,501

1,003

2,504

Adjustments to goodwill:

Acquisitions

359

383

Foreign currency translation

(29)

(4)

(33)

Balance as of December 25, 2021

1,831

1,023

2,854

Adjustments to goodwill:

Acquisitions

(1)

Impairment

(20)

Foreign currency translation

(22)

(4)

(26)

Balance as of December 31, 2022

1,875

1,018

2,893

For the year

ended December 31,

2022, we recorded

a $

million impairment of

goodwill relating to

the disposal

unprofitable

business

whose

estimated

fair

value

was

lower

than

its

carrying

value.

The

disposal

this

business

part

our

restructuring

initiative

fully

discussed

Note 14 – Plans of Restructuring and

Integration Costs

Other intangible assets consisted of the following:

December 31, 2022

December 25, 2021

Accumulated

Cost

Amortization

Net

Cost

Amortization

Net

Customer lists and relationships

826

(387)

439

853

(353)

500

Trademarks / trade names - definite lived

125

(51)

129

(44)

Product Development

(56)

114

(70)

Non-compete agreements

(6)

Other

(10)

(8)

Total

1,097

(510)

587

1,149

(481)

668

Trademarks, trade names, customer lists and customer relationships were established through

business acquisitions.

Definite-lived trademarks and trade names are amortized on a straight-line

basis over a weighted-average period of

approximately

8.4

years as of December 31, 2022.

Customer lists and customer relationships are definite-lived

intangible assets that are amortized on a straight-line basis over a weighted-average

period of approximately

10.0

years as of December 31, 2022.

Product development is a definite-lived intangible asset that is amortized

on a

straight-line basis over a weighted-average period of approximately

8.6

years as of December 31, 2022.

Non-compete agreements represent amounts paid primarily to prior owners of

acquired businesses, as well as

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.

The weighted-average non-compete period for

agreements currently being amortized was approximately

5.3

years as of December 31, 2022.

Amortization expense, excluding impairment charges, related to definite-lived intangible assets

for the years ended

December 31, 2022, December 25, 2021 and December 26, 2020 was $

126

million, $

124

million and $

106

million.

During the year ended December 31, 2022, we recorded $

million of impairment charges related to businesses

within our health care distribution segment, represented by an intangible asset

impairment of $

million related to

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

the disposal of an unprofitable business and a $

million impairment of customer lists and relationships

attributable to customer attrition rates being higher than expected in certain other

businesses.

Our impairment loss

was calculated as the difference between the carrying value and the estimated

fair value of the intangible assets,

using a discounted estimate of future cash flows.

Please see

Note 14 – Plans of Restructuring and Integration Costs

for additional details.

During the year ended December 25, 2021, we recorded a $

million impairment charge related ratably to a

business within our health care distribution segment and a business within

our technology and value-added services

segment.

During the year ended December 26, 2020, we recorded a $

million impairment charge related to businesses

within our technology and value-added services segment due to customer

attrition rates being higher than expected.

The above intangible asset impairment charges were recorded within selling, general

and administrative expenses;

and 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 2023 through

2027 is $

120

million, $

million and $

million.

Note 8 – Investments and Other

Investments and other consisted of the following:

December 31,

December 25,

2022

2021

Investment in unconsolidated affiliates

161

168

Non-current deferred foreign, state and local income taxes

Notes receivable

(1)

Capitalized costs for software to be sold, leased or marketed to external

users

Security deposits

Acquisition-related indemnification

Non-current pension assets

Other long-term assets

Total

472

424

(1)

Long-term notes receivable carry interest rates ranging from

3.0

% to

7.5

% and are due in varying installments through

May 11, 2028

Amortization expense, primarily related to capitalized costs for software to

be sold, leased or marketed to external

users, for the years ended December 31, 2022, December 25, 2021 and

December 26, 2020 was $

million, $

million and $

million, respectively.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 9 – Fair Value Measurements

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

paid to transfer a liability in an orderly

transaction between market participants at the measurement date.

The fair value hierarchy distinguishes between

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

from independent sources (observable

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

information available in the circumstances (unobservable inputs).

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

highest priority to unadjusted quoted prices

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

to unobservable inputs (Level 3).

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

•

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

or liabilities that are accessible at the

measurement date.

•

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

for the asset or liability,

either directly or indirectly.

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

in active markets;

quoted prices for identical or similar assets or liabilities in markets that are

not active; inputs other than quoted

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

derived principally from or corroborated by

observable market data by correlation or other means.

•

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

The following section describes the fair values of our financial instruments

and the methodologies that we used to

measure their fair values.

Investments and notes receivable

There are no quoted market prices available for investments in unconsolidated

affiliates and notes receivable.

Certain of our notes receivable contain variable interest rates.

We believe the carrying amounts are a reasonable

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

Debt

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

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

classified as Level 3 within the fair value hierarchy, and as of December 31, 2022 and December 25, 2021 was

estimated at $

1,149

million and $

873

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.

We use

derivative instruments to minimize our exposure to fluctuations in foreign

currency exchange rates.

Our derivative

instruments primarily include foreign currency forward agreements related

to certain intercompany loans, certain

forecasted inventory purchase commitments with foreign suppliers,

foreign currency forward contracts to hedge a

portion of our euro-denominated foreign operations which are designated

as net investment hedges and a total

return swap for the purpose of economically hedging our unfunded

non-qualified SERP and our DCP.

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

is based on market rates for comparable

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

See

Note 11-Derivatives and Hedging

Activities

for further information.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Total

Return Swaps

The fair value for the Total Return Swap is measured by valuing the underlying ETFs of the swap using market-on-

close pricing by industry providers as of the valuation date and are

classified within Level 2 of the fair value

hierarchy.

Redeemable noncontrolling interests

The values for Redeemable noncontrolling interests are classified within

Level 3 of the fair value hierarchy and are

based on recent transactions and/or implied multiples of earnings.

See

Note 18 – Redeemable Noncontrolling

Interests

for additional information.

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

and Other intangibles, net, and are

classified as Level 3 within the fair value hierarchy.

See

Note 1 – Basis of Presentation and Significant Accounting

Policies

and

Note 7 – Goodwill and Other Intangibles, Net

for additional information.

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 31, 2022 and

December 25, 2021:

December 31, 2022

Level 1

Level 2

Level 3

Total

Assets:

Derivative contracts designated as hedges

Derivative contracts undesignated

Total assets

Liabilities:

Derivative contracts designated as hedges

Derivative contracts undesignated

Total return

swaps

Total liabilities

Redeemable noncontrolling interests

576

December 25, 2021

Level 1

Level 2

Level 3

Total

Assets:

Derivative contracts designated as hedges

Derivative contracts undesignated

Total return

swap

Total assets

Liabilities:

Derivative contracts designated as hedges

Derivative contracts undesignated

Total liabilities

Redeemable noncontrolling interests

613

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 10 – 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 our 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 counter-parties.

With respect to our trade receivables, our 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

% of our net sales in 2022 or 2021.

With respect to our sources of supply, our top 10

health care distribution suppliers and our single largest supplier accounted for approximately

% and

respectively, of our aggregate purchases in each of the years ended December 31, 2022 and December 25, 2021.

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 other commercial financial institutions.

While we have exposure to credit loss in the event of non-

performance by these counter-parties, we conduct ongoing assessments

of their financial and operational

performance.

Note 11 – Derivatives and Hedging Activities

We are exposed to market 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 risk of the derivative counterparties.

We attempt to minimize these

risks by primarily 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 counterparties, maintaining a strong balance sheet and

having multiple sources of capital.

During 2019 we entered into foreign currency forward contracts to hedge

a portion of our euro-denominated

foreign operations which are designated as net investment hedges.

These net investment hedges offset the change

in the U.S. dollar value of our investment 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 this net investment hedge, which matures on

November 16, 2023

, is approximately €

200

million.

During the years ended December 31, 2022 and December 25, 2021, we

recorded losses of $

million and $

million, respectively, within other comprehensive income related to these foreign currency forward contracts.

