Henry Schein 10-Q: Revenue Grows but Margin Pressure Hits Q2 Earnings
Filing Impact
Filing Sentiment
Form Type
10-Q
Henry Schein (HSIC) Q2 FY25 10-Q key takeaways: Net sales grew 3.3% YoY to $3.24 bn, led by Global Distribution & Value-Added Services (+2.9%), Global Specialty Products (+4.3%) and Global Technology (+7.1%). Gross margin contracted 120 bp to 31.3%, and operating income slipped 5% to $151 m, lowering the operating margin to 4.7%. Net income attributable to HSIC fell 17% to $86 m, driving diluted EPS down to $0.70 (-$0.10 YoY).
First-half view: Revenue rose 1.6% to $6.41 bn; diluted EPS improved 4% to $1.58 on tighter SG&A and a 4% lower share count. Operating cash flow dropped to $157 m (vs $493 m) due to working-capital build. The company repurchased $450 m of stock and issued $250 m of equity tied to the KKR investment/ASR, leaving 121.9 m shares outstanding. Cash increased to $145 m while long-term debt climbed $260 m to $2.09 bn, lifting leverage. Year-to-date restructuring and cyber-incident charges total $48 m but were partly offset by $20 m of insurance recoveries. Management implemented a new three-segment structure and notes upcoming FASB disclosure rules, with no material policy changes this quarter.
Positive
- Revenue grew 3.3% YoY with all three segments posting gains.
- First-half diluted EPS up 4% aided by share repurchases and cost control.
- $20 m insurance recovery reduced net cyber-incident exposure.
- Continued share buybacks ($450 m) demonstrate capital-return commitment.
Negative
- Q2 diluted EPS fell 12.5% YoY to $0.70 on margin compression.
- Operating cash flow down 68% to $157 m, pressuring free cash flow.
- Gross margin dropped 120 bp, reflecting higher cost of sales and mix.
- Long-term debt rose 14% to $2.09 bn, increasing leverage.
- Restructuring & cyber costs total $48 m YTD, weighing on profitability.
Insights
TL;DR – Top-line growth solid, but margin erosion and weaker cash generation temper the story.
Revenue expansion across all three segments confirms demand resilience, especially in technology solutions. Yet gross margin pressure and higher restructuring spend drove a 17% EPS decline in the quarter. Sharply lower operating cash flow and a $260 m debt uptick offset the benefit of a $450 m buyback. The balance-sheet trend warrants monitoring as leverage edges higher. Guidance was not included in the filing, keeping visibility limited. Overall, the print is modestly negative for valuation until margin recovery is evidenced.
TL;DR – Cyber risks and restructuring remain contained, but liquidity cushion is thinning.
Cumulative cyber-incident costs are largely insured; no new expenses booked this quarter, reducing tail risk. However, operating cash flow deterioration coincides with higher inventories and receivables, signalling execution risk amid restructuring (Plan 2024/2022). Debt growth to $2.09 bn and contractual VIE recourse elevate financial leverage, though total liquidity of $145 m plus credit lines remains adequate. Rating agencies will likely view trends as neutral to mildly negative unless working-capital metrics stabilise.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the
quarterly
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ____________ to ____________
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(Exact name of registrant as specified in its charter)
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(I.R.S. Employer Identification No.)
incorporation or organization)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Trading Symbol(s)
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The
Nasdaq
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.
☒
No
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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit such files).
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No
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Non-accelerated filer
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Smaller reporting company
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Yes
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As of July 28, 2025,
there were
HENRY SCHEIN, INC.
INDEX
PART I. FINANCIAL INFORMATION
Page
ITEM 1.
Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets
as of June 28, 2025 and December 28, 2024
3
Condensed Consolidated Statements of Income
for the three and six months ended
June 28, 2025 and June 29, 2024
4
Condensed Consolidated Statements of Comprehensive Income
for the
three and six months ended June 28, 2025 and June 29, 2024
5
Condensed Consolidated Statement of Changes in Stockholders' Equity
for the three months ended
June 28, 2025 and June 29, 2024
6
Condensed Consolidated Statement of Changes in Stockholders' Equity
for the six months ended
June 28, 2025 and June 29, 2024
7
Condensed Consolidated Statements of Cash Flows
for the six months ended
June 28, 2025 and June 29, 2024
8
Notes to Condensed Consolidated Financial Statements
9
Note 1 – Basis of Presentation
9
Note 2 – Significant Accounting Policies and Recently
Issued Accounting Standards
10
Note 3 – Cyber Incident
10
Note 4 – Net Sales from Contracts with Customers
11
Note 5 – Segment Data
12
Note 6 – Business Acquisitions
15
Note 7 – Fair Value Measurements
18
Note 8 – Debt
21
Note 9 – Income Taxes
24
Note 10 – Plans of Restructuring
25
Note 11 – Legal Proceedings
27
Note 12 – Stock-Based Compensation
28
Note 13 – Redeemable Noncontrolling Interests
31
Note 14 – Comprehensive Income
31
Note 15 – Earnings Per Share
33
Note 16 – Supplemental Cash Flow Information
33
Note 17 – Related Party Transactions
34
Note 18 – KKR Investment and Accelerated Share Repurchase Program
35
ITEM 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
36
ITEM 3.
Quantitative and Qualitative Disclosures About Market Risk
55
ITEM 4.
Controls and Procedures
55
PART II. OTHER INFORMATION
ITEM 1.
Legal Proceedings
56
ITEM 1A.
Risk Factors
56
ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds
56
ITEM 5.
Other Information
57
ITEM 6.
Exhibits
58
Signature
59
Table of Contents
See accompanying notes.
3
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
HENRY SCHEIN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
June 28,
December 28,
2025
2024
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
$
Accounts receivable, net of allowance for credit losses of $
Inventories, net
Prepaid expenses and other
Total current assets
Property and equipment, net
Operating lease right-of-use assets
Goodwill
Other intangibles, net
Investments and other
Total assets
$
$
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
$
Bank credit lines
Current maturities of long-term debt
Operating lease liabilities
Accrued expenses:
Payroll and related
Taxes
Other
Total current liabilities
Long-term debt (1)
Deferred income taxes
Operating lease liabilities
Other liabilities
Total liabilities
Redeemable noncontrolling interests
Commitments and contingencies
(nil)
(nil)
Stockholders' equity:
Preferred stock, $
Common stock, $
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
(227 )
(379 )
Total Henry Schein, Inc. stockholders' equity
Noncontrolling interests
Total stockholders' equity
Total liabilities, redeemable noncontrolling interests and stockholders' equity
$
$
(1)
Amounts presented include balances held by our consolidated variable interest entity (“VIE”). At June 28, 2025 and December 28,
2024, includes trade accounts receivable of $
$
Note 1 – Basis of Presentation
Table of Contents
See accompanying notes.
4
HENRY SCHEIN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except share and per share data)
(unaudited)
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Net sales
$
$
$
$
Cost of sales
Gross profit
Operating expenses:
Selling, general and administrative
Depreciation and amortization
Restructuring costs
Operating income
Other income (expense):
Interest income
Interest expense
(38 )
(32 )
(73 )
(62 )
Other, net
(1 )
(1 )
(2 )
Income before taxes, equity in earnings of affiliates and
noncontrolling interests
Income taxes
(31 )
(33 )
(66 )
(65 )
Equity in earnings of affiliates, net of tax
Net income
Less: Net income attributable to noncontrolling interests
(8 )
(1 )
(11 )
(6 )
Net income attributable to Henry Schein, Inc.
$
$
$
$
Earnings per share attributable to Henry Schein, Inc.:
Basic
$
$
$
$
Diluted
$
$
$
$
Weighted-average common shares outstanding:
Basic
Diluted
Table of Contents
See accompanying notes.
5
HENRY SCHEIN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(unaudited)
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Net income
$
$
$
$
Other comprehensive income, net of tax:
Foreign currency translation gain (loss)
(62 )
(116 )
Unrealized gain (loss) from hedging activities
(21 )
(26 )
Other comprehensive income (loss), net of tax
(58 )
(101 )
Comprehensive income
Comprehensive income attributable to noncontrolling interests:
Net income
(8 )
(1 )
(11 )
(6 )
Foreign currency translation loss (gain)
(22 )
(31 )
Comprehensive loss (income) attributable to noncontrolling
interests
(30 )
(42 )
Comprehensive income attributable to Henry Schein, Inc.
$
$
$
$
Table of Contents
See accompanying notes.
6
HENRY SCHEIN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ EQUITY
(in millions, except share data)
(unaudited)
Accumulated
Common Stock
Additional
Other
Total
$0.01 Par Value
Paid-in
Retained
Comprehensive
Noncontrolling
Stockholders'
Shares
Amount
Capital
Earnings
Income / (Loss)
Equity
Balance, March 29, 2025
$
$
$
$
(317 )
$
$
Net income (excluding $
noncontrolling interests)
-
-
-
-
Foreign currency translation gain (excluding gain of $
attributable to Redeemable noncontrolling interests)
-
-
-
-
Unrealized loss from hedging activities,
net of tax benefit of $
-
-
-
-
(21 )
-
(21 )
Distributions to noncontrolling shareholders
-
-
-
-
-
(7 )
(7 )
Purchase of noncontrolling interests
-
-
(1 )
-
-
(1 )
(2 )
Change in fair value of redeemable securities
-
-
(10 )
-
-
-
(10 )
Noncontrolling interests and adjustments related to
business acquisitions and contingent consideration
-
-
-
-
-
(1 )
(1 )
Issuance of common stock
-
-
-
-
Repurchase and retirement of common stock
(3,657,832 )
-
(61 )
(227 )
-
-
(288 )
Stock issued upon exercise of stock options
-
-
-
-
-
-
Stock-based compensation expense
-
-
-
-
Shares withheld for payroll taxes
(5,807 )
-
(3 )
-
-
-
(3 )
Settlement of stock-based compensation awards
-
-
-
-
-
-
Balance, June 28, 2025
$
$
$
$
(227 )
$
$
Accumulated
Common Stock
Additional
Other
Total
$0.01 Par Value
Paid-in
Retained
Comprehensive
Noncontrolling
Stockholders'
Shares
Amount
Capital
Earnings
Income / (Loss)
Equity
Balance, March 30, 2024
$
$
$
$
(239 )
$
$
Net income (excluding loss of $
noncontrolling interests)
-
-
-
-
Foreign currency translation loss (excluding loss of $
attributable to Redeemable noncontrolling interests)
-
-
-
-
(57 )
-
(57 )
Unrealized gain from hedging activities,
net of tax of $
-
-
-
-
-
Distributions to noncontrolling shareholders
-
-
-
-
-
(5 )
(5 )
Change in fair value of redeemable securities
-
-
(39 )
-
-
-
(39 )
Noncontrolling interests and adjustments related to
business acquisitions
-
-
(11 )
-
-
-
(11 )
Repurchase and retirement of common stock
(1,415,706 )
-
(14 )
(87 )
-
-
(101 )
Stock issued upon exercise of stock options
-
-
-
-
Stock-based compensation expense
-
-
-
-
Shares withheld for payroll taxes
(4,298 )
-
(1 )
-
-
-
(1 )
Transfer of charges in excess of capital
-
-
(52 )
-
-
-
Balance, June 29, 2024
$
$
$
$
(292 )
$
$
Table of Contents
See accompanying notes.
7
HENRY SCHEIN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY
(in millions, except share data)
(unaudited)
Accumulated
Common Stock
Additional
Other
Total
$0.01 Par Value
Paid-in
Retained
Comprehensive
Noncontrolling
Stockholders'
Shares
Amount
Capital
Earnings
Income / (Loss)
Equity
Balance, December 28, 2024
$
$
$
$
(379 )
$
$
Net income (excluding loss of $
noncontrolling interests)
-
-
-
-
Foreign currency translation gain (excluding gain of $
attributable to Redeemable noncontrolling interests)
-
-
-
-
Unrealized loss from hedging activities,
net of tax benefit of $
-
-
-
-
(26 )
-
(26 )
Pension adjustment gain, net of tax of $
-
-
-
-
-
-
-
Distributions to noncontrolling shareholders
-
-
-
-
-
(7 )
(7 )
Purchase of noncontrolling interests
-
-
(1 )
-
-
(1 )
(2 )
Change in fair value of redeemable securities
-
-
(38 )
-
-
-
(38 )
Noncontrolling interests and adjustments related to
business acquisitions and contingent consideration
-
-
(60 )
-
-
(1 )
(61 )
Issuance of common stock
-
-
-
-
Repurchase and retirement of common stock
(5,913,317 )
-
(82 )
(368 )
-
-
(450 )
Stock issued upon exercise of stock options
-
-
-
-
Stock-based compensation expense
-
-
-
-
Shares withheld for payroll taxes
(193,300 )
-
(14 )
-
-
-
(14 )
Settlement of stock-based compensation awards
-
-
-
-
-
-
Transfer of charges in excess of capital
-
-
(114 )
-
-
-
Balance, June 28, 2025
$
$
$
$
(227 )
$
$
Accumulated
Common Stock
Additional
Other
Total
$0.01 Par Value
Paid-in
Retained
Comprehensive
Noncontrolling
Stockholders'
Shares
Amount
Capital
Earnings
Income / (Loss)
Equity
Balance, December 30, 2023
$
$
$
$
(206 )
$
$
Net income (excluding loss of $
noncontrolling interests)
-
-
-
-
Foreign currency translation gain (excluding loss of $
attributable to Redeemable noncontrolling interests)
-
-
-
-
(101 )
-
(101 )
Unrealized gain from hedging activities,
net of tax of $
-
-
-
-
-
Distributions to noncontrolling shareholders
-
-
-
-
-
(5 )
(5 )
Change in fair value of redeemable securities
-
-
(81 )
-
-
-
(81 )
Noncontrolling interests and adjustments related to
business acquisitions
-
-
(10 )
-
-
-
(10 )
Repurchase and retirement of common stock
(2,414,434 )
-
(24 )
(152 )
-
-
(176 )
Stock issued upon exercise of stock options
-
-
-
-
Stock-based compensation expense
-
-
-
-
Shares withheld for payroll taxes
(108,163 )
-
(9 )
-
-
-
(9 )
Settlement of stock-based compensation awards
-
-
-
-
-
-
Transfer of charges in excess of capital
-
-
(102 )
-
-
-
Balance, June 29, 2024
$
$
$
$
(292 )
$
$
Table of Contents
See accompanying notes.
