HENRY SCHEIN INC

Henry Schein, Inc. operates as a solutions company for health care professionals, serving more than one million customers worldwide across dental practices, laboratories, physician practices, ambulatory surgery centers, government, institutional health care clinics, home health providers, and other alternate care clinics. The company employs more than 25,000 people, with approximately 48% of its workforce based in the United States and 52% outside of the United States, and has operations or affiliates in 34 countries and territories. The distribution and value-added services industry is fragmented and diverse, spanning from sole practitioners to large group practices often owned by dental support organizations (DSOs) or integrated delivery networks (IDNs). The industry should benefit from favorable long-term macro trends including an aging population, increased health care awareness, and the shift of procedures from acute care settings to alternate-care sites.

In the North American dental distribution market, Henry Schein's primary competitors are the Patterson Dental division of Patterson Companies, Inc. and Benco Dental Supply Company. In the U.S. medical distribution market, primary competitors are McKesson Corporation and Medline Industries, Inc. Outside of the U.S., competitors include Cadence Group, Proclinic Group, DD Group, Nuent Group, Lifco AB, Planmeca Group, Dental Union, and Dental Bauer. Within Global Specialty Products, primary global competitors include Straumann, Envista, Zimvie, and Dentsply Sirona for dental implants. Within Global Technology, the company competes against numerous dental software providers including the Eaglesoft division of Patterson Companies, Inc., Carestream Dental LLC, and others. The company believes its competitive strengths include 94 years of experience, a focus on understanding customer needs, direct sales and marketing expertise, cost-effective purchasing, efficient distribution, and a commitment to superior customer service.

The company generates revenue through three reportable segments: Global Distribution and Value-Added Services, Global Specialty Products, and Global Technology. Global Distribution and Value-Added Services includes distribution of national brand and corporate brand merchandise, equipment, and related technical services, as well as value-added services such as financial services, continuing education, consulting, and other practice services. Global Specialty Products involves manufacturing, marketing, and sales of dental implant and biomaterial products, endodontic, orthodontic, and orthopedic products. Global Technology includes development and distribution of practice management software, e-services, and other products. The company stocks a comprehensive selection of more than 300,000 branded and Henry Schein corporate brand products through its network, which includes over 5.4 million square feet of space in 38 strategically located distribution centers and 0.6 million square feet of space in 17 manufacturing facilities.

Global Distribution and Value-Added Services net sales for the year ended December 27, 2025 were $11,138 million ¹, representing 84.5% of total net sales. This segment includes Global Dental Merchandise with net sales of $4,831 million ² (36.6% of total), Global Dental Equipment with net sales of $1,799 million ³ (13.6% of total), Global Value-Added Services with net sales of $238 million ⁴ (1.8% of total), and Global Medical with net sales of $4,270 million ⁵ (32.5% of total). Global Dental merchandise includes infection-control products, handpieces, preventatives, impression materials, composites, anesthetics, teeth, gypsum, acrylics, articulators, abrasives, PPE products, and corporate brand consumable merchandise. Global Dental Equipment includes dental chairs, delivery units and lights, digital dental laboratories, X-ray supplies and equipment, equipment repair services, and high-tech and digital restoration equipment. Global Value-Added Services consists of financial services on a non-recourse basis, continuing education services for practitioners, consulting, and other services. Global Medical includes branded and generic pharmaceuticals, home solutions products, vaccines, surgical products, diagnostic tests, infection-control products, X-ray products, equipment, PPE products, and vitamins.