See

Note 9 – Fair Value Measurements

for additional information.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

March 20, 2020

, we entered into a total return swap for the purpose of economically hedging

our unfunded non-

qualified SERP and our DCP.

This swap will offset changes in our SERP and DCP liabilities.

At the inception, the

notional value of the investments in these plans was $

million.

At December 31, 2022, the notional value of the

investments in these plans was $

million.

At December 31, 2022, the financing blended rate for

this swap was

based on the Secured Overnight Financing Rate (“SOFR”) of

4.03

% plus

0.55

%, for a combined rate of

4.58

For

the years ended December 31, 2022 and December 25, 2021, we have

recorded a gain/(loss), within selling, general

and administrative in our consolidated statement of income, of approximately

) million and $

million,

respectively, net of transaction costs, related to this undesignated swap.

During the years ended December 31, 2022

and December 25, 2021, the swap resulted in a neutral impact to our

results of operations.

This swap is expected to

be renewed on an annual basis after its current expiration date of March 31, 2023,

and is expected to result in a

neutral impact to our results of operations.

See

Note 17 – Employee Benefit Plans

for additional information.

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

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 regard this as 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.

Our hedging activities have historically not had a material impact on our consolidated

financial statements.

Accordingly, additional disclosures related to derivatives and hedging activities required by

ASC 815 have been omitted.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 12 – Debt

Bank Credit Lines

Bank credit lines consisted of the following:

December 31,

December 25,

2022

2021

Revolving credit agreement

Other short-term bank credit lines

103

Total

103

Revolving Credit Agreement

August 20, 2021

, we entered into a $

1.0

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

This

facility which matures on

August 20, 2026

replaced our $

750

million revolving credit facility which was scheduled

to mature in April 2022.

The interest rate is based on the USD LIBOR plus a spread based

on our leverage ratio at

the end of each financial reporting quarter.

Most LIBOR rates have been discontinued after December 31,

2021,

while the remaining LIBOR rates will be discontinued immediately after

June 30, 2023.

We do not expect the

discontinuation of LIBOR as a reference rate in our debt agreements

to have a material adverse effect on our

financial position or to materially affect our interest expense.

The Credit Agreement requires, among other things,

that we maintain certain maximum leverage ratios.

Additionally, the 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 31, 2022 and December 25, 2021, we had

borrowings under this

revolving credit facility.

As of December 31, 2022 and December 25, 2021, there

were $

million and $

million

of letters of credit, respectively, provided to third parties under the credit facility.

Other Short-Term Bank Credit

Lines

As of December 31, 2022 and December 25, 2021, we had various other short-term

bank credit lines available, with

a maximum borrowing capacity of $

402

million as of December 31, 2022, of which $

103

million and $

million,

respectively, were outstanding.

At December 31, 2022 and December 25, 2021, borrowings under

all of these

credit lines had a weighted average interest rate of

10.11

% and

10.44

%, respectively.

Long-term debt

Long-term debt consisted of the following:

December 31,

December 25,

2022

2021

Private placement facilities

699

706

U.S. trade accounts receivable securitization

330

105

Various

collateralized and uncollateralized loans payable with interest,

in varying installments through 2023 at interest rates

ranging from

0.00

% to

3.50

% at December 31, 2022 and

ranging from

2.62

% to

4.27

% at December 25, 2021

Finance lease obligations

Total

1,046

822

Less current maturities

(6)

(11)

Total long-term debt

1,040

811

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Private Placement Facilities

Our private placement facilities were amended on

October 20, 2021

to include four (previously three) insurance

companies, have a total facility amount of $

1.5

billion (previously $

1.0

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

(previously

June 23, 2023

The facilities allow us to issue senior promissory notes to

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

treasury notes at the time of

issuance.

The term of each possible issuance will be selected by us and

can range from

five

15 years

(with an

average life no longer than

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.

On March 5, 2021, we amended the private placement facilities to,

among other things, (a) modify the financial

covenant from being based on a net leverage ratio to a total leverage

ratio and (b) restore the maximum

maintenance total leverage ratio to

3.25

x and remove the

1.00

% interest rate increase triggered if the net leverage

ratio were to exceed

3.0

The components of our private placement facility borrowings, which

have a weighted average interest rate of

2.99

%, as of December 31, 2022 are presented in the following table:

Amount of

Date of

Borrowing

Outstanding

Rate

Due Date

January 20, 2012

3.45

January 20, 2024

December 24, 2012

3.00

December 24, 2024

June 16, 2017

100

3.42

June 16, 2027

September 15, 2017

100

3.52

September 15, 2029

January 2, 2018

100

3.32

January 2, 2028

September 2, 2020

100

2.35

September 2, 2030

June 2, 2021

100

2.48

June 2, 2031

June 2, 2021

100

2.58

June 2, 2033

Less: Deferred debt issuance costs

(1)

Total

699

U.S. Trade Accounts Receivable Securitization

We have a facility agreement based on the securitization of our U.S. trade accounts receivable that is structured as

an asset-backed securitization program with pricing committed for up

three years

On December 15, 2022, we

extended the expiration date of this facility agreement to

December 15, 2025

(the previous maturity date was

October 18, 2024

) and maintained the purchase limit under the facility as

450

million with

two

banks as agents.

As of December 31, 2022 and December 25, 2021, the borrowings outstanding

under this securitization facility

were $

330

million and $

105

million, respectively.

At December 31, 2022, the interest rate on borrowings under

this facility was based on the asset-backed commercial paper rate of

4.58

% plus

0.75

%, for a combined rate of

5.33

At December 25, 2021, the interest rate on borrowings under

this facility was based on the asset-backed

commercial paper rate of

0.19

% plus

0.75

%, for a combined rate of

0.94

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

If our accounts receivable collection pattern changes due to customers

either paying late or not making payments,

our ability to borrow under this facility may be reduced.

We are required to pay a commitment fee of

basis points depending upon program utilization.

As of December 31, 2022,

the aggregate amounts of long-term debt, including finance lease obligations

and net of

deferred debt issuance costs of $

million, maturing in each of the next five years and thereafter

are as follows:

2023

2024

109

2025

331

2026

2027

100

Thereafter

500

Total

1,046

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 13 – Income Taxes

Income before taxes and equity in earnings of affiliates was as follows:

Years

ended

December 31,

December 25,

December 26,

2022

2021

2020

Domestic

506

593

431

Foreign

215

238

Total

721

831

500

The provisions for income taxes were as follows:

Years

ended

December 31,

December 25,

December 26,

2022

2021

2020

Current income tax expense:

U.S. Federal

150

129

State and local

Foreign

Total current

243

209

148

Deferred income tax expense (benefit):

U.S. Federal

(48)

(12)

(18)

State and local

(13)

(3)

(5)

Foreign

(12)

(30)

Total deferred

(73)

(11)

(53)

Total provision

170

198

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

The tax effects of temporary differences that give rise to our deferred income tax asset (liability) were

as follows:

Years

Ended

December 31,

December 25,

2022

2021

Deferred income tax asset:

Net operating losses and other carryforwards

Inventory, premium

coupon redemptions and accounts receivable

valuation allowances

Stock-based compensation

Uniform capitalization adjustment to inventories

Operating lease liability

Other asset

Total deferred income

tax asset

268

244

Valuation

allowance for deferred tax assets

(1)

(36)

Net deferred income tax asset

232

208

Deferred income tax liability

Intangibles amortization

(112)

(134)

Operating lease right-of-use asset

(61)

(74)

Property and equipment

(7)

Total deferred tax

liability

(180)

(215)

Net deferred income tax asset (liability)

(7)

(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.

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 31, 2022, we had federal, state and foreign net operating

loss carryforwards of approximately

million, $

million and $

220

million, respectively.

The federal, state and foreign net operating loss

carryforwards will begin to expire in various years from 2023 through

2041.