8
HENRY SCHEIN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Six Months Ended
June 28,
June 29,
2025
2024
Cash flows from operating activities:
Net income
$
$
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Impairment charge on intangible assets
Non-cash restructuring charges
Stock-based compensation expense
Provision for losses on trade and other accounts receivable
Benefit from deferred income taxes
(7 )
(19 )
Equity in earnings of affiliates
(7 )
(9 )
Distributions from equity affiliates
Changes in unrecognized tax benefits
(1 )
Other
(31 )
(9 )
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable
(100 )
Inventories
(29 )
Other current assets
Accounts payable and accrued expenses
(94 )
(292 )
Net cash provided by operating activities
Cash flows from investing activities:
Purchases of property and equipment
(63 )
(78 )
Payments related to equity investments and business acquisitions,
net of cash acquired
(101 )
(181 )
Proceeds from loan to affiliate
Capitalized software costs
(26 )
(20 )
Other
(9 )
(5 )
Net cash used in investing activities
(197 )
(281 )
Cash flows from financing activities:
Net change in bank credit lines
Proceeds from issuance of long-term debt
Principal payments for long-term debt
(21 )
(177 )
Debt issuance costs
(2 )
Proceeds from issuance of stock upon exercise of stock options
Payments for repurchases and retirement of common stock
(447 )
(175 )
Issuance of common stock
Payments for taxes related to shares withheld for employee taxes
(14 )
(8 )
Distributions to noncontrolling shareholders
(18 )
(28 )
Payments for contingent consideration
(19 )
Acquisitions of noncontrolling interests in subsidiaries
(77 )
(211 )
Net cash provided by (used in) financing activities
(265 )
Effect of exchange rate changes on cash and cash equivalents
(82 )
Net change in cash and cash equivalents
(33 )
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
$
$
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
9
Note 1 – Basis of Presentation
Our condensed consolidated financial statements include the accounts of Henry Schein, Inc., and all of our
controlled subsidiaries and VIE (“we”, “us” and “our”). All intercompany accounts and transactions are eliminated
in consolidation. Investments in unconsolidated affiliates for which we have the ability to influence the operating
or financial decisions are accounted for under the equity method. Certain prior period amounts have been
reclassified to conform to the current period presentation. These reclassifications, individually and in the
aggregate, did not have a material impact on our condensed consolidated financial condition, results of operations
or cash flows.
Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnote disclosures required by U.S. GAAP for complete financial statements.
The unaudited interim condensed consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and notes to the consolidated financial statements contained in our Annual Report
on Form 10-K for the year ended December 28, 2024 and with the information contained in our other publicly-
available filings with the Securities and Exchange Commission. The condensed consolidated financial statements
reflect all adjustments considered necessary for a fair presentation of the consolidated results of operations and
financial position for the interim periods presented. All such adjustments are of a normal recurring nature.
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in
the United States requires us to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The results of operations for the three and six months ended June 28, 2025 are not necessarily indicative of the
results to be expected for any other interim period or for the year ending December 27, 2025.
Our condensed consolidated financial statements reflect estimates and assumptions made by us that affect, among
other things, our goodwill, long-lived asset and definite-lived intangible asset valuation; inventory valuation; equity
investment valuation; assessment of the annual effective tax rate; valuation of deferred income taxes and income
tax contingencies; the allowance for credit losses; hedging activity; supplier rebates; measurement of compensation
cost for certain share-based performance awards and cash bonus plans; and pension plan assumptions.
The primary beneficiary of a VIE is required to consolidate the assets and liabilities of the VIE. We are deemed to
be the primary beneficiary of the VIE when we have the power to direct activities that most significantly affect its
economic performance and have the obligation to absorb the majority of its losses or the right to receive benefits
that could potentially be significant to the VIE. In determining whether we are the primary beneficiary, we
consider factors such as ownership interest, debt investments, management representation, authority to control
decisions, and contractual and substantive participating rights of each party. For this VIE, related to our U.S. trade
accounts receivable securitization as discussed in
Note 8 – Debt
,
the trade accounts receivable transferred to the
VIE are pledged as collateral to the related debt. The VIE’s creditors have recourse to us for losses on these trade
accounts receivable. At June 28, 2025 and December 28, 2024, certain trade accounts receivable that can only be
used to settle obligations of this VIE were $
VIE where the creditors have recourse to us were $
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
10
Note 2 – Significant Accounting Policies and Recently Issued Accounting Standards
Significant Accounting Policies
There have been no material changes in our significant accounting policies during the three and six months ended
June 28, 2025, as compared to the significant accounting policies described in Item 8 of our Annual Report on
Form 10-K for the year ended December 28, 2024.
Recently Issued Accounting Standards
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) 2024-03, “
Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure
(Subtopic 220-40)
:
Disaggregation of Income Statement Expenses
,” which requires additional disclosure about the
specific expense categories in the notes to financial statements at interim and annual reporting periods. The
amendments in this ASU do not change or remove current expense disclosure requirements, but affect where this
information appears in the notes to financial statements. This ASU is effective for annual reporting periods
beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early
adoption permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. We are currently
evaluating the impact that ASU 2024-03 will have on our condensed consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, “
Income Taxes (Topic 740): Improvements to Income Tax
Disclosures
,” which requires public business entities to disclose additional information in specified categories with
respect to the reconciliation of the effective tax rate to the statutory rate for federal, state and foreign income taxes.
It also requires greater detail about individual reconciling items in the rate reconciliation to the extent the impact of
those items exceeds a specified threshold. In addition to new disclosures associated with the rate reconciliation, the
ASU requires information pertaining to taxes paid (net of refunds received) to be disaggregated for federal, state
and foreign taxes and further disaggregated for specific jurisdictions to the extent the related amounts exceed a
quantitative threshold. The ASU also describes items that need to be disaggregated based on their nature, which is
determined by reference to the item’s fundamental or essential characteristics, such as the transaction or event that
triggered the establishment of the reconciling item and the activity with which the reconciling item is associated.
The ASU eliminates the historic requirement that entities disclose information concerning unrecognized tax
benefits having a reasonable possibility of significantly increasing or decreasing in the 12 months following the
reporting date. This ASU is effective for annual periods beginning after December 15, 2024. We are currently
evaluating the impact that ASU 2023-09 will have on our consolidated financial statements.
Note 3 – Cyber Incident
In October 2023 Henry Schein experienced a cyber incident that primarily affected the operations of our North
American and European dental and medical distribution businesses. Henry Schein One, our practice management
software, revenue cycle management and patient relationship management solutions business, was not affected, and
our manufacturing businesses were mostly unaffected. On November 22, 2023, we experienced a disruption of our
ecommerce platform and related applications, which was remediated.
With respect to the October 2023 cyber incident, we have a $
retention. During the three and six months ended June 28, 2025, we did
t incur any expenses directly related to
the cyber incident. During the three and six months ended June 29, 2024 we incurred $
respectively, of expenses related to the cyber incident, mostly consisting of professional fees. During the three and
six months ended June 29, 2024, we received insurance proceeds of $
recovery of losses related to the cyber incident. During the three months ended March 29, 2025 we received
insurance proceeds of $
to the cyber incident. The expenses and insurance recoveries related to the cyber incident are included in the
selling, general and administrative line in our condensed consolidated statements of income.
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
11
Note 4 – Net Sales from Contracts with Customers
Net sales are recognized in accordance with policies disclosed in Item 8 of our Annual Report on Form 10-K for
the year ended December 28, 2024.
Disaggregation of Net Sales
As noted further in
Note 5 – Segment Data
,
during the fourth quarter of our fiscal year ended December 28,
2024, we revised our reportable segments to align with how the Chairman and Chief Executive Officer manages
the business, assesses performance and allocates resources. All prior comparative segment information has
been recast to reflect our new segment structure.
The following table disaggregates our net sales by reportable segment:
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Net Sales:
Global Distribution and Value -Added Services
Global Dental merchandise
$
$
$
$
Global Dental equipment
Global Value -added services
Global Dental
Global Medical
Total Global Distribution and Value -Added Services
Global Specialty Products
Global Technology
Eliminations
(44 )
(44 )
(81 )
(82 )
Total
$
$
$
$
Contract Liabilities
The following table presents our contract liabilities:
As of
June 28,
December 28,
June 29,
December 30,
Description
2025
2024
2024
2023
Current contract liabilities
$
$
$
Non-current contract liabilities
Total contract liabilities
$
$
$
During the six months ended June 28, 2025, we recognized, in net sales, $
previously deferred at December 28, 2024. During the six months ended June 29, 2024, we recognized in net sales
$
included in accrued expenses: other and the non-current contract liabilities are included in other liabilities within
our condensed consolidated balance sheets.
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
12
Note 5
Segment Data
During the fourth quarter of our fiscal year ended December 28, 2024, we revised our reportable segments to align
with how the Chairman and Chief Executive Officer manages the business, assesses performance and allocates
resources. Our revised reportable segments now consist of: (i) Global Distribution and Value -Added Services; (ii)
Global Specialty Products; and (iii) Global Technology. These segments offer different products and services to
the same customer base. All prior comparative segment information has been recast to reflect our new segment
structure.
We aggregate operating segments into these reportable segments based on economic similarities, the nature of their
products, customer base and methods of distribution.
Global Distribution and Value-Added Services includes distribution to the global dental and medical markets of
national brand and corporate brand merchandise, as well as equipment and related technical services. This segment
also includes value-added services such as financial services, continuing education services, consulting and other
services. This segment also markets and sells under our own corporate brand a portfolio of cost-effective, high-
quality consumable merchandise. Global Specialty Products includes manufacturing, marketing and sales of dental
implant and biomaterial products; and endodontic, orthodontic and orthopedic products and other health care-
related products and services. Global Technology includes development and distribution of practice management
software, e-services and other products, which are distributed to health care providers.
Our organizational structure also includes Corporate, which consists primarily of income and expenses associated
with support functions and projects.
Our chief operating decision maker (“CODM”) is our Chairman and Chief Executive Officer. Our CODM uses
adjusted operating income as the profitability metric for purposes of making decisions about allocation of resources
to each segment and assessing performance of each segment. Adjusted operating income provides a measure of our
underlying segment results that is in line with our approach to risk and performance management. We define
adjusted operating income as operating income adjusted to exclude (a) direct cybersecurity costs and related
insurance recovery proceeds, (b) amortization of acquisition intangibles, (c) organizational restructuring expenses,
(d) impairment of intangible assets, (e) changes in fair value of contingent consideration, (f) litigation settlements,
and (g) costs associated with shareholder advisory matters and select value creation consulting costs. These
adjustments are either: (i) non-cash or non-recurring in nature; (ii) not allocable or controlled by the segment; or
(iii) not tied to the operational performance of the segment. Assets by segment are not a measure used to assess the
performance of the Company by CODM and thus are not reported in our disclosures.
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
13
Segment adjusted operating income is presented in the following table to reconcile to operating income as
presented on the condensed consolidated statement of operations. The reconciliation from operating income to
income before taxes and equity in earnings of affiliates is presented on our condensed consolidated statements of
income.
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Gross Sales:
Global Distribution and Value -Added Services
(1)
$
$
$
$
Global Specialty Products
(2)
Global Technology
(3)
Total Gross Sales
Less: Eliminations:
Global Distribution and Value -Added Services
(4 )
(13 )
(8 )
(21 )
Global Specialty Products
(40 )
(31 )
(73 )
(61 )
Global Technology
Total Eliminations
(44 )
(44 )
(81 )
(82 )
Net Sales
Global Distribution and Value -Added Services
Global Specialty Products
Global Technology
Total Net Sales
Segment Cost of Sales
(4)
Global Distribution and Value -Added Services
Global Specialty Products
Global Technology
Total Segment Cost of Sales
Segment Operating Expenses
(5)
Global Distribution and Value -Added Services
Global Specialty Products
Global Technology
Total Segment Operating Expenses
Segment Operating Income
Global Distribution and Value -Added Services
Global Specialty Products
Global Technology
Total Segment Operating Income
Corporate, net
(31 )
(8 )
(66 )
(30 )
Adjustments
(6)
(74 )
(83 )
(129 )
(159 )
Total Operating Income
$
$
$
$
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Depreciation and Amortization
Global Distribution and Value -Added Services
$
$
$
$
Global Specialty Products
Global Technology
Total Depreciation and Amortization
$
$
$
$
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
14
(1)
Global Distribution and Value -Added Services: Includes distribution of infection-control products, handpieces, preventatives,
impression materials, composites, anesthetics, teeth, gypsum, acrylics, articulators, abrasives, personal protective equipment
(“PPE”) products, branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, dental chairs, delivery units
and lights, digital dental laboratories, X-ray supplies and equipment, high-tech and digital restoration equipment, equipment repair
services, financial services on a non-recourse basis, continuing education services for practitioners, consulting and other services.
This segment also markets and sells under our own corporate brand a portfolio of cost-effective, high-quality consumable
merchandise.
(2)
Global Specialty Products: Includes manufacturing, marketing and sales of dental implant and biomaterial products; and
endodontic, orthodontic and orthopedic products and other health care-related products and services.
(3)
Global Technology: Includes development and distribution of practice management software, e-services and other products, which
are distributed to health care providers.
(4)
Cost of goods sold in our Global Distribution and Value-Added Services segment and our Global Specialty Products segment
includes product cost and inbound and outbound freight charges. Cost of goods sold in our Global Technology segment consists
primarily of software development and third-party provider costs, including technology use and hosting fees.
(5)
Significant segment operating expenses for our reportable segments and Corporate include primarily compensation costs, and to a
lesser extent, rent, depreciation and maintenance costs related to operating our facilities.
(6)
Adjustments represent items excluded from segment operating income to enable comparison of financial results between periods.
The following table presents a breakdown of such adjustments:
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Adjustments:
Restructuring costs
$
(23 )
$
(15 )
$
(48 )
$
(25 )
Acquisition intangible amortization
(44 )
(47 )
(87 )
(93 )
Cyber incident-insurance proceeds, net of third-party advisory
expenses
Change in contingent consideration
(23 )
(38 )
Litigation settlements
(1 )
(5 )
(1 )
(5 )
Impairment of intangible assets
(1 )
Costs associated with shareholder advisory matters and select
value creation consulting costs
(6 )
(14 )
Total adjustments
$
(74 )
$
(83 )
$
(129 )
$
(159 )
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
15
Note 6
Business Acquisitions
Our acquisition strategy is focused on investments in companies that add new customers and sales teams, increase
our geographic footprint (whether entering a new country, such as emerging markets, or building scale where we
have already invested in businesses), and finally, those that enable us to access new products and technologies.
2025 Acquisitions
During the six months ended June 28, 2025, we acquired companies within the Global Distribution and Value-
Added Services and Global Specialty Products segments. We acquired ownership interest in these companies
ranging from
% to
%.
The following table aggregates the preliminary estimated fair value, as of the date of the acquisition, of
consideration paid and net assets acquired for acquisitions during the six months ended June 28, 2025:
Preliminary
Allocation as of
June 28, 2025
Acquisition consideration:
Cash
$
Deferred consideration
Estimated fair value of contingent consideration payable
Fair value of previously held equity method investment
Noncontrolling interests
Total consideration
$
Identifiable assets acquired and liabilities assumed:
Current assets
$
Intangible assets
Other noncurrent assets
Current liabilities
(2 )
Deferred income taxes
(11 )
Other noncurrent liabilities
(4 )
Total identifiable net assets
Goodwill
Total net assets acquired
$
The accounting for acquisitions in the six months ended June 28, 2025 has not been completed in several areas,
including, but not limited to, pending assessment of certain assets, including identifiable intangibles, and liabilities.