Global Specialty Products net sales for the year ended December 27, 2025 were $1,544 million ⁶, representing 11.7% of total net sales. This segment includes manufacturing, marketing, and sales of dental implant and biomaterial products, endodontic, orthodontic, and orthopedic products, and other health care-related products and services. The company develops, manufactures, markets, and distributes a broad portfolio of patented and evidence-based dental implants, prosthetic components, instruments, and digital workflow solutions for implant-based tooth restorations, with research and development and manufacturing facilities in the United States, Switzerland, Germany, Brazil, and France. The company markets its implant products and solutions in approximately 90 countries. The orthodontics business develops, manufactures, and distributes a comprehensive range of orthodontic products including brackets, braces, aligners, and accessories, with manufacturing facilities in the United States, Mexico, and France, serving dental practices in over 70 countries. The endodontics business develops, manufactures, markets, and distributes a complete portfolio of endodontic products across multiple brands, with research and development and manufacturing facilities in the United States, Switzerland, and Brazil, serving customers in over 90 countries. Global Technology net sales for the year ended December 27, 2025 were $675 million ⁷, representing 5.1% of total net sales. This segment consists of the development and distribution of practice management software, e-services, and other technology-enabled products for health care providers. As of December 27, 2025, the company had an active user base of approximately 95,000 practices and 324,000 consumers, including users of AxiUm, Dentally, Dentrix Ascend, DentalVision, Dentrix Dental Systems, EXACT, Gesden, Jarvis Analytics, Oasis, Officite, OrisLine, PBS Endo, Power Practice Px, and subscriptions for Demandforce, Sesame, and Lighthouse 360 for dental practices and DentalPlans.com for dental patients.

On January 29, 2025, the company announced a strategic investment by funds affiliated with KKR & Co. Inc. and a Strategic Partnership Agreement with KKR. On May 16, 2025, the company issued 3,285,151 shares of common stock to funds affiliated with KKR for an investment of $250 million ⁸, at approximately $76.10 per share. Pursuant to the Partnership Agreement, KKR also has the ability to purchase additional shares via open market purchases up to a total equity stake of 14.9% of the outstanding shares of common stock of the Company. On November 4, 2025, the Company and KKR entered into an amendment that increased the beneficial ownership limit from 14.9% to 19.9% of the outstanding shares of the Company's common stock that KKR is permitted to acquire during the standstill period. On May 19, 2025, the company executed an accelerated share repurchase program to repurchase a total of $250 million ⁹ of its outstanding common stock. In May 2025, the company received 3,122,832 shares at an estimated fair value of $224 million ¹⁰. In July 2025, the company received an additional 368,651 shares at an estimated fair value of $26 million ¹¹, representing the final amount of shares to be received under this accelerated share repurchase program. On September 8, 2025, the Board authorized the repurchase of up to an additional $750 million ¹² in shares of common stock. From March 3, 2003 through December 27, 2025, the company repurchased $6.0 billion ¹³, or 107,876,628 shares ¹⁴, under its common stock repurchase programs, with $780 million ¹⁵ available as of December 27, 2025 for future common stock share repurchases. On August 6, 2024, the company committed to a restructuring plan (the 2024 Plan) to integrate acquisitions, right-size operations, and further increase efficiencies, currently expected to be completed at the end of 2027. During the year ended December 27, 2025, the company recorded restructuring and related charges associated with the 2024 Plan of $105 million ¹⁶. During the year ended December 27, 2025, in connection with the 2024 Plan, the company recorded a loss of $1 million ¹⁷ and $12 million ¹⁸ related to the disposal of businesses in the Global Distribution and Value-Added Services and Global Specialty Product segments, respectively, and a net gain related to disposal of a business in the Global Technology segment. During the year ended December 27, 2025, the company recorded $16 million ¹⁹ of impairment charges related to businesses in its Global Distribution and Value-Added Services segment, including $14 million ²⁰ primarily related to customer lists and relationships and $2 million ²¹ related to trade names and non-compete agreements.

For the fiscal year ended December 27, 2025, total net sales were $13,184 million ²², compared to $12,673 million ²³ in fiscal 2024 and $12,339 million ²⁴ in fiscal 2023. Net income attributable to Henry Schein, Inc. was $398 million ²⁵ for fiscal 2025, compared to $390 million ²⁶ in fiscal 2024 and $416 million ²⁷ in fiscal 2023. Diluted earnings per share attributable to Henry Schein, Inc. was $3.27 ²⁸ for fiscal 2025, compared to $3.05 ²⁹ in fiscal 2024 and $3.16 ³⁰ in fiscal 2023. Gross profit was $4,105 million ³¹ for fiscal 2025, compared to $4,016 million ³² in fiscal 2024. Operating income was $653 million ³³ for fiscal 2025, compared to $621 million ³⁴ in fiscal 2024. Net cash provided by operating activities was $712 million ³⁵ for fiscal 2025, compared to $848 million ³⁶ in fiscal 2024.