The amounts of federal, state and

foreign net operating losses that can be carried forward indefinitely are $

million, $

million and $

218

million,

respectively.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

The tax provisions differ from the amount computed using the federal statutory income

tax rate as follows:

Years

ended

December 31,

December 25,

December 26,

2022

2021

2020

Income tax provision at federal statutory rate

151

175

105

State income tax provision, net of federal income tax effect

Foreign income tax provision

Pass-through noncontrolling interest

(4)

(3)

Valuation

allowance

(2)

(6)

Unrecognized tax benefits and audit settlements

(18)

Interest expense related to loans

(12)

(11)

Tax benefit related

to legal entity reorganization outside the U.S.

(6)

Other

Total income

tax provision

170

198

For the year ended December 31, 2022, our effective tax rate was

23.5

%, compared to

23.8

% for the prior year

period.

In 2022, the difference between our effective tax rate and the federal statutory tax rate primarily

relates to

state and foreign income taxes and interest expense.

In 2021, the difference between our effective tax rate and the

federal statutory tax rate was primarily due to state and foreign income

taxes and interest expense.

In 2020, our

effective tax rate was

19.1

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

primarily due to an Advance Pricing Agreement with the U.S Internal Revenue

Service (the “IRS”) in the U.S.,

other audit resolutions, state and foreign income taxes and interest expense.

On August 16, 2022, the Inflation Reduction Act (H.R. 5376) (“IRA”) was

signed into law in the United States.

Among other things, the IRA imposes a 15% corporate alternative minimum

tax for tax years beginning after

December 31, 2022 and levies a 1% excise tax on net stock repurchases after

December 31, 2022.

We are still in

the process of analyzing the provisions of the IRA.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES

Act”) was enacted in

response to the COVID-19 pandemic.

The CARES Act includes, but is not limited to, certain income tax

provisions that modify the Section 163(j) limitation of business interest and

net operating loss carryover and

carryback rules.

The modifications to Section 163(j) increase the allowable business

interest deduction from

of adjusted taxable income to

% of adjusted taxable income for years beginning in 2019 and 2020.

The CARES

Act eliminated the NOL income limitation for years beginning before 2021

and it extended the carryback period to

five years for losses incurred in 2018, 2019 and 2020.

have analyzed the income tax provisions of the CARES

Act and have accounted for the impact in the year ended December 26, 2020,

which did not have a material impact

on our consolidated financial statements.

There are certain other non-income tax benefits available to us under

the

CARES Act that require further clarification or interpretation that

may affect our consolidated financial statements

in the future.

On December 27, 2020, the Consolidated Appropriations Act was

enacted into law and extended

certain non-income tax benefits under the CARES Act.

On July 20, 2020, the IRS issued final regulations related to the Tax Cuts and Jobs Act enacted in 2017 (the “Tax

Act”).

The final regulations concern the global intangible low-taxed income

(“GILTI”) and subpart F income

provisions of the Tax Act.

To provide flexibility to taxpayers, the IRS is permitting the application of these final

regulations to prior tax years, if the taxpayer elects to do so.

We have analyzed the final regulations, which do not

have a material impact to our consolidated financial statements.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

100

On December 22, 2017, the U.S. government passed the Tax 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 $

million and

million were included in “accrued taxes” for 2022 and 2021, respectively, and $

million and $

million

were included in “other liabilities” for 2022 and 2021, respectively.

Due to the one-time transition tax and the imposition of the GILTI provisions, all previously unremitted earnings

will no longer be subject to U.S. federal income tax; however, there could be U.S., state and/or foreign withholding

taxes upon distribution of such unremitted earnings.

Determination of the amount of unrecognized deferred tax

liability with respect to such earnings is not practicable.

ASC 740 prescribes the accounting for uncertainty in income taxes recognized

in the financial statements in

accordance with other provisions contained within this 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% likely 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.

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

liabilities” within our consolidated

balance sheets, as of December 31, 2022 and December 25, 2021 was approximately

million and $

million,

respectively, of which $

million and $

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

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 2018.

The tax years subject to examination by the

IRS include years 2019 and forward.

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

to IRS

examination.

During the quarter ended December 25, 2021, we were notified by

the IRS that tax year 2019 was

selected for examination.

During the quarter ended June 26, 2021 we reached a resolution with

the Appellate

Division for all remaining outstanding issues for 2012 and 2013.

During the quarter ended September 26, 2020 we reached an agreement with

the Advanced Pricing Division on an

appropriate transfer pricing methodology for the years 2014-2025.

The objective of this resolution was to mitigate

future transfer pricing audit adjustments.

In the fourth quarter of 2020, we reached a resolution with the IRS for the

2014-2016 audit cycle.

The total amounts of interest and penalties are classified as a component of

the provision for income taxes.

The

amount of tax interest expense (credit) was approximately $

million, $

million and $(

) million in 2022, 2021

and 2020, respectively.

The total amount of accrued interest is included in “other liabilities”,

and was

approximately $

million as of December 31, 2022 and $

million as of December 25, 2021.

The amount of

penalties accrued for during the periods presented were not material

to our consolidated financial statements.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

101

The following table provides a reconciliation of unrecognized tax benefits:

December 31,

December 25,

December 26,

2022

2021

2020

Balance, beginning of period

Additions based on current year tax positions

Additions based on prior year tax positions

Reductions based on prior year tax positions

(1)

Reductions resulting from settlements with taxing authorities

(1)

(9)

(19)

Reductions resulting from lapse in statutes of limitations

(10)

(3)

(14)

Balance, end of period

Note 14 – Plans of Restructuring

and Integration Costs

On August 1, 2022, we committed to a restructuring plan focused on

funding the priorities of the strategic plan and

streamlining operations and other initiatives to increase efficiency.

We expect this initiative to extend through

2023.

We are currently unable in good faith to make a determination of an estimate of the amount or range of

amounts expected to be incurred in connection with these activities, both with

respect to each major type of cost

associated therewith and with respect to the total cost, or an estimate of the

amount or range of amounts that will

result in future cash expenditures.

During the year ended December 31, 2022, we recorded restructuring charges of $

128

million primarily related to

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

lease assets, impairment of other

long-lived assets and lease exit costs.

During the three months ended December 31, 2022, in connection with our

restructuring plan, we vacated

one

the buildings at our corporate headquarters in Melville NY, which resulted in an accelerated amortization of right-

of-use lease asset of $

million.

We also initiated the disposal of a non-profitable US business and recorded

related costs of $

million which primarily consisted of impairment of intangible assets

and goodwill, inventory

impairment, and severance and employee-related costs.

These expenses are included in the $

128

million of

restructuring charges discussed above.

The disposal is expected to be completed in 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 $

million related to one-time employee and other

costs, as well as restructuring charges of $

million, which are included in the $

128

million of restructuring charges

discussed above.

On November 20, 2019, we committed to a contemplated restructuring

initiative intended to mitigate stranded costs

associated with the spin-off of our animal health business and to rationalize operations

and provide expense

efficiencies.

These activities were originally expected to be completed by

the end of 2020 but we extended them to

the end of 2021 in light of the changes to the business environment brought

on by the COVID-19 pandemic.

The

restructuring activities under this prior initiative were completed

in 2021.

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HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

102

Restructuring and integration costs recorded during our 2022, 2021 and

2020 fiscal years consisted of the

following:

Year

Ended December 31, 2022

Health-Care Distribution

Technology

and Value-Added

Services

Restructuring

Costs

Integration

Costs

Restructuring

Costs

Integration

Costs

Total

Severance and employee-related costs

Impairment and accelerated depreciation and

amortization of right-of-use lease assets and

other long-lived assets

Exit and other related costs

Loss on disposal of a business

Integration employee-related and other costs

Total restructuring and integration costs

124

131

Year

Ended December 25, 2021

Health-Care Distribution

Technology

and Value-Added

Services

Restructuring

Costs

Integration

Costs

Restructuring

Costs

Integration

Costs

Total

Severance and employee-related costs

Total restructuring and integration costs

Year

Ended December 26, 2020

Health-Care Distribution

Technology

and Value-Added

Services

Restructuring

Costs

Integration

Costs

Restructuring

Costs

Integration

Costs

Total

Severance and employee-related costs

Impairment and accelerated depreciation and

amortization of right-of-use lease assets and

other long-lived assets

Exit and other related costs

Total restructuring and integration costs

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

103

The following table summarizes, by reportable segment, the activity related

to the liabilities associated with our

restructuring initiatives for the year ended December 31, 2022.