Goodwill is a result of the synergies and cross-selling opportunities that these acquisitions are expected to provide
for us, as well as the expected growth potential. The majority of the acquired goodwill is not deductible for tax
purposes.
The impact of these acquisitions, individually and in the aggregate, was not considered material to our condensed
consolidated financial statements.
Pro forma financial information since the acquisition date has not been presented because the impact of these
acquisitions was immaterial to our condensed consolidated financial statements.
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
16
The following table summarizes the intangible assets acquired during the six months ended June 28, 2025:
2025
Weighted Average Useful
Lives (in years)
Customer relationships and lists
Trademarks / Tradenames
Patents
Non-compete agreements
Total
$
The impact of these acquisitions, individually and in the aggregate, was not considered material to our condensed
consolidated financial statements.
Pro forma financial information since the acquisition date has not been presented because the impact of these
acquisitions was immaterial to our condensed consolidated financial statements.
2024 Acquisitions
Acquisition of TriMed
On April 1, 2024, we acquired a
% voting equity interest in TriMed Inc. (“TriMed”), a global developer of
solutions for the orthopedic treatment of lower and upper extremities, headquartered in California, for consideration
of $
December 28, 2024, we completed the accounting for this acquisition.
The following table aggregates the final fair value, as of the date of the acquisition, of consideration paid and net
assets acquired in the TriMed acquisition:
Final Allocation
Acquisition consideration:
Cash
$
Deferred consideration
Redeemable noncontrolling interests
Total consideration
$
Identifiable assets acquired and liabilities assumed:
Current assets
$
Intangible assets
Other noncurrent assets
Current liabilities
(7 )
Deferred income taxes
(62 )
Other noncurrent liabilities
(6 )
Total identifiable net assets
Goodwill
Total net assets acquired
$
Goodwill is a result of synergies that are expected to originate from the acquisition as well as the expected growth
potential of TriMed. The acquired goodwill is not deductible for tax purposes.
The intangible assets acquired consisted of product development of $
million, and in-process research and development of $
intangible assets were
development (“IPR&D”), intangible assets acquired as a result of the TriMed acquisition are being amortized over
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
17
their estimated useful lives using the straight-line method of amortization. IPR&D is accounted for as an
indefinite-lived intangible asset and is not amortized until completion or abandonment of the associated research
and development efforts. IPR&D is tested for impairment annually or periodically if an indicator of impairment
exists during the period until completion.
Pro forma financial information and TriMed’s revenue and earnings since the acquisition date have not been
presented because the impact of the TriMed acquisition was immaterial to our condensed consolidated financial
statements.
Other 2024 Acquisitions
During the year ended December 28, 2024, we acquired companies within the Global Distribution and Value-
Added Services and Global Specialty Products segments. Our acquired ownership interest in these companies
range from
% to
%. Total consideration for these acquisitions was $
million, fair value of previously held equity investment of $
estimated fair value of contingent consideration payable of $
Net assets acquired primarily consisted of $
intangible assets acquired consisted of customer relationships and lists of $
of $
useful lives for these acquired intangible assets were
During the three and six months ended June 28, 2025 we completed the accounting for all acquisitions that occurred
in the year ended December 28, 2024. We did not record material adjustments in our condensed consolidated
financial statements relating to changes in estimated values of assets acquired, liabilities assumed or contingent
consideration assets and liabilities in respect to these acquisitions.
Goodwill is a result of the synergies and cross-selling opportunities that these acquisitions are expected to provide
for us, as well as the expected growth potential. The majority of the acquired goodwill is not deductible for tax
purposes.
Pro forma financial information for our 2024 acquisitions has not been presented because the impact of the
acquisitions was immaterial to our condensed consolidated financial statements.
Acquisition Costs
During the three and six months ended June 28, 2025, we incurred $
respectively. During the three and six months ended June 29, 2024, we incurred $
acquisition costs, respectively. These costs are included in selling, general and administrative in our condensed
consolidated statements of income.
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
18
Note 7 – Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value hierarchy distinguishes between
(1) market participant assumptions developed based on market data obtained from independent sources (observable
inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best
information available in the circumstances (unobservable inputs).
The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices
in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
The three levels of the fair value hierarchy are described as follows:
• Level 1— Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the
measurement date.
• Level 2— Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly. Level 2 inputs include: quoted prices for similar assets or liabilities in active markets;
quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted
prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
• Level 3— Inputs that are unobservable for the asset or liability.
The following section describes the fair values of our financial instruments and the methodologies that we used to
measure their fair values.
Investments and notes receivable
There are no quoted market prices available for investments in unconsolidated affiliates and notes receivable.
Certain of our notes receivable contain variable interest rates. We believe the carrying amounts of the notes
receivable are a reasonable estimate of fair value based on the interest rates in the applicable markets. Our notes
receivable fair value is based on Level 3 inputs within the fair value hierarchy.
Debt
The fair value of our debt (including bank credit lines, current maturities of long-term debt and long-term debt) is
based on Level 3 inputs within the fair value hierarchy, and as of June 28, 2025 and December 28, 2024 was
estimated at $
value of our debt include market conditions, such as interest rates and credit spreads.
Derivative contracts
Derivative contracts are valued using quoted market prices and significant other observable inputs. Our derivative
instruments primarily include foreign currency forward contracts, interest rate swaps and total return swaps.
The fair values for the majority of our foreign currency derivative contracts are obtained by comparing our contract
rate to a published forward price of the underlying market rates, which are based on market rates for comparable
transactions that are classified within Level 2 of the fair value hierarchy.
The fair value of the interest rate swap, which is classified within Level 2 of the fair value hierarchy, is determined
by comparing our contract rate to a forward market rate as of the valuation date.
The fair value of total return swaps is determined by valuing the underlying exchange traded funds of the swap
using market-on-close pricing by industry providers as of the valuation date that are classified within Level 2 of the
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
19
fair value hierarchy.
Redeemable noncontrolling interests
The values for redeemable noncontrolling interests are based on recent transactions and/or implied multiples of
earnings that are classified within Level 3 of the fair value hierarchy.
Note 13 – Redeemable Noncontrolling
Interests
Intangible Assets
Assets measured on a non-recurring basis at fair value include intangibles. Inputs for measuring intangibles are
classified as Level 3 within the fair value hierarchy.
Defined Benefit Plans
Assets of our defined benefit plans are measured on a recurring basis and are classified as Level 1 within the fair
value hierarchy.
Contingent Consideration
We estimate the fair value of contingent consideration payments as part of the acquisition price and record the
estimated fair value of contingent consideration as a liability on our condensed consolidated balance sheet. For
transactions accounted for as business combinations, subsequent changes in the estimated fair value of contingent
consideration payments are included in selling, general and administrative expenses in our condensed consolidated
statements of income
Note 6 – Business Acquisitions
)
.
For transactions involving changes in our ownership in
subsidiaries without a change in our control, subsequent changes in the estimated fair value of contingent
consideration payments are recognized in additional paid-in capital in our condensed consolidated balance sheet.
During the three months ended June 28, 2025, we recognized contingent consideration due to the acquisition of a
noncontrolling interest in a subsidiary of $
payment of $
to the acquisitions of noncontrolling interests in subsidiaries of $
million, and a net change in fair value of $
general and administrative line of the condensed consolidated income statement and $
reflected in the equity section of our condensed consolidated balance sheet. During the six months ended June 28,
2025, we also recognized payments of $
We measure contingent consideration at the fair value on a recurring basis using significant unobservable inputs
classified as Level 3 of the fair value hierarchy. We use various valuation techniques, including the Monte Carlo
simulation and probability-weighted scenarios, to determine the fair value of the contingent consideration liabilities
on the acquisition date and at each reporting period. Our fair value measurement inputs include expected operating
performance, discount and risk-free rates, and credit spread.
The components of the change in the fair value of contingent consideration for the six months ended June 28, 2025
and June 29, 2024 are presented in the following table:
June 28,
June 29,
2025
2024
Balance, beginning of period
$
$
Increase in contingent consideration due to business acquisitions and acquisitions of
noncontrolling interests in subsidiaries
Decrease in contingent consideration due to payments
(19 )
Change in fair value of contingent consideration
Balance, end of period
$
$
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
20
The following table presents our assets and liabilities that are measured and recognized at fair value on a recurring
basis classified under the appropriate level of the fair value hierarchy as of June 28, 2025 and December 28, 2024:
June 28, 2025
Level 1
Level 2
Level 3
Total
Assets:
Derivative contracts designated as hedges
$
$
$
$
Derivative contracts undesignated
Total return swap
Total assets
$
$
$
$
Liabilities:
Derivative contracts designated as hedges
$
$
$
$
Derivative contracts undesignated
Contingent consideration
Total liabilities
$
$
$
$
Redeemable noncontrolling interests
$
$
$
$
December 28, 2024
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 swap
Contingent consideration
Total liabilities
$
$
$
$
Redeemable noncontrolling interests
$
$
$
$
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
21
Note 8 – Debt
Bank Credit Lines
Bank credit lines consisted of the following:
June 28,
December 28,
2025
2024
Revolving credit agreement
$
$
Other short-term bank credit lines
Total
$
$
Revolving Credit Agreement
On
, we entered into a $
which was amended and restated on
interest rate provisions to reflect the current market approach for a multicurrency facility. On June 6, 2025, we
amended and restated the Revolving Credit Agreement to, among other things, modify certain financial definitions
and covenants. The interest rate on this revolving credit facility is based on Term Secured Overnight Financing
Rate (“
Term SOFR
”) plus a spread based on our leverage ratio at the end of each financial reporting quarter. As of
June 28, 2025 the interest rate on this revolving credit facility was
% plus
% for a combined rate of
%.
As of December 28, 2024 the interest rate on this revolving credit facility was
% plus
%, for a combined
rate of
%.
The Revolving Credit Agreement requires, among other things, that we maintain certain maximum leverage ratios.
Additionally, the Revolving Credit Agreement contains customary representations, warranties and affirmative
covenants as well as customary negative covenants, subject to negotiated exceptions, on liens, indebtedness,
significant corporate changes (including mergers), dispositions and certain restrictive agreements. As of June 28,
2025 and December 28, 2024, we had $
credit facility. During the six months ended June 28, 2025, the average outstanding balance under the Revolving
Credit Agreement was approximately $
million and $
Agreement.
Other Short-Term Bank Credit Lines
As of June 28, 2025 and December 28, 2024, we had various other short-term bank credit lines available, in various
currencies, with a maximum borrowing capacity of $
2025 and December 28, 2024, $
months ended June 28, 2025, the average outstanding balances under our various other short-term bank credit lines
was approximately $
bank credit lines had weighted average interest rates of
% and
%, respectively.
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
22
Long-term debt
Long-term debt consisted of the following:
June 28,
December 28,
2025
2024
Private placement facilities
$
$
Term loan
U.S. trade accounts receivable securitization
Various collateralized and uncollateralized loans payable with interest,
in varying installments through 2031 at interest rates
from
% to
% at June 28, 2025 and
from
% to
% at December 28, 2024
Finance lease obligations
Total
Less current maturities
(27 )
(56 )
Total long-term debt
$
$
Private Placement Facilities
Our private placement facilities provided by
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
. 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
than
). The proceeds of any issuances under the facilities will be used for general corporate purposes,
including working capital and capital expenditures, to refinance existing indebtedness, and/or to fund potential
acquisitions. The agreements provide, among other things, that we maintain certain maximum leverage ratios, and
contain restrictions relating to subsidiary indebtedness, liens, affiliate transactions, disposal of assets and certain
changes in ownership. These facilities contain make-whole provisions in the event that we pay off the facilities
prior to the applicable due dates.
The components of our private placement facility borrowings as of June 28, 2025, which have a weighted average
interest rate of
%, are presented in the following table:
Amount of
Date of
Borrowing
Borrowing
Borrowing
Outstanding
Rate
Due Date
$
%
Total
$
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
23
The components of our private placement facility borrowings as of December 28, 2024, which have a weighted
average interest rate of
%, are presented in the following table:
Amount of
Date of
Borrowing
Borrowing
Borrowing
Outstanding
Rate
Due Date
$
%
Total
$
Term Loan
On July 11, 2023, we entered into a
three-year
Agreement”), which was originally scheduled to mature on
. On June 6, 2025, this agreement was
amended and restated to, among other things, (i) extend the maturity date to
, and (ii) modify certain
financial definitions and covenants. The interest rate on this term loan is based on the
Term SOFR
based on our leverage ratio at the end of each financial reporting quarter. Beginning in June 2026 and continuing
through June 2027, we are required to make quarterly payments of $
payment amount increases to $
2030. As of June 28, 2025, the borrowings outstanding under this term loan were $
the interest rate under the Term Credit Agreement was
% plus
%, for a combined rate of
%. As of
December 28, 2024, the borrowings outstanding under this term loan were $
the interest rate under the Term Credit Agreement was
% plus
%, for a combined rate of
%. However,
at December 28, 2024, we had a hedge in place creating an effective fixed rate of
%. After renewing the Term
Credit Agreement in June of 2025, our hedged portion of the Term Credit Agreement was approximately
% of
the notional total. As of June 28, 2025, the effective fixed rate was
% and the floating rate was
%,
resulting in a weighted average rate of
%. The Term Credit Agreement requires, among other things, that we
maintain certain maximum leverage ratios. Additionally, the Term Credit Agreement contains customary
representations, warranties and affirmative covenants as well as customary negative covenants, subject to
negotiated exceptions, on liens, indebtedness, significant corporate changes (including mergers), dispositions and
certain restrictive agreements.
U.S. Trade Accounts Receivable Securitization
We have a facility agreement based on our U.S. trade accounts receivable that is structured as an asset-backed
securitization program with pricing committed for up to
. On December 6, 2024, we extended the
expiration date of this facility agreement to
).
This facility agreement has a purchase limit of $
As of June 28, 2025 and December 28, 2024, the borrowings outstanding under this securitization facility were
$
was based on the
asset-backed commercial paper rate
% plus
%, for a combined rate of
%. At
December 28, 2024, the interest rate on borrowings under this facility was based on the asset-backed commercial
paper rate of
% plus
%, for a combined rate of
%.
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
24
If our accounts receivable collection pattern changes due to customers either paying late or not making payments,
our ability to borrow under this facility may be reduced. We are required to pay a commitment fee of
points depending upon program utilization.
Note 9 – Income Taxes
For the three months ended June 28, 2025, our effective tax rate was
%, compared to
% for the prior year
period. The difference between our effective and federal statutory tax rates primarily relates to state and foreign
income taxes and interest expense.
For the six months ended June 28, 2025, our effective tax rate was
%, compared to
% for the prior year
period. The difference between our effective tax rate and the federal statutory tax rate is primarily due to state and
foreign income taxes and interest expense.