The company discusses its BOLD+1 Strategic Plan for 2025-2027, which consists of building complementary software, specialty, and services businesses for high growth; operationalizing One Distribution to deliver exceptional customer experience, increased efficiency, and growth; leveraging One Schein to broaden and deepen relationships with customers; driving digital transformation for customers and for Henry Schein; and creating value for stakeholders.

A key growth vector is the company's focus on increasing penetration of its existing customer base of over one million customers worldwide. The company intends to increase sales to its existing customer base and enhance its position as their primary supplier by offering a broad range of products, services, and support, including software solutions that can help drive improved workflow efficiency and patient communications. Another growth vector is increasing the number of customers served by increasing productivity of field sales consultants and telesales teams, and using the customer database to focus marketing efforts across all operating segments. In the dental business, the company provides products and services to independent practices, mid-market groups, large DSOs, community health centers, and government sites of care. In the medical business, the company has expanded to serve customers in settings outside of the traditional office, such as urgent care clinics, retail, occupational health, and home health settings.

The company's strategy includes leveraging value-added products and services by increasing cross-selling efforts for key product lines utilizing a consultative selling process. The company sees significant cross-selling opportunities between its dental software users and dental customers, and opportunities to expand vaccine, injectables, and other pharmaceuticals sales to health care practitioners, as well as cross-selling Electronic Health Record systems and software when selling core products. The company's strategy extends to providing health systems, integrated delivery networks, and other large group and multi-site health care organizations these same value-added products and services. The company also pursues strategic acquisitions and joint ventures focused on investments in high growth high margin businesses aligned with its BOLD+1 strategy that add new customers and sales teams, increase geographic footprint, and enable access to new products and technologies.

The company's gross margin percentages vary between segments, with substantially higher gross margin from products developed and manufactured within the Global Specialty Products segment compared to products distributed within the Global Distribution and Value-Added Services segment. Within the Global Technology segment, higher gross margins result from the company being both the developer and seller of software products and services. Within the Global Distribution and Value-Added Services segment, gross profit margins may fluctuate between periods as a result of changes in product mix and customer mix. The company has experienced inflationary pressures, including higher freight costs and interest expense, and pressures resulting from the strengthening of the dollar, which have and continue to impact results of operations. The company expects to record restructuring and related charges associated with the 2024 Plan through the end of 2027, though an estimate of the amount of these charges for 2026 through 2027 has not yet been determined.

The company's infrastructure includes over 5.4 million square feet of space in 38 strategically located distribution centers and 0.6 million square feet of space in 17 manufacturing facilities around the world. The company has additional operating capacity at certain distribution center facilities. The company continues to invest in its e-commerce platforms so customers can find the products they need and to enable an engaging purchase experience. The company's global e-commerce platform, henryschein.com, focuses on accelerating the adoption of digital commerce technologies across the company, driving the transformation of business strategy and operations using digital technology, and enabling the growth of digital sales revenue. The company has implemented a fulfillment system supported by customized inventory management systems for individual practices, large group practices, and integrated delivery networks.

Capital expenditure plans are indicated by purchases of property and equipment of $139 million ³⁷ for the year ended December 27, 2025, compared to $148 million ³⁸ in fiscal 2024. Capitalized software costs were $52 million ³⁹ for fiscal 2025, compared to $39 million ⁴⁰ in fiscal 2024. The company has a share repurchase program with $780 million ⁴¹ available for future common stock share repurchases as of December 27, 2025. The company has not declared any cash or stock dividends on its common stock during fiscal years 2025 or 2024 and currently does not anticipate declaring any cash or stock dividends in the foreseeable future, intending to retain earnings to finance expansion and for general corporate purposes including the share repurchase program.