The remaining accrued balance of restructuring

costs as of December 31, 2022 is included in accrued expenses: other within

our condensed consolidated balance

sheet.

Technology

and

Health Care

Value-Added

Distribution

Services

Total

Balance, December 25, 2021

Restructuring charges

124

128

Non-cash asset impairment and accelerated depreciation and

amortization of right-of-use lease assets and other long-lived

assets

(47)

Non-cash impairment on disposal of a business

(46)

Cash payments and other adjustments

(13)

(2)

(15)

Balance, December 31, 2022

Note 15 – Commitments and Contingencies

Purchase Commitments

In our health care distribution 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

of December 31, 2022 were:

2023

2024

2025

2026

2027

Thereafter

Total minimum

inventory purchase commitment payments

Employment, Consulting and Non-Compete Agreements

We have employment, consulting and non-compete agreements that have varying base aggregate annual payments

for the years 2023 through 2027 and thereafter of approximately $

million, $

million, and $

million, respectively.

We also have lifetime consulting agreements that provide for current

compensation of

four-hundred thousand

dollars per year, increasing

twenty-five thousand

dollars every fifth year

with the next increase in 2026.

In addition, some agreements have provisions for additional

incentives and

compensation.

Litigation

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

related lawsuits (currently less than one-

hundred and fifty (

150

); in approximately half of those cases one or more of Henry Schein, Inc.’s subsidiaries is

also named as a defendant).

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 affiliated companies) 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

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

104

In Re National Prescription Opiate Litigation (MDL No. 2804; Case No.

17-md-2804) and are currently stayed, and

others which remain pending in state courts and are proceeding independently

and outside of the MDL.

At this

time, the following cases are set for trial: the action filed by DCH Health

Care Authority, et al. in Alabama state

court, which has been designated a bellwether with

eight

thirty-eight

plaintiffs set for a jury trial on July 24,

2023; and the action filed by Florida Health Sciences Center, Inc. (and

other hospitals located throughout the

State of Florida) in Florida state court, which is currently scheduled for a jury

trial in October 2024.

In December

2022, we settled

seven

cases filed in Utah (plus one case in which we were not yet

named a defendant) by

nineteen

plaintiffs for a total amount of

sixty thousand

dollars.

The

seven

cases have been dismissed.

Of Henry Schein’s

2022 net sales of approximately $

12.6

billion from continuing operations, sales of opioids represented

less than

two-tenths of 1 percent

Opioids represent a negligible part of our business.

We intend to defend ourselves

vigorously against these actions.

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

States Attorney’s Office for the

Western District of Virginia,

seeking documents in connection with an investigation of possible

violations of the

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

Henry Schein.

The investigation relates to the sale of veterinary prescription drugs

to certain customers.

October 2022, Henry Schein received a second Grand Jury Subpoena from

the United States Attorney’s Office for

the Western District of Virginia.

The October Subpoena seeks documents relating to payments Henry

Schein

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

Butler was spun off into a separate company and became a

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

We are cooperating with the

investigation.

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 31, 2022, we had accrued our best estimate of potential

losses relating to claims that were probable

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

a loss.

This accrued amount, as well as

related expenses, was not material to our financial position, results of operations

or cash flows.

Our method for

determining estimated losses considers currently available

facts, presently enacted laws and regulations and other

factors, including probable recoveries from third parties.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

105

Note 16 – Stock-Based Compensation

Stock-based awards are provided to certain employees under the terms of our

2020 Stock Incentive Plan and to

non-employee directors under the terms of our 2015 Non-Employee Director

Stock Incentive Plan (together, the

“Plans”).

The Plans are administered by the Compensation Committee of the Board

of Directors (the

“Compensation Committee”).

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

form of time-based and performance-based restricted stock units

(“RSUs”).

However, for our 2021 fiscal year, in

light of the COVID-19 pandemic, the Compensation Committee determined

it would be difficult for management

to set a meaningful three-year cumulative earnings per share target as the goal applicable

to performance-based

RSU awards as it had done in prior years.

Instead, the Compensation Committee set our equity-based awards

employees for fiscal 2021 in the form of time-based RSUs and non-qualified

stock options which focus on stock

value appreciation and retention instead of pre-established performance goals.

Our non-employee directors

continued to receive equity-based awards for fiscal 2021 solely in the form of time-based

RSUs.

In March 2022,

the Compensation Committee reinstated performance-based RSUs

for equity-based awards to employees for fiscal

2022 and awarded grants in the form of performance-based RSUs,

time-based RSUs and non-qualified stock

options.

As of December 31, 2022, there were

70,942,657

shares authorized and

8,034,696

shares available to be granted

under the 2020 Stock Incentive Plan and

1,892,657

shares authorized and

192,400

shares available to be granted

under the 2015 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 under the 2015 Non-Employee Director Stock Incentive

Plan primarily

are granted with

-month cliff vesting.

For these RSUs, we recognize the cost as compensation expense on

straight-line basis.

With

respect to time-based RSUs, we estimate the fair value on the date

of grant based on our closing stock price at

the time of grant.

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 2020 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, 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 of certain products and unforeseen events or circumstances affecting us.

Over the performance period, the number of shares of common stock 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 will be based on our actual performance metrics

as defined under the Plans.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

106

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

common stock at a fixed price following

vesting of the stock options.

Stock options are granted at an exercise price equal to our closing stock

price on the

date of grant.

Stock options issued beginning in 2021 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 the term

upon certain events.

Compensation expense for these stock options is recognized

using a graded vesting method.

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

In addition to equity-based awards granted in fiscal 2021 under the long-term

incentive program, the Compensation

Committee granted a Special Pandemic Recognition Award under the 2020 Stock Incentive Plan to recipients of

performance-based RSUs under the 2018 long-term incentive program.

The payout under the performance-based

restricted stock units granted under the fiscal 2018 long-term incentive program

(the “2018 LTIP”) was negatively

impacted by the global COVID-19 pandemic.

Given the significance of the impact of the pandemic on our

three

year EPS goal under such equity awards and the contributions made by our employees

(including those who

received such awards), on March 3, 2021, the Compensation Committee granted

a Special Pandemic Recognition

Award to recipients of performance-based restricted stock units under the 2018 LTIP who were employed by us on

the grant date of the Special Pandemic Recognition Award.

These time-based RSU awards vest

% on the first

anniversary of the grant date and

% on the second anniversary of the grant date, based on the recipient’s

continued service and subject to the terms and conditions of the 2020 Stock Incentive

Plan, and are recorded as

compensation expense using a graded vesting method.

The combination of the

% payout based on actual

performance of the 2018 LTIP and the one-time Special Pandemic Recognition Award granted in 2021 will

generate a cumulative payout of

% of each recipient’s original number of performance-based restricted stock

units awarded in 2018 if the recipient satisfies the

two

-year vesting schedule commencing on the grant date.

Our accompanying consolidated statements of income reflect pre-tax share-based

compensation expense of $

million ($

million after-tax), $

million ($

million after-tax) and $

million ($

million after-tax) for the years

ended December 31, 2022, December 25, 2021 and December 26, 2020.

Total unrecognized compensation cost related to non-vested awards as of December 31, 2022 was $

million,

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

approximately

2.1

years.

The weighted-average grant date fair value of stock-based awards granted

before forfeitures was $

85.51

, $

62.72

and $

60.23

per share during the years ended December 31, 2022, December 25,

2021 and December 26, 2020.