On July 4, 2025, after the end of the second quarter (June 28, 2025), President Trump signed the reconciliation tax
bill, commonly known as the “One Big Beautiful Bill Act” (OBBBA), into law. This includes significant changes
to corporate tax rates, limitations on certain deductions and modifications to international tax provisions. We are
currently assessing the impact of the OBBBA on our consolidated financial statements.
The “Organization of Economic Co-Operation and Development” (OECD) issued technical and administrative
guidance on Pillar Two rules in December 2021, which provides for a global minimum tax rate on the earnings of
large multinational businesses on a country-by-country basis. Effective January 1, 2024, the minimum global tax
rate is 15% for various jurisdictions pursuant to the Pillar Two rules. Future tax reform resulting from these
developments may result in changes to long-standing tax principles, which may adversely impact our effective tax
rate going forward or result in higher cash tax liabilities. As of June 28, 2025, the impact of the Pillar Two rules to
our financial statements was immaterial.
The total amount of unrecognized tax benefits, which are included in “other liabilities” within our condensed
consolidated balance sheets, as of June 28, 2025 and December 28, 2024 was $
respectively, of which $
It is possible that the amount of unrecognized tax benefits will change in the next 12 months, which may result in a
material impact on our condensed consolidated statements of income.
All tax returns audited by the IRS are officially closed through 2020. The tax years subject to examination by the
IRS include years 2021 and forward. In addition, limited positions reported in the 2017 tax year are subject to IRS
examination.
The amount of tax interest expense included as a component of the provision for taxes was $
million for the three months ended June 28, 2025 and June 29, 2024, respectively. The amount of tax interest
expense included as a component of the provision for taxes was $
June 28, 2025 and June 29, 2024, respectively. The total amount of accrued interest is included in other liabilities
within our consolidated balance sheets, and was $
28, 2024. The amount of penalties accrued for during the periods presented was not material to our condensed
consolidated financial statements.
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
25
Note 10 – Plans of Restructuring
On August 6, 2024, we committed to a new restructuring plan (the “2024 Plan”) to integrate recent acquisitions,
right-size operations and further increase efficiencies. During the three and six months ended June 28, 2025, we
recorded restructuring charges associated with the 2024 Plan of $
primarily related to severance and employee-related costs, accelerated amortization of right-of-use assets and fixed
assets, and other exit costs. We expect to record restructuring charges associated with the 2024 Plan through the
end of 2025; however, an estimate of the amount of these charges has not yet been determined.
On August 1, 2022, we committed to a restructuring plan (the “2022 Plan”) focused on funding the priorities of the
BOLD+1 strategic plan, streamlining operations and other initiatives to increase efficiency. The 2022 Plan has
been completed as of July 31, 2024. During the three and six months ended June 29, 2024, in connection with our
2022 Plan, we recorded restructuring costs of $
severance and employee-related costs, accelerated amortization of right-of-use assets and fixed assets, and other
exit costs.
Restructuring costs recorded for the three and six months ended June 28, 2025 and June 29, 2024 in connection
with the 2024 Plan and 2022 Plan, respectively, consisted of the following:
Three Months Ended June 28, 2025
Global Distribution
and Value-Added
Services
Global
Specialty
Products
Global
Technology
Corporate
Total
2024 Plan
Severance and employee-related costs
$
$
$
$
$
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
Restructuring costs-2024 Plan
$
$
$
$
$
Three Months Ended June 29, 2024
Global Distribution
and Value-Added
Services
Global
Specialty
Products
Global
Technology
Corporate
Total
2022 Plan
Severance and employee-related costs
$
$
$
$
$
Impairment and accelerated depreciation and amortization
of right-of-use lease assets and other long-lived assets
Exit and other related costs
Restructuring costs-2022 Plan
$
$
$
$
$
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
26
Six Months Ended June 28, 2025
Global Distribution
and Value-Added
Services
Global
Specialty
Products
Global
Technology
Corporate
Total
2024 Plan
Severance and employee-related costs
$
$
$
$
$
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
Restructuring costs-2024 Plan
$
$
$
$
$
Six Months Ended June 29, 2024
Global Distribution
and Value-Added
Services
Global
Specialty
Products
Global
Technology
Corporate
Total
2022 Plan
Severance and employee-related costs
$
$
$
$
$
Impairment and accelerated depreciation and amortization
of right-of-use lease assets and other long-lived assets
(3 )
Exit and other related costs
Restructuring costs-2022 Plan
$
$
$
$
(1 )
$
The following table summarizes, by plan year the activity related to the liabilities associated with our restructuring
initiatives under the 2022 Plan and the 2024 Plan for the six months ended June 28, 2025. The remaining accrued
balance of restructuring costs as of June 28, 2025, which primarily relates to severance and employee-related costs,
is included in accrued expenses: other within our condensed consolidated balance sheets. Liabilities related to
exited leased facilities are recorded within our current and non-current operating lease liabilities within our
condensed consolidated balance sheets.
2022 Plan
2024 Plan
Total
Balance, December 28, 2024
$
$
$
Restructuring costs
Non-cash impairment, accelerated depreciation and
amortization
(3 )
(3 )
Cash payments and other adjustments
(8 )
(31 )
(39 )
Balance, June 28, 2025
$
$
$
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
27
Note 11 – Legal Proceedings
Henry Schein, Inc. has been named as a defendant in multiple opioid related lawsuits (currently less than one-
hundred (
); one or more of Henry Schein, Inc.’s subsidiaries is also named as a defendant in a number of those
cases). Generally, the lawsuits allege that the manufacturers of prescription opioid drugs engaged in a false
advertising campaign to expand the market for such drugs and their own market share and that the entities in the
supply chain (including Henry Schein, Inc. and its subsidiaries) reaped financial rewards by refusing or otherwise
failing to monitor appropriately and restrict the improper distribution of those drugs. These actions consist of some
that have been consolidated within the MultiDistrict Litigation (“MDL”) proceeding In Re National Prescription
Opiate Litigation (MDL No. 2804; Case No. 17-md-2804) and are currently stayed, and others which remain
pending in state courts and are proceeding independently and outside of the MDL. We have reached a settlement
agreement in principle with hospital plaintiffs in
Center (and other hospitals) in Florida state court, which was scheduled for trial in September 2025, for an
immaterial amount. That trial has been stayed as to Henry Schein pending finalization of the settlement agreement.
We have also agreed to settle
Finalization of the settlement agreement in those cases is pending. Of Henry Schein’s 2024 net sales of
approximately $
four
-tenths of 1 percent. Opioids represent a
negligible part of our business. We intend to defend ourselves vigorously against these actions.
From time to time, we may become a party to other legal proceedings, including, without limitation, product
liability claims, employment matters, commercial disputes, governmental inquiries and investigations (which may
in some cases involve our entering into settlement arrangements or consent decrees), and other matters arising out
of the ordinary course of our business. While the results of any legal proceeding cannot be predicted with certainty,
in our opinion none of these other pending matters are currently anticipated to have a material adverse effect on our
consolidated financial position, liquidity or results of operations.
As of June 28, 2025, we had accrued our best estimate of potential losses relating to claims that were probable to
result in liability and for which we were able to reasonably estimate a loss. This accrued amount, as well as related
expenses, was not material to our financial position, results of operations or cash flows. Our method for
determining estimated losses considers currently available facts, presently enacted laws and regulations and other
factors, including probable recoveries from third parties.
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
28
Note 12 – Stock-Based Compensation
Stock-based awards are provided to certain employees under our 2024 Stock Incentive Plan (formerly known as our
2020 Stock Incentive Plan) and to non-employee directors under our 2023 Non-Employee Director Stock Incentive
Plan (together, the “Plans”). The Plans are administered by the Compensation Committee of the Board of Directors
(the “Compensation Committee”). Historically, equity-based awards to our employees have been granted solely in
the form of time-based and performance-based restricted stock units (“RSUs”) with the exception of our 2021 plan
year in which non-qualified stock options were issued in place of performance-based RSUs and in 2022, when we
granted time-based and performance-based RSUs, as well as non-qualified stock options.
Starting with our 2023 plan year, we returned to granting our employees equity-based awards solely in the form of
time-based RSUs (which vest solely based on the recipient’s continued service over time) and performance-based
RSUs (which vest based on achieving specified performance measurements and the recipient’s continued service
over time). Our non-employee directors receive equity-based awards solely in the form of time-based RSUs.
In our 2025 plan year, stock awards issued to our Chief Executive Officer were allocated
% to time-based RSU
awards with
four-year
% to performance-based RSU awards with
three-year
2025 plan year, stock awards issued to members of our Executive Management Committee were allocated
% to
time-based RSU awards with
four-year
% to performance-based RSU awards with
three-year
cliff vesting.
In our 2025 plan year, stock awards issued to our eligible vice-presidents were allocated
% to time-based RSU
awards and
% to performance-based RSU awards with
three-year
based awards will vest
% on the third anniversary of the grant date with the remaining
% vesting on the fourth
anniversary of the grant date.
In our 2025 plan year, we began granting only time-based RSU awards to our eligible director level employees.
Our director level time-based RSU awards will vest
% on the third anniversary of the grant date with the
remaining
% vesting on the fourth anniversary of the grant date.
RSUs are stock-based awards granted to recipients with specified vesting provisions. In the case of RSUs, common
stock is delivered on or following satisfaction of vesting conditions. We issue RSUs to employees that primarily
vest (i) solely based on the recipient’s continued service over time, primarily with
four
-year cliff vesting for RSU
awards granted prior to 2025 and with vesting upon third and fourth anniversary of the grant date for RSU awards
granted in 2025 and/or (ii) based on achieving specified performance measurements and the recipient’s continued
service over time, primarily with
three
-year cliff vesting. RSUs granted to our non-employee directors primarily
include
-month cliff vesting. For the performance-based RSUs and the time-based RSUs with cliff vesting
(issued in 2022-2024 plan years), we recognize the cost as compensation expense on a straight-line basis. For the
time-based RSUs with graded vesting (issued in the 2025 plan year), we recognize the cost as compensation
expense on an accelerated basis.
For all RSUs, we estimate the fair value based on our closing stock price on the grant date. With respect to
performance-based RSUs, the number of shares that ultimately vest and are received by the recipient is based upon
our performance as measured against specified targets over a specified period, as determined by the Compensation
Committee. Although there is no guarantee that performance targets will be achieved, we estimate the fair value of
performance-based RSUs based on our closing stock price at time of grant.
Each of the Plans provide for certain adjustments to the performance measurement in connection with awards under
the Plans. With respect to the performance-based RSUs granted under our 2024 Stock Incentive Plan, such
performance measurement adjustments relate to significant events, including, without limitation, acquisitions,
divestitures, new business ventures, changes in fair value of contingent consideration (solely with respect to
performance-based RSUs granted in the 2024 and 2025 plan years), certain capital transactions (including share
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
29
repurchases), differences in budgeted average outstanding shares (other than those resulting from capital
transactions referred to above), restructuring costs, amortization expense recorded for acquisition-related intangible
assets, certain litigation settlements or payments, changes in accounting principles or in applicable laws or
regulations, changes in income tax rates in certain markets, foreign exchange fluctuations, the financial impact
either positive or negative, of the difference in projected earnings generated by COVID-19 test kits (solely with
respect to performance-based RSUs granted in the 2023 plan year), intangibles impairment charges and costs
related to shareholder advisory matters (solely with respect to performance-based RSUs granted in the 2025 plan
year).
Over the performance period, the number of performance-based RSUs that will ultimately vest and be issued and
the related compensation expense is adjusted upward or downward based upon our estimation of achieving such
performance targets. The ultimate number of shares delivered to recipients and the related compensation cost
recognized as an expense is based on our actual performance against the pre-determined performance metrics (in
each case as adjusted).
Stock options are awards that allow the recipient to purchase shares of our common stock after vesting at a fixed
price set at the time of grant. Stock options were granted at an exercise price equal to our closing stock price on the
date of grant. Stock options issued in 2021 and 2022 vest
one-third
service, subject to the terms and conditions of the 2020 Stock Incentive Plan, are fully vested
grant date and have a contractual term of
term acceleration upon certain events. Compensation expense for stock options is recognized on an accelerated
basis. We estimate grant date fair value of stock options using the Black-Scholes valuation model. During the six
months ended June 28, 2025, we did
t grant any stock options.
Our condensed consolidated statements of income reflect pre-tax share-based compensation expense of $
and $
June 29, 2024, we recorded pre-tax share-based compensation expense of $
Total unrecognized compensation cost related to unvested awards as of June 28, 2025 was $
expected to be recognized over a weighted-average period of approximately
Our condensed consolidated statements of cash flows present our stock-based compensation expense as a
reconciling adjustment between net income and net cash provided by operating activities for all periods presented.
There were no cash benefits associated with tax deductions in excess of recognized compensation for the six
months ended June 28, 2025 and June 29, 2024.
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
30
The following table summarizes the stock option activity for the six months ended June 28, 2025:
Stock Options
Weighted Average
Weighted Average
Aggregate
Exercise
Remaining Contractual
Shares
Price
Life (in years)
Outstanding at beginning of period
$
Granted
-
Exercised
(14,447 )
Forfeited
(9,793 )
Outstanding at end of period
$
$
Options exercisable at end of period
$
Weighted Average
Weighted Average
Aggregate
Number of
Exercise
Remaining Contractual
Intrinsic
Options
Price
Life (in years)
Value
Expected to vest
$
$
The following tables summarize the activity of our unvested RSUs for the six months ended June 28, 2025:
Time-Based Restricted Stock Units
Performance-Based Restricted Stock Units
Weighted
Weighted
Average
Intrinsic
Average
Intrinsic
Grant Date Fair
Value
Grant Date Fair
Value
Shares/Units
Value Per Share
Per Share
Shares/Units
Value Per Share
Per Share
Outstanding at beginning of period
$
$
Granted
Performance adjustment
n/a
n/a
(31,787 )
Vested
(532,427 )
(14,054 )
Forfeited
(56,558 )
(184,069 )
Outstanding at end of period
$
$
$
$
The fair value of time and performance RSUs that vested was $
months ended June 28, 2025; and $
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
31
Note 13 – Redeemable Noncontrolling Interests
Some minority stockholders in certain of our subsidiaries have the right, at certain times, to require us to acquire
their ownership interest in those entities at fair value. Accounting Standards Codification Topic 480-10 is
applicable for noncontrolling interests where we are or may be required to purchase all or a portion of the
outstanding interest in a consolidated subsidiary from the noncontrolling interest holder under the terms of a put
option contained in contractual agreements. The components of the change in the redeemable noncontrolling
interests for the six months ended June 28, 2025 and June 29, 2024 are presented in the following table:
June 28,
June 29,
2025
2024
Balance, beginning of period
$
$
Decrease in redeemable noncontrolling interests due to acquisitions of
(76 )
(205 )
Increase in redeemable noncontrolling interests due to business acquisitions
Net loss attributable to redeemable noncontrolling interests
(1 )
(1 )
Distributions declared, net of capital contributions
(10 )
(22 )
Effect of foreign currency translation gain (loss) attributable to
(15 )
Change in fair value of redeemable securities
Balance, end of period
$
$
Note 14 – Comprehensive Income
Comprehensive income includes certain gains and losses that, under U.S. GAAP, are excluded from net income and
are recorded directly to stockholders’ equity.