The company faces structural headwinds including uncertain global and domestic macro-economic and political conditions that could materially adversely affect results of operations and financial condition. These include recessionary or inflationary conditions, depressed levels of consumer and commercial spending, and the effects of unemployment on insurance coverage. The company has experienced inflationary pressures including higher freight costs and interest expense, and pressures resulting from the strengthening of the dollar. The U.S. has adopted new and increased tariffs on imports from countries, which remain subject to frequently evolving exemptions and modifications, and some countries have imposed retaliatory tariffs. The tariffs did not have a material impact on results of operations during fiscal year 2025, although sales of U.S. dental equipment were temporarily impacted by market uncertainty related to tariffs in the second half of the quarter ended June 28, 2025. The One Big Beautiful Bill Act, signed into law on July 4, 2025, includes provisions expected to result in reductions in the number of Medicaid enrollees and reductions in federal funding to state Medicaid programs, which will likely have an adverse impact on utilization and Medicaid payment.

The company faces execution risks including dependence on third parties for the manufacture and supply of a significant volume of products. In 2025, the top 10 Global Distribution and Value-Added Services suppliers and the single largest supplier accounted for approximately 24% and 4%, respectively, of aggregate purchases. The company may be unsuccessful in achieving strategic growth objectives, and future growth especially for Global Technology and Global Specialty Products segments is dependent upon the ability to develop or acquire and maintain and protect new products and services and utilize new technologies that achieve market acceptance with acceptable margins. Risks inherent in acquisitions, dispositions, and joint ventures could offset anticipated benefits. The company also faces risks related to the Strategic Partnership Agreement with KKR, including uncertainty about management, operations, or future strategic direction.

The company faces material risks including dependence on third-party suppliers, with its top 10 Global Distribution and Value-Added Services suppliers accounting for approximately 24% ⁴² of aggregate purchases and its single largest supplier accounting for approximately 4% ⁴³ in 2025, and any interruption in supply could result in significant disruption to sales and operations. The health care products distribution industry is highly competitive and consolidating, with primary competitors including Patterson Dental, Benco Dental, McKesson Corporation, and Medline Industries in the U.S., and the company may not be able to compete successfully. The company is subject to extensive governmental regulations, and failure to comply could result in severe penalties including treble damages and substantial civil penalties under the federal False Claims Act, as well as potential loss of licenses and ability to participate in federal and state health care programs. Security risks associated with information systems have adversely affected the business, including an October 2023 cyber incident that disrupted key business operations, adversely impacted financial results for the fourth quarter and full year 2023, and caused the company to incur significant remediation costs, with direct expenses of $11 million ⁴⁴ in 2023 and $9 million ⁴⁵ in 2024 related to the incident. The company's future growth depends on its ability to develop or acquire new products and services and utilize new technologies such as artificial intelligence that achieve market acceptance with acceptable margins, and failure to successfully address these challenges could materially disrupt sales and operations.

Management's message emphasizes the company's BOLD+1 Strategic Plan for 2025-2027, which focuses on building complementary software, specialty, and services businesses for high growth; operationalizing One Distribution to deliver exceptional customer experience, increased efficiency, and growth; leveraging One Schein to broaden and deepen relationships with customers; driving digital transformation for customers and for Henry Schein; and creating value for stakeholders. The company's mission is to provide innovative, integrated health care products and services and to be trusted advisors and consultants to customers, enabling them to deliver the best quality patient care and enhance their practice management efficiency and profitability. Management highlights the company's 94 years of experience distributing health care products and its position as what it believes is the world's largest provider of health care products and services primarily to office-based dental and medical practitioners. The company announced on January 12, 2026 the appointment of Frederick M. Lowery as its next CEO, effective March 2, 2026, succeeding Stanley M. Bergman who will retire as CEO on March 1, 2026 but remain as Chairman of the Board.