Certain stock-based compensation granted may require us to settle in

the form of a cash payment.

During the year

ended December 31, 2022, we recorded a liability of $

0.4

million relating to the grant date fair value of stock-based

compensation to be settled in cash.

record deferred income tax assets for awards that will result in

future deductions on our income tax returns

based on the amount of compensation cost recognized and our statutory tax

rate in the jurisdiction in which we will

receive a deduction.

Our accompanying consolidated statements of cash flows present our stock-based

compensation expense as an

adjustment to reconcile net income to net cash provided by operating

activities for all periods presented.

In the

accompanying consolidated statements of cash flows, there were no benefits

associated with tax deductions in

excess of recognized compensation as a cash inflow from financing

activities for the years ended December 31,

2022, December 25, 2021 and December 26, 2020.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

107

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 (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 in conjunction with considering 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 SAB Topic 14.

Estimates of fair value are not intended to predict actual future events or

the

value ultimately realized by recipients of stock options, and subsequent

events are not indicative of the

reasonableness of the original estimates of fair value made by us.

The following table summarizes the stock option activity for the year

ended December 31, 2022:

Stock Options

Weighted

Remaining

Average

Weighted Average

Aggregate

Exercise

Remaining Contractual

Intrinsic

Price

Life in Years

Value

Outstanding at beginning of year

767,717

63.24

Granted

420,075

85.81

Exercised

(36,150)

62.92

Forfeited

(34,068)

74.84

Outstanding at end of year

1,117,574

71.38

8.5

Options exercisable at end of year

220,688

63.35

Weighted

Weighted Average

Average

Remaining

Aggregate

Number of

Exercise

Contractual

Intrinsic

Options

Price

Life (in years)

Value

Vested

or expected to vest

885,428

73.50

8.7

The following tables summarize the activity of our unvested RSUs for

the year ended December 31, 2022:

Time-Based Restricted Stock Units

Performance-Based Restricted Stock Units

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

1,945,862

58.79

674,753

59.63

Granted

471,840

85.49

267,865

82.35

Vested

(566,887)

55.46

(396,220)

59.21

Forfeited

(94,771)

67.87

(25,482)

67.65

Outstanding at end of period

1,756,044

66.59

79.87

520,916

60.23

79.87

The total intrinsic value per share of RSUs that vested was $

78.74

, $

73.99

and $

61.49

during the years ended

December 31, 2022, December 25, 2021 and December 26, 2020.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

108

Note 17 – 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 31,

December 25,

2022

2021

Obligation and funded status:

Change in benefit obligation

Projected benefit obligation, beginning of period

128

130

Service costs

Interest cost

Past service cost

Actuarial loss

(19)

(5)

Benefits paid

(1)

Participant contributions

Settlements

(1)

(2)

Effect of foreign currency translation

(4)

(5)

Projected benefit obligation, end of period

108

128

Change in plan assets

Fair value of plan assets at beginning of period

Actual return on plan assets

(3)

Employer contributions

Plan participant contributions

Expected return on plan assets

Benefit received

(1)

Settlements

(1)

(3)

Effect of foreign currency translation

(2)

(1)

Fair value of plan assets at end of period

Unfunded status at end of period

(1)

Includes regular benefit payments and amounts transferred in by new

participants.

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

million and $

million as of

December 31, 2022 and December 25, 2021, respectively.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

109

The following table provides the amounts recognized in our consolidated

balance sheets for our defined benefit

pension plans:

Years

Ended

December 31,

December 25,

2022

2021

Non-current assets

Current liabilities

(1)

Non-current liabilities

(59)

(74)

Accumulated other comprehensive loss, pre-tax

The following table provides the net periodic pension cost for our

defined benefit plans:

Years

Ended

December 31,

December 25,

December 26,

2022

2021

2020

Service cost

Interest cost

Expected return on plan assets

(1)

Employee contributions

Amortization of prior service credit

Recognized net actuarial loss

Settlements

Net periodic pension cost

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 31,

December 25,

Pension Benefit Obligation

2022

2021

Weighted average

discount rate

1.67

0.87

Years

Ended

December 31,

December 25,

December 26,

Net Periodic Pension Cost

2022

2021

2020

Discount rate-pension benefit

1.25

0.56

0.51

Expected return on plan assets

0.81

0.71

0.87

Rate of compensation increase

1.68

1.95

1.97

Pension increase rate

0.61

0.72

0.67

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

110

The following table presents the estimated pension benefit payments that

are payable to the plan’s participants as of

December 31, 2022:

Year

2023

2024

2025

2026

2027

2028 to 2032

Total

401(k) Plans

We offer

qualified 401(k) plans to substantially all our domestic full-time

employees.

As determined by our Board

of Directors, matching contributions to these plans generally do not

exceed

100

% of the participants’ contributions

up to

% of their base compensation, subject to applicable legal limits.

Matching contributions consist of cash and

were allocated entirely to the participants’ investment elections on file,

subject to a

% allocation limit to the

Henry Schein Stock Fund.

Due to the impact of COVID-19, as part of our initiative to generate cash savings,

suspended the matching contribution for the second half of 2020.

The matching contribution was reinstated in

2021.

Forfeitures attributable to participants whose employment terminates prior

to becoming fully vested are used

to reduce our matching contributions and 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 31, 2022, December 25, 2021 and December

26, 2020 amounted to $

million,

million and $

million, respectively.

Within our consolidated statements of income, $

million is included

in selling, general and administrative expenses; and $

million is included in cost of goods sold.

Supplemental Executive Retirement Plan (“SERP”)

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.

Due to the impact of COVID-19, as part of our initiative

to generate cash savings,

we suspended contributions under the SERP for the second half of

2020.

Contributions to the SERP were restored

in 2021.

The amounts charged to operations during the years ended December 31,

2022, December 25, 2021 and

December 26, 2020 amounted to $

(1)

million, $

million and $

million, respectively.

The charges are included in

selling, general and administrative expenses line item within our consolidated

statements of income.

Please see

Note 11 – Derivatives and Hedging Activities

for additional information.

Deferred Compensation Plan (“DCP”)

During 2011, we began to offer DCP to a select group of management or highly compensated employees of

the

Company and certain subsidiaries.

This plan allows for the elective deferral of base salary, bonus and/or

commission compensation by eligible employees.

The amounts charged to operations during the years ended

December 31, 2022, December 25, 2021 and December 26, 2020 were approximately

(11)

million, $

million and

million, respectively.

The charges are included in selling, general and administrative expenses line

item within

our consolidated statements of income.

Please see

Note 11 – Derivatives and Hedging Activities

for additional

information.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

111

Note 18 – 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 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 31, 2022,

December 25, 2021 and December 26, 2020 are presented in the following table:

December 31,

December 25,

December 26,

2022

2021

2020

Balance, beginning of period

613

328

287

Decrease in redeemable noncontrolling interests due to acquisitions of

noncontrolling interests in subsidiaries

(31)

(60)

(17)

Increase in redeemable noncontrolling interests due to business

acquisitions

189

Net income attributable to redeemable noncontrolling interests

Dividends declared

(21)

(13)

Effect of foreign currency translation loss attributable to redeemable

noncontrolling interests

(6)

(4)

Change in fair value of redeemable securities

(4)

160

Balance, end of period

576

613

328

Note 19 – Comprehensive Income

Comprehensive income includes certain gains and losses that, under U.S.

GAAP,

are excluded from net income as

such amounts are recorded directly as an adjustment to stockholders’

equity.