The following table summarizes our Accumulated other comprehensive loss, net of applicable taxes as of:
June 28,
December 28,
2025
2024
Attributable to redeemable noncontrolling interests:
Foreign currency translation adjustment
$
(27 )
$
(56 )
Attributable to noncontrolling interests:
Foreign currency translation adjustment
$
$
(1 )
Attributable to Henry Schein, Inc.:
Foreign currency translation adjustment
$
(193 )
$
(371 )
Unrealized loss from hedging activities
(26 )
Pension adjustment loss
(8 )
(8 )
Accumulated other comprehensive loss
$
(227 )
$
(379 )
Total Accumulated other comprehensive loss
$
(253 )
$
(436 )
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
32
The following table summarizes the components of comprehensive income, net of applicable taxes as of:
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Net income
$
$
$
$
Foreign currency translation gain (loss)
(62 )
(116 )
Tax effect
Foreign currency translation gain (loss)
(62 )
(116 )
Unrealized gain (loss) from hedging activities
(29 )
(35 )
Tax effect
(2 )
(6 )
Unrealized gain (loss) from hedging activities
(21 )
(26 )
Pension adjustment gain
Tax effect
(1 )
Pension adjustment gain
Comprehensive income
$
$
$
$
Our financial statements are denominated in U.S. Dollars. Fluctuations in the value of foreign currencies as
compared to the U.S. Dollar may have a significant impact on our comprehensive income. The foreign currency
translation gain (loss) during the six months ended June 28, 2025 and six months ended June 29, 2024 was
primarily due to changes in foreign currency exchange rates of the Brazilian Real, British Pound, Euro, Swiss
Franc, Canadian Dollar, New Zealand Dollar and Israel Shekel.
The hedging gain (loss) during the three and six months ended June 28, 2025, and June 29, 2024 was attributable to
a net investment hedge.
The following table summarizes our total comprehensive income, net of applicable taxes as follows:
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Comprehensive income attributable to
Henry Schein, Inc.
$
$
$
$
Comprehensive income attributable to
noncontrolling interests
Comprehensive income (loss) attributable to
Redeemable noncontrolling interests
(8 )
(16 )
Comprehensive income
$
$
$
$
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
33
Note 15
Earnings Per Share
Basic earnings per share is computed by dividing net income attributable to Henry Schein, Inc. by the weighted-
average number of common shares outstanding for the period. Our diluted earnings per share is computed similarly
to basic earnings per share, except that it reflects the effect of common shares issuable for unvested RSUs and upon
exercise of stock options using the treasury stock method in periods in which they have a dilutive effect.
A reconciliation of shares used in calculating earnings per basic and diluted share follows:
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Basic
Effect of dilutive securities:
Stock options and restricted stock units
Diluted
The number of antidilutive securities that were excluded from the calculation of diluted weighted average common
shares outstanding are as follows:
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Stock options
Restricted stock units
Total anti-dilutive securities excluded from earnings per
share computation
Note 16 – Supplemental Cash Flow Information
Cash paid for interest and income taxes was:
Six Months Ended
June 28,
June 29,
2025
2024
Interest
$
$
Income taxes
For the six months ended June 28, 2025 and June 29, 2024, we had $
(35 )
unrealized gains (losses) related to hedging activities, respectively.
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
34
Note 17 – Related Party Transactions
During 2018, we entered into a joint venture with Internet Brands to create Henry Schein One, LLC. Internet
Brands initially held a
% noncontrolling interest, which has since increased to a
% noncontrolling interest in
Henry Schein One, LLC, and a freestanding and separately exercisable right to put its noncontrolling interest to
Henry Schein, Inc. for fair value following the fifth anniversary of the effective date of the formation of the joint
venture. On January 29, 2025, Henry Schein, Inc. signed a Memorandum of Understanding with Internet Brands to
extend the time-based trigger for the exercise of our call option to July 1, 2032 and to pause the exercise by Internet
Brands of its put option for a period of
, to January 29, 2029.
In connection with the formation of Henry Schein One, LLC, we entered into a
ten-year
Internet Brands whereby we will pay Internet Brands approximately $
intellectual property. During the three and six months ended June 28, 2025, we recorded $
million, respectively, within selling, general and administrative in our condensed consolidated statements of
income, in connection with costs related to this royalty agreement. During the three and six months ended June 29,
2024 we recorded $
condensed consolidated statements of income, in connection with costs related to this royalty agreement. As of
June 28, 2025 and December 28, 2024, Henry Schein One, LLC had a net payable balance to Internet Brands of $
million and $
agreement. The components of this payable are recorded within accrued expenses: other within our condensed
consolidated balance sheets.
We have interests in entities that we account for under the equity accounting method. In our normal course of
business, during the three and six months ended June 28, 2025, we recorded net sales of $
million respectively, to such entities. During the three and six months ended June 29, 2024, we recorded net sales
of $
we purchased $
June 29, 2024, we purchased $
December 28, 2024, we had an aggregate $
and $
Certain of our facilities related to our acquisitions are leased from employees and minority shareholders. These
leases are classified as operating leases and have a remaining lease term ranging from less than
a
approximately
. As of June 28, 2025, current and non-current liabilities associated with related party
operating leases were $
% and
% of the total current and non-current operating lease liabilities, respectively. At December 28, 2024,
current and non-current liabilities associated with related party operating leases were $
respectively. At December 28, 2024, related party leases represented
% and
% of the total current and non-
current operating lease liabilities, respectively.
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
35
Note 18 – KKR Investment and Accelerated Share Repurchase Program
On January 29, 2025, Henry Schein, Inc. announced a strategic investment by funds affiliated with KKR, a leading
global investment firm, and on May 16, 2025, we issued
KKR for an investment of $
holdings, funds affiliated with KKR currently own approximately
% of the Company’s common stock. KKR
also has the ability to purchase additional shares via open market purchases up to a total equity stake of
% of
the outstanding shares of common stock of the Company. In addition, under the agreement between Henry Schein
and KKR,
On May 19, 2025, we executed an accelerated share repurchase program to repurchase a total of $
our outstanding common stock based on volume-weighted average prices. As of June 28, 2025, we received
at an estimated fair value of $
accelerated share repurchase program.
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36
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Cautionary Note Regarding Forward-Looking Statements
In accordance with the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995, we
provide the following cautionary remarks regarding important factors that, among others, could cause future results
to differ materially from the forward-looking statements, expectations and assumptions expressed or implied herein.
All forward-looking statements made by us are subject to risks and uncertainties and are not guarantees of future
performance. These forward-looking statements involve known and unknown risks, uncertainties and other factors
that may cause our actual results, performance and achievements or industry results to be materially different from
any future results, performance or achievements expressed or implied by such forward-looking statements. These
statements are generally identified by the use of such terms as “may,” “could,” “expect,” “intend,” “believe,”
“plan,” “estimate,” “forecast,” “project,” “anticipate,” “to be,” “to make” or other comparable terms. Factors that
could cause or contribute to such differences include, but are not limited to, those discussed in the documents we
file with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K.
Risk factors and uncertainties that could cause actual results to differ materially from current and historical results
include, but are not limited to: our dependence on third parties for the manufacture and supply of our products and
where we manufacture products, our dependence on third parties for raw materials or purchased components; risks
relating to the achievement of our strategic growth objectives, including anticipated results of restructuring and
value-optimization initiatives; risks related to the Strategic Partnership Agreement with KKR Hawaii Aggregator
L.P. entered into in January 2025; transitions in senior company leadership; our ability to develop or acquire and
maintain and protect new products (particularly technology and specialty products) and services and utilize new
technologies that achieve market acceptance with acceptable margins; transitional challenges associated with
acquisitions and joint ventures, including the failure to achieve anticipated synergies/benefits, as well as significant
demands on our operations, information systems, legal, regulatory, compliance, financial and human resources
functions in connection with acquisitions, dispositions and joint ventures; certain provisions in our governing
documents that may discourage third-party acquisitions of us; adverse changes in supplier rebates or other
purchasing incentives; risks related to the sale of corporate brand products; risks related to activist investors;
security risks associated with our information systems and technology products and services, such as cyberattacks
or other privacy or data security breaches (including the October 2023 incident); effects of a highly competitive
(including, without limitation, competition from third-party online commerce sites) and consolidating market;
political, economic and regulatory influences on the health care industry; risks from expansion of customer
purchasing power and multi-tiered costing structures; increases in shipping costs for our products or other service
issues with our third-party shippers, and increases in fuel and energy costs; changes in laws and policies governing
manufacturing, development and investment in territories and countries where we do business; general global and
domestic macro-economic and political conditions, including inflation, deflation, recession, unemployment (and
corresponding increase in under-insured populations), consumer confidence, sovereign debt levels, fluctuations in
energy pricing and the value of the U.S. dollar as compared to foreign currencies and changes to other economic
indicators; failure to comply with existing and future regulatory requirements, including relating to health care;
risks associated with the EU Medical Device Regulation; failure to comply with laws and regulations relating to
health care fraud or other laws and regulations; failure to comply with laws and regulations relating to the
collection, storage and processing of sensitive personal information or standards in electronic health records or
transmissions; changes in tax legislation, changes in tax rates and availability of certain tax deductions; risks related
to product liability, intellectual property and other claims; risks associated with customs policies or legislative
import restrictions; risks associated with disease outbreaks, epidemics, pandemics (such as the COVID-19
pandemic), or similar wide-spread public health concerns and other natural or man-made disasters; risks associated
with our global operations; the threat or outbreak of war (including, without limitation, geopolitical wars), terrorism
or public unrest (including, without limitation, the war in Ukraine, the Israel-Gaza war and other unrest and threats
in the Middle East and the possibility of a wider European or global conflict); changes to laws and policies
governing foreign trade, tariffs and sanctions or greater restrictions on imports and exports, including changes to
international trade agreements and the current imposition of (and the potential for additional) tariffs by the U.S. on
numerous countries and retaliatory tariffs; supply chain disruption; litigation risks; new or unanticipated litigation
developments and the status of litigation matters; our dependence on our senior management (including, without
limitation, succession planning for our Chief Executive Officer), employee hiring and retention, increases in labor
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37
costs or health care costs, and our relationships with customers, suppliers and manufacturers; and disruptions in
financial markets. The order in which these factors appear should not be construed to indicate their relative
importance or priority.
We caution that these factors may not be exhaustive and that many of these factors are beyond our ability to control
or predict. Accordingly, any forward-looking statements contained herein should not be relied upon as a prediction
of actual results. We undertake no duty and have no obligation to update forward-looking statements except as
required by law.
Where You Can Find Important Information
We may disclose important information through one or more of the following channels: SEC filings, public
conference calls and webcasts, press releases, the investor relations page of our website (www.henryschein.com)
and the social media channels identified on the About Media Center page of our website.
Recent Developments
While the U.S. economy has experienced inflationary pressures and strengthening of the U.S. dollar, their impacts
have not been material to our results of operations. Though inflation impacts both our revenues and costs, the depth
and breadth of our product portfolio often allows us to offer lower-cost national brand solutions or corporate brand
alternatives to our more price-sensitive customers who are unwilling to absorb price increases, thus positioning us
to protect our gross profit.
Segment Reporting
During the fourth quarter of our fiscal year ended December 28, 2024, we revised our reportable segments to align
with how the Chairman and Chief Executive Officer manages the business, assesses performance and allocates
resources. Our revised reportable segments now consist of: (i) Global Distribution and Value -Added Services; (ii)
Global Specialty Products; and (iii) Global Technology.
Global Distribution and Value-Added Services includes distribution to the global dental and medical markets of
national brand and corporate brand merchandise, as well as equipment and related technical services. This segment
also includes value-added services such as financial services, continuing education services, consulting and other
services. This segment also markets and sells under our own corporate brand a portfolio of cost-effective, high-
quality consumable merchandise. Global Specialty Products includes manufacturing, marketing and sales of dental
implant and biomaterial products; and endodontic, orthodontic and orthopedic products and other health care-
related products and services. Global Technology includes development and distribution of practice management
software, e-services and other products, which are distributed to health care providers.
Cyber Incident
As previously reported, in October 2023 Henry Schein experienced a cyber incident that primarily affected the
operations of our North American and European dental and medical distribution businesses.
During the three and six months ended June 29, 2024, we had a sales decrease in our dental and medical
distribution businesses, which we believe was primarily a result of lower sales to episodic customers following the
cyber incident.
With respect to the October 2023 cyber incident, we have a $60 million insurance policy, following a $5 million
retention. During the three and six months ended June 28, 2025, we did not incur any expenses directly related to
the cyber incident. During the three and six months ended June 29, 2024 we incurred $3 million and $8 million,
respectively, of expenses related to the cyber incident, mostly consisting of professional fees. During the three
months and six months ended June 29, 2024, we received insurance proceeds of $10 million, representing a partial
insurance recovery of losses related to the cyber incident. During the three months ended March 29, 2025 we
received insurance proceeds of $20 million, representing the remaining insurance recovery of losses related to the
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38
cyber incident. The expenses and insurance recoveries related to the cyber incident are included in the selling,
general and administrative line in our condensed consolidated statements of income.
Tariffs and Related Economic Conditions
The U.S. has adopted new and increased tariffs on imports from countries, subject to evolving exemptions, with
additional tariff increases proposed but currently on pause. Some countries have imposed retaliatory tariffs and
other restrictions on imports from the U.S. The U.S. government is reported to be in negotiations with certain other
countries over tariff rates and other trade policies. These developments, and anticipated future developments, have
created a volatile environment for global trade, and new trade policies with individual countries, if finalized, are
expected to be announced incrementally over a period of time.
The tariffs did not have a material impact on our results of operations in the first or second quarter of this fiscal
year, although sales of U.S. dental equipment were temporarily impacted by market uncertainty related to tariffs in
the second half of the quarter ended June 28, 2025. It is unclear whether, or the extent to which, the proposed
tariffs on numerous countries that are incrementally higher than those in place today will take effect, the exceptions
that may apply, and their timing.
One Big Beautiful Bill Act
In the United States, the OBBBA, signed into law on July 4, 2025, includes a number of provisions that are
expected to result in substantial reductions in the number of Medicaid enrollees, which will reduce utilization of
services and covered products generally. There are also several provisions that will reduce federal funding to state
Medicaid programs. The OBBBA, in combination with tariffs, will almost certainly have an adverse impact on
utilization, Medicaid payment and cost of production (if foreign components are used).
The OBBBA also includes significant changes to corporate tax rates, limitations on certain deductions and
modifications to international tax provisions. We are currently assessing the impact of the OBBBA on our
consolidated financial statements.
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39
Executive-Level Overview
Henry Schein, Inc. is a solutions company for health care professionals powered by a network of people and
technology.
We
believe we are the world’s largest provider of health care products and services primarily to office-
based dental and medical practitioners, as well as alternate sites of care.
We
serve more than one million customers
worldwide including dental practitioners, laboratories, physician practices and ambulatory surgery centers, as well
as government, institutional health care clinics, home health providers, and other alternate care clinics.
We
believe
that we have a strong brand identity due to our more than 93 years of experience distributing health care products.
We
are headquartered in Melville, New York, employ more than 25,000 people (of which approximately 13,000 are
based outside of the United States) and have operations or affiliates in 33 countries and territories. Our broad
global footprint has evolved over time through our organic growth as well as through contribution from strategic
acquisitions.
We
have established strategically located distribution centers around the world to enable us to better serve our
customers and increase our operating efficiency. This infrastructure, together with broad product and service
offerings at competitive prices, and a strong commitment to customer service, enables us to be a single source of
supply for our customers’ needs.
As a distributor, we market and sell branded products as well as our own corporate brand portfolio of cost-effective,
high-quality consumable merchandise products.
We
also manufacture, source and sell a range of company-owned
manufactured products, primarily implants, biomaterial products, endodontics, handpiece and small equipment,
hand instrument and repair, restoratives, orthodontics, wound care, orthopedics and dental lab products.
We
have
achieved scale in these global businesses primarily through acquisitions, as manufacturers of these products
typically do not utilize a distribution channel to serve customers.
During the fourth quarter of our fiscal year ended December 28, 2024, we revised our reportable segments to align
with how the Chairman and Chief Executive Officer manages the business, assesses performance and allocates
resources. Our revised reportable segments now consist of: (i) Global Distribution and Value -Added Services; (ii)
Global Specialty Products; and (iii) Global Technology.
Global Distribution and Value-Added Services includes distribution to the global dental and medical markets of
national brand and corporate brand merchandise, as well as equipment and related technical services. This segment
also includes value-added services such as financial services, continuing education services, consulting and other
services. This segment also markets and sells under our own corporate brand, a portfolio of cost-effective, high-
quality consumable merchandise. Global Specialty Products includes manufacturing, marketing and sales of dental
implant and biomaterial products; and endodontic, orthodontic and orthopedic products and other health care-
related products and services. Global Technology includes development and distribution of practice management
software, e-services and other products, which are distributed to health care providers.
A key element to grow closer to our customers is our One Schein initiative, which is a unified go-to-market
approach that enables practitioners to work synergistically with our supply chain, equipment sales and service and
other value-added services, allowing our customers to leverage the combined value that we offer through a single
program. Specifically, One Schein provides customers with streamlined access to our comprehensive offering of
national brand products, corporate brand products and proprietary specialty products and solutions (including
implant, orthodontic and endodontic products). In addition, customers have access to a wide range of services,
including software and other value-added services.
Industry Overview
In recent years, the health care industry has increasingly focused on cost containment. This trend has benefited
distributors capable of providing a broad array of products and services at low prices. It also has accelerated the
growth of DSOs, GPOs, HMOs, group practices, other managed care accounts and collective buying groups, which,
in addition to their emphasis on obtaining products at competitive prices, tend to favor distributors capable of
providing specialized management information support.
We
believe that the trend towards cost containment has
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40
the potential to favorably affect demand for technology solutions, including software, which can enhance the
efficiency and facilitation of practice management.
Our operating results in recent years have been significantly affected by strategies and transactions that we
undertook to expand our business, domestically and internationally, in part to address significant changes in the
health care industry, including consolidation of health care distribution companies, health care reform, trends
toward managed care, cuts in Medicare and collective purchasing arrangements.
Industry Consolidation
The health care products distribution industry, as it relates to office-based health care practitioners, is fragmented
and diverse. The industry ranges from sole practitioners working out of relatively small offices to group practices
or service organizations ranging in size from a few practitioners to a large number of practitioners who have
combined or otherwise associated their practices.
Due in part to the inability of office-based health care practitioners to store and manage large quantities of supplies
in their offices, the distribution of health care supplies and small equipment to office-based health care practitioners
has been characterized by frequent, small quantity orders, and a need for rapid, reliable and substantially complete
order fulfillment. The purchasing decisions within an office-based health care practice are typically made by the
practitioner or an administrative assistant. Supplies and small equipment are generally purchased from more than
one distributor, with one generally serving as the primary supplier.
The trend of consolidation extends to our customer base. Health care practitioners are increasingly seeking to
partner, affiliate or combine with larger entities such as hospitals, health systems, group practices or physician
hospital organizations. In many cases, purchasing decisions for consolidated groups are made at a centralized or
professional staff level; however, orders are delivered to the practitioners’ offices.
Our approach to acquisitions and joint ventures has been to expand our role as a provider of products and services
to the health care industry. This trend has resulted in our expansion into service areas that complement our existing
operations and provide opportunities for us to develop synergies with, and thus strengthen, the acquired businesses.
As industry consolidation continues, we believe that we are positioned to capitalize on this trend, as we believe we
have the ability to support increased sales through our existing infrastructure, although there can be no assurances
that we will be able to successfully accomplish this.
We
are focused on building relationships with decision makers
who do not reside in the office-based practitioner setting.
As the health care industry continues to change, we continually evaluate possible candidates for joint venture or
acquisition and intend to continue to seek opportunities to expand our role as a provider of products and services to
the health care industry. There can be no assurance that we will be able to successfully pursue any such
opportunity or consummate any such transaction, if pursued. If additional transactions are entered into or
consummated, we would incur merger and/or acquisition-related costs, and there can be no assurance that the
integration efforts associated with any such transaction would be successful.
Aging Population and Other Market Influences
The health care products distribution industry continues to experience growth due to the aging population,
increased health care awareness, the proliferation of medical technology and testing, new pharmacological
treatments, and expanded third-party insurance coverage, partially offset by the effects of unemployment on
insurance coverage. In addition, the physician market continues to benefit from the shift of procedures and
diagnostic testing from acute care settings to alternate-care sites, particularly physicians’ offices.
According to the U.S. Census Bureau’s International Database, between 2025 and 2035, the 45 and older
population is expected to grow by approximately 10%. Between 2025 and 2045, this age group is expected to grow
by approximately 17%. This compares with expected total U.S. population growth rates of approximately 4%
between 2025 and 2035 and approximately 6% between 2025 and 2045.
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41
According to the U.S. Census Bureau’s International Database, in 2025 there are approximately seven million
Americans aged 85 years or older, the segment of the population most in need of long-term care and elder-care
services. By the year 2050, that number is projected to increase to approximately 17 million. The population aged
65 to 84 years is projected to increase by approximately 15% during the same period.
As a result of these market dynamics, annual expenditures for health care services continue to increase in the
United States.
We
believe that demand for our products and services will grow while continuing to be impacted by
current and future operating, economic and industry conditions. The Centers for Medicare and Medicaid Services,
or CMS, published “National Health Expenditure Data” indicating that total national health care spending reached
approximately $4.9 trillion in 2023, or 17.6% of the nation’s gross domestic product, the benchmark measure for
annual production of goods and services in the United States. Health care spending is projected to reach
approximately $8.6 trillion by 2033, or 20.3% of the nation’s projected gross domestic product.
We
believe similar demographic changes are also occurring in other markets we serve outside the U.S.
Government
Certain of our businesses involve the distribution, manufacturing, importation, exportation, marketing, sale and
promotion of pharmaceuticals and/or medical devices, and in this regard, we are subject to extensive local, state,
federal and foreign governmental laws and regulations, including as applicable to our wholesale distribution of
pharmaceuticals and medical devices, manufacturing activities, and as part of our specialty home medical supplies
businesses that distribute and sell medical equipment and supplies directly to patients. Federal, state and certain
foreign governments have also increased enforcement activity in the health care sector, particularly in areas of fraud
and abuse, anti-bribery and anti-corruption, controlled substances handling, medical device regulations and data
privacy and security standards.
Certain of our businesses involve pharmaceuticals and/or medical devices, including orthopaedic, in vitro
diagnostic devices, software regulated as a medical device, and sales of medical equipment and supplies directly to
patients, that are paid for by third parties and/or patients and must operate in compliance with a variety of
burdensome and complex coding, billing and record-keeping requirements in order to substantiate claims for
payment under federal, state and commercial health care reimbursement programs.
Government and private insurance programs fund a large portion of the total cost of medical care, and there have
been efforts to limit such private and government insurance programs, including efforts, thus far unsuccessful, to
seek repeal of the entire United States Patient Protection and Affordable Care Act, as amended by the Health Care
and Education Reconciliation Act, each enacted in March 2010.
Certain of our businesses are subject to various additional federal, state, local and foreign laws and regulations,
including with respect to the sale, transportation, importation, storage, handling and disposal of hazardous or
potentially hazardous substances; “forever chemicals” such as per-and polyfluoroalkyl substances; amalgam bans;
pricing disclosures; supply chain transparency around labor practices; and safe working conditions. In addition,
activities to control medical costs, including laws and regulations lowering reimbursement rates for
pharmaceuticals, medical devices, medical supplies and/or medical treatments or services, are ongoing. Laws and
regulations are subject to change and their evolving implementation may impact our operations and our financial
performance.
Certain of our businesses also maintain contracts with governmental agencies and are subject to certain regulatory
requirements specific to government contractors.
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42
Our businesses are generally subject to numerous laws and regulations that could impact our financial performance,
and failure to comply with such laws or regulations could have a material adverse effect on our business. A few
noteworthy items that have come into effect recently are noted below:
●
Regulation (EU) 2023/1182 of June 14, 2023, entered into force on January 1, 2025, under the conditions
set out in Article 14. This regulation lays down specific rules relating to medicinal products for human use
intended to be placed on the market in Northern Ireland in accordance with Article 6 of
Directive 2001/83/EC.
●
Directive No. 2025/794 of April 14, 2025, known as the “Stop-the-Clock” Directive, amended Directives
(EU) 2022/2464 (CSRD) and (EU) 2024/1760 (CSDDD) by introducing a uniform two-year postponement
of the sustainability reporting and due diligence requirements for financial years beginning on or after
January 1, 2025 and on or after January 1, 2026.
●
Regulation (EU) 2025/327 of February 11, 2025 on the European Health Data Space and amending
Directive 2011/24/EU and Regulation (EU) 2024/2847 establishes the European Health Data Space
(EHDS) by providing for common rules, standards and infrastructures and a governance framework, with a
view to facilitating access to electronic health data for the purpose of primary use and secondary use of this
data. This could potentially affect Henry Schein or its customers.
●
In the United States, as noted above, the OBBBA includes a number of provisions that are expected to
result in substantial reductions in the number of Medicaid enrollees, as well as reductions in federal funding
to state Medicaid programs, resulting in potentially adverse impacts on utilization of services and coverage
of products. The OBBBA also includes significant changes to corporate tax rates, limitations on certain
deductions and modifications to international tax provisions.
We
are currently assessing the impact of the
OBBBA on our consolidated financial statements.
A more detailed discussion of governmental laws and regulations is included in Management’s Discussion &
Analysis of Financial Condition and Results of Operations, contained in our Annual Report on Form 10-K for the
fiscal year ended December 28, 2024, filed with the SEC on February 25, 2025.
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43
Results of Operations
The following tables summarize the significant components of our operating results for the three and six months
ended June 28, 2025 and June 29, 2024 and cash flows for the six months ended June 28, 2025 and June 29, 2024
(in millions):
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Operating results:
Net sales
$
3,240
$
3,136
$
6,408
$
6,308
Cost of sales
2,224
2,118
4,392
4,278
Gross profit
1,016
1,018
2,016
2,030
Operating expenses:
Selling, general and administrative
778
781
1,516
1,572
Depreciation and amortization
64
63
126
124
Restructuring costs
23
15
48
25
Operating income
$
151
$
159
$
326
$
309
Other expense, net
$
(30)
$
(27)
$
(60)
$
(50)
Income taxes
(31)
(33)
(66)
(65)
Net income
94
105
207
203
Net income attributable to Henry Schein, Inc.
86
104
196
197
Six Months Ended
June 28,
June 29,
2025
2024
Cash flows:
Net cash provided by operating activities
$
157
$
493
Net cash used in investing activities
(197)
(281)
Net cash provided by (used in) financing activities
145
(265)
Plans of Restructuring
On August 6, 2024, we committed to a new restructuring plan (the “2024 Plan”) to integrate recent acquisitions,
right-size operations and further increase efficiencies. During the three and six months ended June 28, 2025, we
recorded restructuring charges associated with the 2024 Plan of $23 million and $48 million, respectively, which
primarily related to severance and employee-related costs, accelerated amortization of right-of-use assets and fixed
assets, and other exit costs. We expect to record restructuring charges associated with the 2024 Plan through the
end of 2025; however, an estimate of the amount of these charges has not yet been determined.
On August 1, 2022, we committed to a restructuring plan (the “2022 Plan”) focused on funding the priorities of the
BOLD+1 strategic plan, streamlining operations and other initiatives to increase efficiency. The 2022 Plan has
been completed as of July 31, 2024. During the three and six months ended June 29, 2024, in connection with our
2022 Plan, we recorded restructuring costs of $15 million and $25 million, respectively, which primarily related to
severance and employee-related costs, accelerated amortization of right-of-use assets and fixed assets, and other
exit costs.
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44
Three Months Ended June 28, 2025 Compared to Three Months Ended June 29, 2024
Note: Percentages for Net Sales; Gross Profit; Operating Expenses; Other Expense, Net; and Income Taxes are
based on actual values and may not recalculate due to rounding.
During the fourth quarter of our fiscal year ended December 28, 2024, we revised our reportable segments to align
with how the Chairman and Chief Executive Officer manages the business, assesses performance and allocates
resources. Our revised reportable segments now consist of: (i) Global Distribution and Value -Added Services; (ii)
Global Specialty Products; and (iii) Global Technology. All prior comparative segment information has been recast
to reflect our new segment structure.
Net Sales
Net sales by reportable segment and by major product or service type were as follows:
June 28,
% of
June 29,
% of
Increase
2025
Total
2024
Total
$
%
Global Distribution and Value -Added Services
Global Dental Merchandise
(1)
$
1,218
37.6
%
$
1,214
38.7
%
$
4
0.3
%
Global Dental Equipment
(2)
439
13.5
426
13.6
13
3.0
Global Value -Added Services
(3)
58
1.8
56
1.8
2
3.6
Global Dental
1,715
52.9
1,696
54.1
19
1.1
Global Medical
(4)
1,016
31.4
958
30.5
58
6.1
Total Global Distribution and Value -Added Services
2,731
84.3
2,654
84.6
77
2.9
Global Specialty Products
(5)
386
11.9
370
11.8
16
4.2
Global Technology
(6)
167
5.2
156
5.0
11
7.4
Eliminations
(44)
(1.4)
(44)
(1.4)
-
n/a
Total
$
3,240
100.0
$
3,136
100.0
$
104
3.3
(1)
Includes infection-control products, handpieces, preventatives, impression materials, composites, anesthetics, teeth, gypsum,
acrylics, articulators, abrasives, PPE products and our own corporate brand of consumable merchandise.