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

applicable taxes as of:

December 31,

December 25,

December 26,

2022

2021

2020

Attributable to Redeemable noncontrolling interests:

Foreign currency translation adjustment

(37)

(31)

(25)

Attributable to noncontrolling interests:

Foreign currency translation adjustment

(1)

Attributable to Henry Schein, Inc.:

Foreign currency translation adjustment

(236)

(155)

(77)

Unrealized gain (loss) from foreign currency hedging activities

(2)

(11)

Pension adjustment loss

(2)

(14)

(20)

Accumulated other comprehensive loss

(233)

(171)

(108)

Total Accumulated

other comprehensive loss

(271)

(202)

(133)

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

112

The following table summarizes the components of comprehensive income, net of

applicable taxes as follows:

December 31,

December 25,

December 26,

2022

2021

2020

Net income

566

660

420

Foreign currency translation gain (loss)

(88)

(84)

Tax effect

Foreign currency translation gain (loss)

(88)

(84)

Unrealized gain (loss) from foreign currency hedging activities

(10)

Tax effect

(3)

Unrealized gain (loss) from foreign currency hedging activities

(7)

Pension adjustment gain

Tax effect

(4)

(2)

Pension adjustment gain

Comprehensive income

497

591

476

Our financial statements are denominated in the U.S. Dollar currency.

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

31, 2022, December 25, 2021 and

December 26, 2020 was primarily due to changes in foreign currency exchange

rates of the Euro, British Pound,

Australian Dollar, Brazilian Real, New Zealand Dollar and Canadian Dollar.

The foreign currency translation gain

(loss) during the years ended December 31, 2022, December 25, 2021

and December 26, 2020 was primarily

attributable to a net investment hedge that was entered into during 2019.

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 31,

December 25,

December 26,

2022

2021

2020

Comprehensive income attributable to

Henry Schein, Inc.

476

568

463

Comprehensive income attributable to

noncontrolling interests

Comprehensive income attributable to

Redeemable noncontrolling interests

Comprehensive income

497

591

476

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

113

Note 20 – Discontinued Operations

Animal Health Spin-off

On February 7, 2019 (the “Distribution Date”), we completed the separation

(the “Separation”) and subsequent

merger (“Merger”) of our animal health business (the “Henry Schein Animal Health Business”) with Direct

Vet

Marketing, Inc. (d/b/a Vets First Choice, “Vets

First Choice”).

This was accomplished by a series of transactions

among us, Vets

First Choice, Covetrus, Inc. (f/k/a HS Spinco, Inc. “Covetrus”), a

wholly owned subsidiary of ours

prior to the Distribution Date, and HS Merger Sub, Inc., a wholly owned subsidiary

of Covetrus (“Merger

Sub”).

In connection with the Separation, we contributed, assigned

and transferred to Covetrus certain applicable

assets, liabilities and capital stock or other ownership interests relating

to the Henry Schein Animal Health

Business.

On the Distribution Date, we received a tax-free distribution of $

1,120

million from Covetrus pursuant to

certain debt financing incurred by Covetrus.

On the Distribution Date and prior to the Animal Health Spin-off,

Covetrus issued shares of Covetrus common stock to certain institutional

accredited investors (the “Share Sale

Investors”) for $

361

million (the “Share Sale”).

The proceeds of the Share Sale were paid to Covetrus and

distributed to us.

Subsequent to the Share Sale, we distributed, on a pro rata basis,

all of the shares of the common

stock of Covetrus held by us to our stockholders of record as of the close of

business on January 17, 2019 (the

“Animal Health Spin-off”).

After the Share Sale and Animal Health Spin-off, Merger Sub consummated the

Merger whereby it merged with and into Vets

First Choice, with Vets First Choice surviving the Merger as a

wholly owned subsidiary of Covetrus.

Immediately following the consummation of the Merger, on a fully diluted

basis, (i) approximately

% of the shares of Covetrus common stock were (a) owned by our stockholders

and the

Share Sale Investors, and (b) held by certain employees of the Henry Schein

Animal Health Business (in the form

of certain equity awards), and (ii) approximately

% of the shares of Covetrus common stock were (a) owned by

stockholders of Vets

First Choice immediately prior to the Merger, and (b) held by certain employees of Vets First

Choice (in the form of certain equity awards).

After the Separation and the Merger, we no longer beneficially

owned any shares of Covetrus common stock and, following the Distribution

Date, will not consolidate the

financial results of Covetrus for the purpose of our financial reporting.

Following the Separation and the Merger,

Covetrus was an independent, publicly traded company on the Nasdaq Global Select

Market.

In connection with the completion of the Animal Health Spin-off, we entered into

a transition services agreement,

which ended in December 2020, with Covetrus under which we agreed to provide

certain transition services for up

twenty-four months

in areas such as information technology, finance and accounting, human resources, supply

chain, and real estate and facility services.

As a result of the Separation, the financial position and results of operations

of the Henry Schein Animal Health

Business are presented as discontinued operations and have been excluded

from continuing operations and segment

results for all periods presented.

The accompanying notes to the consolidated financial

statements have been

revised to reflect the effect of the Separation and all prior year balances have been

revised accordingly to reflect

continuing operations only.

The historical statements of Comprehensive Income (Loss) and Shareholders'

Equity

have not been revised to reflect the Separation and instead reflect the Separation

as an adjustment to the balances at

December 26, 2020.

In February 2019, we completed the Animal Health Spin-off.

During the year ended December 26, 2020, we

incurred $

million in transaction costs associated with this transaction.

All transaction costs related to the Animal

Health Spin-off have been included in results from discontinued operations.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

114

Summarized financial information for our discontinued operations

is as follows:

Year

Ended

December 26,

2020

Selling, general and administrative

Operating loss

(2)

Income tax benefit

(3)

Income from discontinued operations

Net income from discontinued operations attributable to Henry Schein,

Inc.

The operating loss from discontinued operations for the year ended

December 26, 2020 was primarily attributable

to costs directly related to the Animal Health Spin-off.

See

Note 23 – Related Party Transactions

for additional

information.

The net income from discontinued operations for the year ended December

26, 2020 was primarily attributable to a

reduction in a liability for tax indemnification and a tax refund received

during 2020 by a holding company

previously part of our Animal Health legal structure and other

favorable tax resolutions.

Note 21 – 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 presently 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 31,

December 25,

December 26,

2022

2021

2020

Basic

136,064,221

140,090,889

142,504,193

Effect of dilutive securities:

Stock options and restricted stock units

1,691,449

1,681,892

899,489

Diluted

137,755,670

141,772,781

143,403,682

The number of antidilutive securities that were excluded from the calculation

of diluted weighted average common

shares outstanding are as follows:

Years

Ended

December 31,

December 25,

December 26,

2022

2021

2020

Stock options

342,716

611,869

Restricted stock units

19,466

1,048

2,398

Total anti-dilutive

securities excluded from EPS computation

362,182

612,917

2,398

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

115

Note 22 – Supplemental Cash Flow Information

Cash paid for interest and income taxes was:

Years

ended

December 31,

December 25,

December 26,

2022

2021

2020

Interest

Income taxes

265

242

207

For the years ended December 31, 2022, December 25, 2021 and December

26, 2020, we had $

million, $

million and $

(10)

million of non-cash net unrealized gains (losses) related to foreign

currency hedging activities,

respectively.

Note 23 – Related Party Transactions

In connection with the completion of the Animal Health Spin-off during our 2019

fiscal year, we entered into a

transition services agreement with Covetrus under which we agreed to provide

certain transition services for up to

twenty-four months

in areas such as information technology, finance and accounting, human resources, supply

chain, and real estate and facility services.

(see

Note 20 – Discontinued Operations

for additional details).

For the year ended December 26, 2020, we recorded approximately $

million of fees for these services.

Pursuant

to the transition services agreement, Covetrus purchased

certain products from us.

During the year December 26,

2020, net sales to Covetrus under the transition services agreement were

approximately $

million.

Sales to

Covetrus under the transition services agreement ended in December 2020.

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

with Internet Brands, which was

formed on July 1, 2018, we entered into a

ten-year

royalty agreement with Internet Brands whereby we will pay

Internet Brands approximately $

million annually for the use of their intellectual property.

During the years

ended December 31, 2022, December 25, 2021 and December 26, 2020, we recorded

million, $

million and

million, respectively in connection with costs related to this royalty

agreement.

As of December 31, 2022 and

December 25, 2021, Henry Schein One, LLC had a net receivable (payable)

balance from (to) Internet Brands of

) million and $

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

agreement.

The components of this receivable and payable are recorded within

prepaid expenses and other; and

accrued expenses: other, respectively, within our consolidated balance sheets.

During our normal course of business, we have interests in entities that we

account for under the equity accounting

method.

During the years ended December 31, 2022, December

25, 2021 and December 26, 2020, we recorded net

sales of $

million, $

million, and $

respectively, to such entities.

During our fiscal years ended 2022, 2021

and 2020, we purchased $

million, $

million and $

million respectively, from such entities.

At December 31,

2022 and December 25, 2021, we had in aggregate $

million and $

million, due from our equity affiliates, and

million and $

million due to our equity affiliates, respectively.

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

and minority shareholders.

Please see

Note 6 – Leases

for further information.

Table of Contents

116

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 31,

2022, 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.

Changes in Internal Control over Financial Reporting

The combination of acquisitions, continued acquisition integrations and systems

implementation activity

undertaken during the quarter ended December 31, 2022 and carried over from

prior quarters when considered in

the aggregate, does not represent a material change in our internal control over

financial reporting.

Management’s

Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate

internal control over financial reporting,

as such term is defined in Exchange Act Rule 13a-15(f).

Our internal control system is designed to provide

reasonable assurance to our management and Board of Directors 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 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 31, 2022.

The effectiveness of our internal control over financial reporting as of December

31, 2022, has been independently

audited by BDO USA, LLP, an independent registered public accounting firm, and their attestation is included

herein.

Limitations of the Effectiveness of Internal Control

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

only reasonable, not absolute, assurance

that the objectives of the internal control system are met.

Because of the inherent limitations of any internal control

system, no evaluation of controls can provide absolute assurance that all control

issues, if any, within a company

have been detected.

Table of Contents

117

Report Of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

Henry Schein, Inc.

Melville, NY

Opinion on Internal Control over Financial Reporting

have audited Henry

Schein, Inc.’s

(the “Company’s”)

internal control over

financial reporting as

of December

31, 2022, based on criteria established in Internal Control

– Integrated Framework (2013) (the “COSO criteria”). In

our opinion, the

Company maintained, in all

material respects, effective

internal control over

financial reporting as

of December 31, 2022, based on the COSO criteria.

have

also

audited,

accordance

with

the

standards

the

Public

Company

Accounting

Oversight

Board

(United

States)

(“PCAOB”),

the

consolidated

balance

sheets

the

Company

December

31,

2022

and

December

25,

2021, the

consolidated statements

income, comprehensive

income, stockholders’

equity,

and cash

flows for

each of

the three

years in

the period

ended December

31, 2022,

and the

related notes

and our

report dated February 21, 2023

expressed as 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

the

effectiveness

internal

control

over

financial

reporting,

included

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

independent

with

respect

the

Company in

accordance

with

U.S.

federal

securities

laws

and

the

applicable

rules

and

regulations

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

all

material

respects.

Our

audit

included

obtaining

understanding

internal

control

over

financial

reporting,

assessing

the

risk

that

material

weakness

exists,

and

testing and

evaluating the

design and

operating effectiveness

of internal

control based

on 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.

Definition and Limitations of Internal Control over Financial Reporting

company’s

internal

control

over

financial

reporting

process

designed

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.

company’s

internal

control

over

financial

reporting

includes

those

policies

and

procedures

that

(1)

pertain

the

maintenance

records

that,

reasonable

detail,

accurately and

fairly reflect

the transactions

and dispositions

of the

assets of

the company;

(2) provide

reasonable

assurance

that

transactions

are

recorded

necessary

permit

preparation

financial

statements

accordance

with generally

accepted accounting

principles, and

that receipts

and expenditures

of the

company are

being made

only

accordance with

authorizations of

management and

directors of

the

company; and

(3) provide

reasonable

assurance

regarding

prevention

timely

detection

unauthorized

acquisition,

use,

disposition

the

company’s assets that could have a material effect on the financial statements.

Because

its

inherent

limitations,

internal

control

over

financial

reporting

may

not

prevent

detect

misstatements.

Also,

projections

any

evaluation

effectiveness

future

periods

are

subject

the

risk

that

controls

may

become

inadequate

because

changes

conditions,

that

the

degree

compliance

with

the

policies or procedures may deteriorate.

/s/ BDO USA, LLP

New York

February 21, 2023

Table of Contents

118

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 2023 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 of

Directors since our last disclosure of such procedures, which appeared

in our definitive 2022 Proxy Statement filed

pursuant to Regulation 14A on April 6, 2022.

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 2023 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.

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 2023 Proxy

Statement to be filed pursuant to Regulation 14A.

Table of Contents

119

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

31, 2022:

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

8,227,096

Plans Not Approved by Stockholders

Total

8,227,096

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

2023 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 2023 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 2023 Proxy

Statement to be filed pursuant to Regulation 14A.

PART

ITEM 15.

Exhibits, Financial Statement Schedules

(a)

List of Documents Filed as a Part of This Report:

Financial Statements:

Our Consolidated Financial Statements filed as a part of this report

are listed on the index on

Page 60.

Index to Exhibits:

See exhibits listed under Item 15(b) below.

Table of Contents

120

(b) Exhibits

2.1

Contribution and Distribution Agreement, dated as of April 20, 2018, by and

among us, HS Spinco, Inc., Direct Vet Marketing, Inc. and Shareholder

Representative Services LLC. (Incorporated by reference to Exhibit 2.1 to our

Current Report on Form 8-K filed on April 23, 2018 (film no. 18767875).)*

2.2

Agreement and Plan of Merger, dated as of April 20, 2018, by and among us, HS

Spinco, Inc, HS Merger Sub, Inc., Direct Vet Marketing, Inc. and Shareholder

Representative Services LLC. (Incorporated by reference to Exhibit 2.2 to our

Current Report on Form 8-K filed on April 23, 2018 (film no. 18767875).)*

2.3

Letter Agreement, Amendment No. 1 to Contribution and Distribution Agreement

and Amendment No. 1 to Agreement and Plan of Merger, dated as of September

14, 2018, by and among us, HS Spinco, Inc., HS Merger Sub, Inc., Direct Vet

Marketing, Inc. and Shareholder Representative Services LLC.( Incorporated by

reference to Exhibit 2.3 to our Annual Report on Form 10-K for the fiscal year

ended December 29, 2018 filed on February 20, 2019.)

2.4

Letter Agreement and Amendment No. 2 to Contribution and Distribution

Agreement, dated as of November 30, 2018, by and among us, HS Spinco, Inc.,

Direct Vet Marketing, Inc. and Shareholder Representative Services LLC.

(Incorporated by reference to Exhibit 2.4 to our Annual Report on Form 10-K for

the fiscal year ended December 29, 2018 filed on February 20, 2019.)

2.5

Letter Agreement and Amendment No. 3 to Contribution and Distribution

Agreement and Amendment No. 2 to Agreement and Plan of Merger, dated as of

December 25, 2018, by and among us, HS Spinco, Inc., HS Merger Sub, Inc.,

Direct Vet Marketing, Inc. and Shareholder Representative Services

LLC.(Incorporated by reference to Exhibit 2.5 to our Annual Report on Form 10-K

for the fiscal year ended December 29, 2018 filed on February 20, 2019.)

2.6

Letter Agreement and Amendment No. 4 to Contribution and Distribution

Agreement, dated as of January 15, 2019, by and among us, HS Spinco, Inc., Direct

Vet Marketing, Inc. and Shareholder Representative Services LLC.(Incorporated

by reference to Exhibit 2.6 to our Annual Report on Form 10-K for the fiscal year

ended December 29, 2018 filed on February 20, 2019.)

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

Third Amended and Restated By-Laws of the Company, effective May 13, 2021.

(Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed

on May 17, 2021.)

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.)