(2)
Includes dental chairs, delivery units and lights, digital dental laboratories, X-ray supplies and equipment, equipment repair
services and high-tech and digital restoration equipment.
(3)
Consists of financial services on a non-recourse basis, continuing education services for practitioners, consulting and other services.
(4)
Includes branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products, X-ray
products, equipment, PPE products and vitamins.
(5)
Includes manufacturing, marketing and sales of dental implant and biomaterial products; and endodontic, orthodontic and
orthopedic products and other health care-related products and services.
(6)
Consists of development and distribution of practice management software, e-services and other products, which are distributed to
health care providers.
The components of our sales growth/(decline) were as follows:
Constant Currency
Growth/(Decline)
Total Constant
Currency
Growth/(Decline)
Foreign
Exchange
Impact
Total Sales
Growth
Local Internal
Growth/(Decline)
Acquisition
Growth
Global Distribution and Value -Added Services
Global Dental Merchandise
(0.8)
%
0.4
%
(0.4)
%
0.7
%
0.3
%
Global Dental Equipment
0.7
0.9
1.6
1.4
3.0
Global Value -Added Services
(1.9)
5.6
3.7
(0.1)
3.6
Global Dental
(0.4)
0.7
0.3
0.8
1.1
Global Medical
4.4
1.6
6.0
0.1
6.1
Total Global Distribution and Value -Added Services
1.3
1.1
2.4
0.5
2.9
Global Specialty Products
3.6
(0.3)
3.3
0.9
4.2
Global Technology
6.6
-
6.6
0.8
7.4
Total
1.9
0.8
2.7
0.6
3.3
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45
Global Sales
Global net sales for the three months ended June 28, 2025 increased 3.3%. Foreign exchange and acquisitions
contributed 0.6% and 0.8% to sales growth, respectively. The components of our sales increase are presented in the
table above.
The 1.9% increase in our internally generated local currency sales was primarily attributable to sales growth in
certain of our international dental markets, and medical sales growth attributable to increased patient traffic, growth
of our Home Solutions business, partially offset by the impact of lower pricing in U.S. dental merchandise markets,
and the impact on U.S. dental equipment from market uncertainty related to tariffs. For the three months ended
June 28, 2025, the estimated increase in internally generated local currency sales, excluding PPE products and
COVID-19 test kits, was 2.1%.
Global Distribution and Value-Added Services Sales
Global Distribution and Value-Added Services net sales for the three months ended June 28, 2025 increased 2.9%.
The components of our sales increase are presented in the table above.
The 0.4% decrease in internally generated local currency dental sales was primarily due to the impact of lower
glove pricing as well as time-limited targeted sales initiatives for U.S. dental merchandise and the impact on U.S.
dental equipment from market uncertainty related to tariffs. The decrease was partially offset by dental
merchandise and dental equipment sales growth in certain of our international markets.
The 4.4% increase in internally generated local currency medical sales was attributable to increased patient traffic,
growth of our Home Solutions business, and growth in medical products and pharmaceuticals.
The decrease in internally generated local currency value-added services sales was attributable primarily to lower
sales in our practice transitions business, which can fluctuate from quarter to quarter.
We estimate that sales of PPE products (including gloves) and COVID-19 test kits were approximately $138
million for the three months ended June 28, 2025, as compared to $139 million for the three months ended June 29,
2024, representing an estimated decrease of $1 million. The estimated $1 million net decrease in sales of PPE
products and COVID-19 test kits represents 0.1% of Global Distribution and Value -Added Services
net sales for
the three months ended June 28, 2025, and was primarily due to lower glove prices. The estimated increase in the
segment’s internally generated local currency sales, excluding PPE products and COVID-19 test kits, was 1.5%.
Global Specialty Products
Global Specialty Products net sales for the three months ended June 28, 2025 increased 4.2%. The components of
our sales increase are presented in the table above.
The 3.6% increase in internally generated local currency sales was attributable to growth in dental implants and
biomaterials, and endodontic merchandise, partially offset by a decline in orthodontics.
Global Technology
Global Technology net sales for the three months ended June 28, 2025 increased 7.4%. The components of sales
growth are presented in the table above.
The internally generated local currency increase of 6.6% in Global Technology sales was primarily attributable to a
continued increase in the number of cloud-based users of our practice management software and an increase in
revenue cycle management solutions, partially offset by lower revenues of certain legacy products.
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46
Gross Profit
Gross profit and gross margin percentages by segment and in total were as follows:
June 28,
Gross
June 29,
Gross
Increase / (Decrease)
2025
Margin %
2024
Margin %
$
%
Global Distribution and Value -Added Services
$
688
25.2
%
$
701
26.4
%
$
(13)
(1.9)
%
Global Specialty Products
211
54.9
205
55.5
6
3.1
Global Technology
114
67.9
105
67.6
9
7.8
Corporate
3
n/a
7
n/a
(4)
n/a
Total
$
1,016
31.4
$
1,018
32.5
$
(2)
(0.2)
As a result of different practices of categorizing costs associated with distribution networks throughout our
industry, our gross margins may not necessarily be comparable to other distribution companies. Gross margin
percentages vary between our segments. We realize substantially higher gross margin from sales of products that
we develop and manufacture within our Global Specialty Products segment compared to gross margin from sales of
products that we distribute within our Global Distribution and Value-Added Services segment. Within our Global
Technology segment, higher gross margins result from us being both the developer and seller of software products
and services.
Within our Global Distribution and Value -Added Services segment, gross profit margins may vary between the
periods as a result of the changes in the mix of products sold as well as changes in our customer mix. With respect
to customer mix, sales to our large-group customers are typically completed at lower gross margins due to the
higher volumes sold as opposed to the gross margin on sales to office-based practitioners, which normally purchase
lower volumes.
The decrease in Global Distribution and Value-Added Services gross profit for the three months ended June 28,
2025 compared to the prior-year-period is due to lower glove pricing as well as time-limited targeted initiatives to
accelerate growth in market share, lower dental equipment sales in the U.S. and lower sales in our practice
transitions business.
The increase in Global Specialty Products gross profit reflects increased internally generated sales volume. The
decrease in gross margin rates was due to product mix.
The increase in Global Technology gross profit is the result of the shift to higher margin products within the
product mix and improved gross margin rates.
Operating Expenses
Operating expenses (consisting of selling, general and administrative expenses; depreciation and amortization; and
restructuring costs) by segment were as follows:
% of
% of
June 28,
Respective
June 29,
Respective
Increase / (Decrease)
2025
Gross Sales
2024
Gross Sales
$
%
Global Distribution and Value -Added Services
$
529
19.4
%
$
525
19.8
%
$
4
0.7
%
Global Specialty Products
159
41.4
165
44.4
(6)
(2.9)
Global Technology
69
41.0
71
45.9
(2)
(3.9)
Corporate
34
n/a
15
n/a
19
n/a
791
24.4
776
24.7
15
2.0
Adjustments
(1)
74
n/a
83
n/a
(9)
n/a
Total operating expenses
$
865
26.7
$
859
27.4
$
6
0.8
(1)
Adjustments represent items excluded from segment operating income to enable comparison of financial results between periods. These
items may vary independently of business performance. Please see
Note 5 – Segment Data
. These adjustments (current quarter vs. prior
quarter) consist of (i) acquisition intangible amortization ($44 million vs. $47 million), (ii) restructuring costs ($23 million vs. $15
million), (iii) change in contingent consideration ($0 million vs. $23 million), (iv) cyber incident-insurance proceeds, net of third-party
advisory expenses (no activity vs. $(7) million net proceeds), (v) litigation settlements ($1 million vs. $5 million), and (vi) costs
Table of Contents
47
associated with shareholder advisory matters and select value creation consulting costs ($6 million vs. $0 million).
The net increase in operating expenses is attributable to the following:
Operating Costs
(excluding
acquisitions)
Acquisitions
Adjustments
Total
Global Distribution and Value -Added Services
$
(3)
$
7
$
-
$
4
Global Specialty Products
(6)
-
-
(6)
Global Technology
(2)
-
-
(2)
Corporate
19
-
-
19
8
7
-
15
Adjustments
-
-
(9)
(9)
Total operating expenses
$
8
$
7
$
(9)
$
6
The components of the net increase in total operating expenses are presented in the table above. The increase in
operating costs (excluding acquisitions) during the three months ended June 28, 2025 included an increase in
Corporate investments in technology in anticipation of the launch of our Global E-Commerce Platform
(www.henryschein.com) and timing of certain non-income tax credits.
Other Expense, Net
Other expense, net was as follows:
June 28,
June 29,
Variance
2025
2024
$
%
Interest income
$
9
$
6
$
3
54.5
%
Interest expense
(38)
(32)
(6)
(19.9)
Other, net
(1)
(1)
-
(15.5)
Other expense, net
$
(30)
$
(27)
$
(3)
(12.3)
Interest income increased primarily due to increased interest rates. Interest expense increased primarily due to
increased borrowings.
Income Taxes
Our effective tax rate was 24.4% for the three months ended June 28, 2025, compared to 24.9% for the prior year
period. The difference between our effective and federal statutory tax rates primarily relates to state and foreign
income taxes and interest expense.
On July 4, 2025, after the end of the second quarter (June 28, 2025), President Trump signed the reconciliation tax
bill, commonly known as the OBBBA, into law. This includes significant changes to corporate tax rates,
limitations on certain deductions and modifications to international tax provisions.
We
are currently assessing the
impact of the OBBBA on our consolidated financial statements.
The OECD issued technical and administrative guidance on Pillar Two rules in December 2021, which provides for
a global minimum tax rate on the earnings of large multinational businesses on a country-by-country basis.
Effective January 1, 2024, the minimum global tax rate is 15% for various jurisdictions pursuant to the Pillar Two
rules. Future tax reform resulting from these developments may result in changes to long-standing tax principles,
which may adversely impact our effective tax rate going forward or result in higher cash tax liabilities. As of June
28, 2025, the impact of the Pillar Two rules to our financial statements was immaterial.
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48
Six Months Ended June 28, 2025 Compared to Six Months Ended June 29, 2024
Note: Percentages for Net Sales; Gross Profit; Operating Expenses; Other Expense, Net; and Income Taxes are
based on actual values and may not recalculate due to rounding.
During the fourth quarter of our fiscal year ended December 28, 2024, we revised our reportable segments to align
with how the Chairman and Chief Executive Officer manages the business, assesses performance and allocates
resources. Our revised reportable segments now consist of: (i) Global Distribution and Value -Added Services; (ii)
Global Specialty Products; and (iii) Global Technology. All prior comparative segment information has been recast
to reflect our new segment structure.
Net Sales
Net sales by reportable segment and by major product or service type were as follows:
June 28,
% of
June 29,
% of
Increase / (Decrease)
2025
Total
2024
Total
$
%
Global Distribution and Value -Added Services
Global Dental Merchandise
(1)
$
2,403
37.5
%
$
2,424
38.4
%
$
(21)
(0.9)
%
Global Dental Equipment
(2)
823
12.9
828
13.1
(5)
(0.6)
Global Value -Added Services
(3)
110
1.7
112
1.8
(2)
(2.3)
Global Dental
3,336
52.1
3,364
53.3
(28)
(0.9)
Global Medical
(4)
2,071
32.3
1,983
31.4
88
4.4
Total Global Distribution and Value -Added Services
5,407
84.4
5,347
84.7
60
1.1
Global Specialty Products
(5)
753
11.8
730
11.6
23
3.1
Global Technology
(6)
329
5.1
313
5.0
16
5.1
Eliminations
(81)
(1.3)
(82)
(1.3)
1
n/a
Total
$
6,408
100.0
$
6,308
100.0
$
100
1.6
(1)
Includes infection-control products, handpieces, preventatives, impression materials, composites, anesthetics, teeth, gypsum,
acrylics, articulators, abrasives, PPE products and our own corporate brand of consumable merchandise.
(2)
Includes dental chairs, delivery units and lights, digital dental laboratories, X-ray supplies and equipment, equipment repair
services and high-tech and digital restoration equipment.
(3)
Consists of financial services on a non-recourse basis, continuing education services for practitioners, consulting and other services.
(4)
Includes branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products, X-ray
products, equipment, PPE products and vitamins.
(5)
Includes manufacturing, marketing and sales of dental implant and biomaterial products; and endodontic, orthodontic and
orthopedic products and other health care-related products and services.
(6)
Consists of development and distribution of practice management software, e-services and other products, which are distributed to
health care providers.
The components of our sales growth/(decline) were as follows:
Constant Currency
Growth/(Decline)
Total Constant
Currency
Growth/(Decline)
Foreign
Exchange
Impact
Total Sales
Growth/
(Decline)
Local Internal
Growth/(Decline)
Acquisition
Growth
Global Distribution and Value -Added Services
Global Dental Merchandise
(0.4)
%
0.4
%
-
%
(0.9)
%
(0.9)
%
Global Dental Equipment
(1.2)
0.9
(0.3)
(0.3)
(0.6)
Global Value -Added Services
(8.2)
6.4
(1.8)
(0.5)
(2.3)
Global Dental
(0.8)
0.7
(0.1)
(0.8)
(0.9)
Global Medical
3.1
1.4
4.5
(0.1)
4.4
Total Global Distribution and Value -Added Services
0.6
1.0
1.6
(0.5)
1.1
Global Specialty Products
2.0
1.8
3.8
(0.7)
3.1
Global Technology
5.0
-
5.0
0.1
5.1
Total
1.1
1.0
2.1
(0.5)
1.6
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49
Global Sales
Global net sales for the six months ended June 28, 2025 increased 1.6%, attributable to acquisition growth of 1.0%,
partially offset by a decrease in foreign exchange of 0.5%. The components of our sales increase are presented in
the table above.
The 1.1% increase in our internally generated local currency sales was primarily attributable to sales growth in
certain of our international dental equipment markets, and medical sales growth attributable to increased patient
traffic, growth of our Home Solutions business, partially offset by the impact of lower pricing in U.S. dental
merchandise markets, lower glove pricing, the impact of the deferral of sales of U.S. dental equipment from the
fourth quarter of 2023 into the first quarter of 2024 as a result of the cyber incident, and the impact on U.S. dental
equipment from market uncertainty related to tariffs.
For the six months ended June 28, 2025, the estimated increase in internally generated local currency sales,
excluding PPE products and COVID-19 test kits, was 1.4%.
Global Distribution and Value-Added Services Sales
Global Distribution and Value-Added Services net sales for the six months ended June 28, 2025 increased 1.1%.
The components of our sales increase are presented in the table above.