Table of Contents

121

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. 2013 Stock Incentive Plan, as amended and restated effective as

of May 14, 2013. (Incorporated by reference to Exhibit 10.2 to our Current Report

on Form 8-K filed on May 16, 2013.)**

10.2

Form of 2019 Restricted Stock Unit Agreement for performance-based restricted

stock unit awards pursuant to the Henry Schein, Inc. 2013 Stock Incentive Plan (as

amended and restated effective as of May 14, 2013). (Incorporated by reference to

Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended

March 30, 2019 filed on May 7, 2019.)**

10.3

Form of 2019 Restricted Stock Unit Agreement for time-based restricted stock unit

awards pursuant to the Henry Schein, Inc. 2013 Stock Incentive Plan (as amended

and restated effective as of May 14, 2013). (Incorporated by reference to Exhibit

10.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 30,

2019 filed on May 7, 2019.)**

10.4

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.)**

10.5

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.)**

Table of Contents

122

10.6

Form of 2021 Special Pandemic Recognition Award 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 27, 2021 filed on May 4,

2021.)**

10.7

Form of 2022 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.)**

10.8

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.)**

10.9

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.)**

10.10

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.)**

10.11

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.)**

10.12

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, 2020 filed on February 20, 2020.)**

10.13

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.)**

10.14

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.)**

Table of Contents

123

10.15

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.)**

10.16

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.)**

10.17

Henry Schein, Inc. Deferred Compensation Plan. (Incorporated by reference to

Exhibit 10.23 to our Annual Report on Form 10-K for the fiscal year ended

December 25, 2010 filed on February 22, 2011.)**

10.18

Amendment to the Henry Schein, Inc. Deferred Compensation Plan. (Incorporated

by reference to Exhibit 10.26 to our Annual Report on Form 10-K for the fiscal

year ended December 31, 2011 filed on February 15, 2012.)**

10.19

Amendment Number Two to the Henry Schein, Inc. Deferred Compensation

Plan. (Incorporated by reference to Exhibit 10.20 to our Annual Report on Form

10-K for the fiscal year ended December 28, 2013 filed on February 11, 2014.)**

10.20

Amendment Number Three to the Henry Schein, Inc. Deferred Compensation Plan.

(Incorporated by reference to Exhibit 10.21 to our Annual Report on Form 10-K for

the fiscal year ended December 28, 2013 filed on February 11, 2014.)**

10.21

Amendment Number Four to the Henry Schein, Inc. Deferred Compensation Plan.

(Incorporated by reference to Exhibit 10.46 to our Annual Report on Form 10-K for

the fiscal year ended December 31, 2016 filed on February 21, 2017.)**

10.22

Amendment Number Five to the Henry Schein, Inc. Deferred Compensation Plan.

(Incorporated by reference to Exhibit 10.32 to our Annual Report on Form 10-K for

the fiscal year ended December 28, 2020 filed on February 20, 2020.)**

10.23

Amendment Number Six to the Henry Schein, Inc. Deferred Compensation Plan.

(Incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q

for the fiscal quarter ended March 28, 2020 filed on May 5, 2020.)**

10.24

Henry Schein Management Team Performance Incentive Plan and Plan Summary,

effective as of January 1, 2014. (Incorporated by reference to Exhibit 10.7 to our

Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 2014 filed

on May 6, 2014.)**

10.25

Form of Performance-Based RSU Award Agreement for Stanley M. Bergman

Pursuant to the Henry Schein, Inc. 2013 Stock Incentive Plan (as Amended and

Restated as of May 14, 2013). (Incorporated by reference to Exhibit 10.2 to our

Current Report on Form 8-K filed on August 9, 2019.)**

Table of Contents

124

10.26

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.)**

10.27

Letter Agreement dated November 11, 2021 between Henry Schein, Inc. and Brad

Connett.**+

10.28

Agreement dated November 11, 2021 between Henry Schein, Inc. and Brad

Connett.**+

10.29

Special Incentive Plan dated May 24, 2021 between Henry Schein, Inc. and Brad

Connett.**#+

10.30

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, Mark Mlotek and Steven Paladino, 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.)**

10.31

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, Mark Mlotek and Steven Paladino,

respectively). (Incorporated by reference to Exhibit 10.1 to our Current Report on

Form 8-K filed on January 20, 2012.)**

10.32

Form of Change in Control Agreement between us and certain executive officers

who are a party thereto (Walter Siegel). (Incorporated by reference to Exhibit 10.3

to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2019

filed on May 7, 2019.)

10.33

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,

Brad Connett, David Brous, and Lorelei McGlynn). (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.)**

10.34

Form of Indemnification Agreement between us and certain directors and executive

officers who are a party thereto (Mohamed Ali, Deborah Derby, Joseph L. Herring,

Kurt P. Kuehn, Philip A. Laskawy, Anne H. Margulies, Steven Paladino, Carol

Raphael, Scott P. Serota, Bradley T. Sheares, Ph.D., Reed V. Tuckson, M.D.,

FACP, Stanley M. Bergman, James P. Breslawski, David Brous, Brad Connett,

Michael S. Ettinger, Lorelei McGlynn, Mark E. Mlotek, Walter Siegel 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.)**

Table of Contents

125

10.35

Amended and Restated Revolving Credit Agreement, dated as of August 20, 2021,

among us, the several lenders parties thereto, and JPMorgan Chase Bank, N.A., as

administrative agent. (Incorporated by reference to Exhibit 10.1 to our Current

Report on Form 8-K filed on August 23, 2021.)

10.36

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.)

10.37

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.)

10.38

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.)

10.39

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.)

10.40

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.)

10.41

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.)

Table of Contents

126

10.42

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.)

10.43

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.)

10.44

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.)

10.45

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.*+

10.46

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.)

10.47

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.)

10.48

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.)

21.1

List of our Subsidiaries.+

23.1

Consent of BDO USA, LLP.+

Table of Contents

127

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.+

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 31, 2022, formatted in Inline XBRL

(included within Exhibit 101 attachments).+

_________

Filed or furnished herewith.

* Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company

hereby agrees to furnish supplementally a copy of any of the omitted schedules and exhibits upon request

by the U.S. Securities and Exchange Commission.

Indicates management contract or compensatory plan or agreement.

# Certain identified information has been excluded from the exhibit because it is both not material and is

the type that the registrant treats as private or confidential.

ITEM 16.

Form 10-K Summary

None.

Table of Contents

128

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 21, 2023

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 21, 2023

Stanley M. Bergman

and Director (principal executive officer)

/s/ RONALD N. SOUTH

Senior Vice President, Chief

Financial Officer

February 21, 2023

Ronald N. South

(principal financial and accounting officer)

/s/ JAMES P.

BRESLAWSKI

Vice Chairman, President

and Director

February 21, 2023

James P.

Breslawski

/s/ MARK E. MLOTEK

Director

February 21, 2023

Mark E. Mlotek

/s/ MOHAMAD ALI

Director

February 21, 2023

Mohamad Ali

/s/ DEBORAH DERBY

Director

February 21, 2023

Deborah Derby

/s/ JOSEPH L. HERRING

Director

February 21, 2023

Joseph L. Herring

/s/ KURT P.

KUEHN

Director

February 21, 2023

Kurt P.

Kuehn

/s/ PHILIP A. LASKAWY

Director

February 21, 2023

Philip A. Laskawy

/s/ ANNE H. MARGULIES

Director

February 21, 2023

Anne H. Margulies

/s/ STEVEN PALADINO

Director

February 21, 2023

Steven Paladino

/s/ CAROL RAPHAEL

Director

February 21, 2023

Carol Raphael

/s/ SCOTT SEROTA

Director

February 21, 2023

Scott Serota

/s/ BRADLEY T. SHEARES,

PH. D.

Director

February 21, 2023

Bradley T.

Sheares, Ph. D.

/s/ REED V.

TUCKSON, M.D., FACP

Director

February 21, 2023

Reed V.

Tuckson, M.D., FACP

Henry Schein - 10-K annual report 2022

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