The 0.8% decrease in internally generated local currency dental sales was primarily due to the impact of lower
pricing for U.S. dental merchandise markets, resulting from lower glove pricing as well as time-limited targeted
sales initiatives, the impact of the deferral of sales of U.S. dental equipment from the fourth quarter of 2023 into the
first quarter of 2024 as a result of the cyber incident, and the impact on U.S. dental equipment from market
uncertainty related to tariffs. The decrease was partially offset by dental equipment sales growth in certain of our
international markets.
The 3.1% increase in internally generated local currency medical sales was attributable to increased patient traffic
and growth of our Home Solutions business.
The decrease in internally generated local currency value-added services sales was attributable primarily to lower
sales in our practice transitions business, which can fluctuate from quarter to quarter.
We estimate that sales of PPE products (including gloves) and COVID-19 test kits were approximately $302
million for the six months ended June 28, 2025, as compared to $320 million for the six months ended June 29,
2024, representing an estimated decrease of $18 million. The estimated $18 million net decrease in sales of PPE
products and COVID-19 test kits represents 0.3% of Global Distribution and Value -Added Services net sales for
the six months ended June 28, 2025, and was primarily due to lower glove prices. The estimated increase in the
segment’s internally generated local currency sales, excluding PPE products and COVID-19 test kits, was 1.0%.
Global Specialty Products
Global Specialty Products net sales for the six months ended June 28, 2025 increased 3.1%. The components of
our sales increase are presented in the table above.
The 2.0% increase in internally generated local currency sales was attributable to growth in our implant and
biomaterial businesses in certain of our international markets, partially offset by a decline in endodontic and
orthodontic sales. The increase in constant currency Global Specialty Products sales was also attributable to the
acquisition of TriMed Inc. during the year ended December 28, 2024.
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50
Global Technology
Global Technology net sales for the six months ended June 28, 2025 increased 5.1%. The components of sales
growth are presented in the table above.
The internally generated local currency increase of 5.0% in Global Technology sales was primarily attributable to a
continued increase in the number of cloud-based users of our practice management software and an increase in
revenue cycle management solutions, partially offset by lower revenues of certain legacy products.
Gross Profit
Gross profit and gross margin percentages by segment and in total were as follows:
June 28,
Gross
June 29,
Gross
Increase / (Decrease)
2025
Margin %
2024
Margin %
$
%
Global Distribution and Value -Added Services
$
1,369
25.3
%
$
1,408
26.3
%
$
(39)
(2.8)
%
Global Specialty Products
417
55.4
404
55.3
13
3.4
Global Technology
224
67.9
211
67.4
13
5.9
Corporate
6
n/a
7
n/a
(1)
n/a
Total
$
2,016
31.5
$
2,030
32.2
$
(14)
(0.7)
As a result of different practices of categorizing costs associated with distribution networks throughout our
industry, our gross margins may not necessarily be comparable to other distribution companies. Gross margin
percentages vary between our segments. We realize substantially higher gross margin from sales of products that
we develop and manufacture within our Global Specialty Products segment compared to gross margin from sales of
products that we distribute within our Global Distribution and Value-Added Services segment. Within our Global
Technology segment, higher gross margins result from us being both the developer and seller of software products
and services.
Within our Global Distribution and Value -Added Services segment, gross profit margins may vary between the
periods as a result of the changes in the mix of products sold as well as changes in our customer mix. With respect
to customer mix, sales to our large-group customers are typically completed at lower gross margins due to the
higher volumes sold as opposed to the gross margin on sales to office-based practitioners, which normally purchase
lower volumes.
The decrease in Global Distribution and Value-Added Services gross profit for the six months ended June 28, 2025
compared to the prior-year-period is due to lower glove pricing as well as time-limited targeted initiatives to
accelerate growth in market share, lower sales of dental equipment in the U.S. and lower sales in our practice
transitions business.
The increase in Global Specialty Products gross profit reflects increased internally generated sales volume and
gross profit from acquisitions. Gross margin rates were relatively flat.
The increase in Global Technology gross profit is the result of higher internally generated sales and improved gross
margin rates.
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51
Operating Expenses
Operating expenses (consisting of selling, general and administrative expenses; depreciation and amortization; and
restructuring costs) by segment were as follows:
% of
% of
June 28,
Respective
June 29,
Respective
Increase / (Decrease)
2025
Gross Sales
2024
Gross Sales
$
%
Global Distribution and Value -Added Services
$
1,043
19.3
%
$
1,061
19.8
%
$
(18)
(1.7)
%
Global Specialty Products
309
41.1
321
43.8
(12)
(3.4)
Global Technology
137
41.5
143
45.8
(6)
(4.7)
Corporate
72
n/a
37
n/a
35
n/a
1,561
24.4
1,562
24.8
(1)
-
Adjustments
(1)
129
n/a
159
n/a
(30)
n/a
Total operating expenses
$
1,690
26.4
$
1,721
27.3
$
(31)
(1.8)
(1)
Adjustments represent items excluded from segment operating income to enable comparison of financial results between periods. These
items may vary independently of business performance. Please see
Note 5 – Segment Data
. These adjustments (current year-to-date vs.
prior year-to-date) consist of (i) acquisition intangible amortization ($87 million vs. $93 million), (ii) restructuring costs ($48 million vs.
$25 million), (iii) change in contingent consideration ($(2) million vs. $38 million), (iv) litigation settlements ($1 million vs. $5
million), (v) cyber incident-insurance proceeds, net of third-party advisory expenses ($(20) million net proceeds vs. $(2) million net
proceeds), (vi) impairment of intangible assets ($1 million vs. $0 million), and (vii) costs associated with shareholder advisory matters
and select value creation consulting costs ($14 million vs. $0 million).
The net decrease in operating expenses is attributable to the following:
Operating Costs
(excluding
acquisitions)
Acquisitions
Adjustments
Total
Global Distribution and Value -Added Services
$
(32)
$
14
$
-
$
(18)
Global Specialty Products
(10)
(2)
-
(12)
Global Technology
(6)
-
-
(6)
Corporate
35
-
-
35
(13)
12
-
(1)
Adjustments
-
-
(30)
(30)
Total operating expenses
$
(13)
$
12
$
(30)
$
(31)
The components of the net decrease in total operating expenses are presented in the table above. The decrease in
operating costs (excluding acquisitions) during the six months ended June 28, 2025 included cost savings from our
restructuring activities, certain changes in estimates and other operating cost efficiencies, partially offset by an
increase in Corporate investments in technology in anticipation of the launch of our Global E-Commerce Platform
(www.henryschein.com) and timing of certain non-income tax credits.
Other Expense, Net
Other expense, net was as follows:
June 28,
June 29,
Variance
2025
2024
$
%
Interest income
$
15
$
11
$
4
34.8
%
Interest expense
(73)
(62)
(11)
(17.8)
Other, net
(2)
1
(3)
(538.2)
Other expense, net
$
(60)
$
(50)
$
(10)
(20.8)
Interest income increased primarily due to increased interest rates. Interest expense increased primarily due to
increased borrowings.
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52
Income Taxes
Our effective tax rate was 24.7% for the six months ended June 28, 2025, compared to 25.2% for the prior year
period. The difference between our effective and federal statutory tax rates primarily relates to state and foreign
income taxes and interest expense.
On July 4, 2025, after the end of the second quarter (June 28, 2025), President Trump signed the reconciliation tax
bill, commonly known as the OBBBA, into law. This includes significant changes to corporate tax rates,
limitations on certain deductions and modifications to international tax provisions.
We
are currently assessing the
impact of the OBBBA on our consolidated financial statements.
The OECD issued technical and administrative guidance on Pillar Two rules in December 2021, which provides for
a global minimum tax rate on the earnings of large multinational businesses on a country-by-country basis.
Effective January 1, 2024, the minimum global tax rate is 15% for various jurisdictions pursuant to the Pillar Two
rules. Future tax reform resulting from these developments may result in changes to long-standing tax principles,
which may adversely impact our effective tax rate going forward or result in higher cash tax liabilities. As of June
28, 2025, the impact of the Pillar Two rules to our financial statements was immaterial.
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53
Liquidity and Capital Resources
Our principal capital requirements have included funding of acquisitions, purchases of additional noncontrolling
interests, repayments of debt principal, the funding of working capital needs, purchases of fixed assets and
repurchases of common stock. Working capital requirements generally result from increased sales, special
inventory forward buy-in opportunities and payment terms for receivables and payables. Historically, sales have
tended to be stronger during the second half of the year and special inventory forward buy-in opportunities have
been most prevalent just before the end of the year, and have caused our working capital requirements to be higher
from the end of the third quarter to the end of the first quarter of the following year.
We finance our business primarily through cash generated from our operations, revolving credit facilities and debt
placements. Please see
Note 8 – Debt
operations is dependent on the continued demand of our customers for our products and services, and access to
products and services from our suppliers.
Our business requires a substantial investment in working capital, which is susceptible to fluctuations during the
year as a result of inventory purchase patterns and seasonal demands. Inventory purchase activity is a function of
sales activity, special inventory forward buy-in opportunities and our desired level of inventory.
We finance our business to provide adequate funding for at least 12 months. Funding requirements are based on
forecasted profitability and working capital needs, which, on occasion, may change. Consequently, we may change
our funding structure to reflect any new requirements.
We believe that our cash and cash equivalents, our ability to access private debt markets and public equity markets,
and our available funds under existing credit facilities provide us with sufficient liquidity to meet our currently
foreseeable short-term and long-term capital needs.
Our acquisition strategy is focused on investments in companies that add new customers and sales teams, increase
our geographic footprint (whether entering a new country, such as emerging markets, or building scale where we
have already invested in businesses), and finally, those that enable us to access new products and technologies.
Net cash provided by operating activities was $157 million for the six months ended June 28, 2025, compared to
net cash provided by operating activities of $493 million for the prior year. The net change of $336 million was
primarily attributable to changes in working capital accounts (primarily accounts receivable, inventory, and
accounts payable and accrued expenses). Our operating cash flows during the six months ended June 29, 2024
were affected by the residual impacts of the 2023 cyber incident and included a higher-than-normal level of cash
collections. Our cash collections normalized during the six months ended June 28, 2025.
Net cash used in investing activities was $197 million for the six months ended June 28, 2025, compared to net
cash used in investing activities of $281 million for the prior year. The net change of $84 million was primarily
attributable to reduced payments for equity investments and business acquisitions.
Net cash provided by financing activities was $145 million for the six months ended June 28, 2025, compared to
net cash used in financing activities of $265 million for the prior year. The net change of $410 million was
primarily due to increased net borrowings from debt to finance our investments and proceeds received from the
issuance of common stock, partially offset by increased repurchases of common stock.
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54
The following table summarizes selected measures of liquidity and capital resources:
June 28,
December 28,
2025
2024
Cash and cash equivalents
$
145
$
122
Working capital
1,236
1,180
Debt:
Bank credit lines
$
901
$
650
Current maturities of long-term debt
27
56
Long-term debt
2,090
1,830
Total debt
$
3,018
$
2,536
Leases:
Current operating lease liabilities
$
81
$
75
Non-current operating lease liabilities
259
259
(1)
Includes $440 million and $241 million of certain accounts receivable, which serve as security for U.S. trade accounts receivable
securitization at June 28, 2025 and December 28, 2024, respectively.
Our cash and cash equivalents consist of bank balances and investments in money market funds representing
overnight investments with a high degree of liquidity.
Accounts receivable days sales outstanding and inventory turns
Our accounts receivable days sales outstanding from operations decreased to 44.7 days as of June 28, 2025 from
48.9 days as of June 29, 2024, which was primarily attributable to impact that the cyber incident had on the cash
collections during the three months ended March 30, 2024. During the six months ended June 28, 2025, we wrote
off approximately $5 million of fully reserved accounts receivable against our trade receivable reserve. Our
inventory turns from operations decreased to 4.7 as of June 28, 2025 from 5.0 as of June 29, 2024. Our working
capital accounts may be impacted by current and future economic conditions.
Leases
We
have operating and finance leases for corporate offices, office space, distribution and other facilities, vehicles
and certain equipment. Our leases have remaining terms of less than one year to approximately 16 years, some of
which may include options to extend the leases for up to 15 years. As of June 28, 2025, our right-of-use assets
related to operating leases were $300 million and our current and non-current operating lease liabilities were $81
million and $259 million, respectively.
Stock Repurchases
On January 27, 2025, our Board of Directors authorized the repurchase of up to an additional $500 million in shares
of our common stock.
On May 19, 2025, we executed an accelerated share repurchase program to repurchase a total of $250 million of
our outstanding common stock based on volume-weighted average prices. As of June 28, 2025, we received
3,122,832 shares at an estimated fair value of $223 million, which were recorded in treasury stock. In July 2025,
we received an additional 368,651 shares at an estimated fair value of $27 million, representing the final amount of
shares to be received under this accelerated share repurchase program.
From March 3, 2003 through June 28, 2025, we repurchased $5.6 billion, or 101,727,771 shares (including shares
delivered after June 28, 2025), under our common stock repurchase programs, with $432 million available as of
June 28, 2025 for future common stock share repurchases.
Redeemable Noncontrolling Interests
Some minority stockholders in certain of our subsidiaries have the right, at certain times, to require us to acquire
their ownership interest in those entities at fair value. Accounting Standards Codification Topic 480-10 is
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55
applicable for noncontrolling interests where we are or may be required to purchase all or a portion of the
outstanding interest in a consolidated subsidiary from the noncontrolling interest holder under the terms of a put
option contained in contractual agreements. As of June 28, 2025 and December 28, 2024, our balance for
redeemable noncontrolling interests was $811 million and $806 million, respectively. Please see
Note 13 –
Redeemable Noncontrolling Interests
Critical Accounting Policies and Estimates
There have been no material changes in our critical accounting policies and estimates from those disclosed in Item
7 of our Annual Report on Form 10-K for the year ended December 28, 2024.
Accounting Standards Update
For a discussion of accounting standards updates that have been adopted or will be adopted, see
Note 2 - Significant
Accounting Policies and Recently Issued Accounting Standards
Financial Statements included under Item 1.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our exposure to market risk from that disclosed in Item 7A of our Annual
Report on Form 10-K for the year ended December 28, 2024.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of management, including our principal executive officer and
principal financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this quarterly report as such term is defined in Rules 13a-15(e)
and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based
on this evaluation, our management, including our principal executive officer and principal financial officer,
concluded that our disclosure controls and procedures were effective as of June 28, 2025, to ensure that all material
information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated
and communicated to them as appropriate to allow timely decisions regarding required disclosure and that all such
information is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules
and forms, and the rules of the Nasdaq stock exchange.
Changes in Internal Control over Financial Reporting
The combination of acquisitions, continued acquisition integrations and systems implementation activity
undertaken during the quarter ended June 28, 2025, and carried over from prior quarters, when considered in the
aggregate, does not represent a material change in our internal control over financial reporting.
Limitations of the Effectiveness of Internal Control
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the internal control system are met. Because of the inherent limitations of any internal control
system, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company
have been detected.
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56
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For a discussion of Legal Proceedings, see
Note 11–Legal Proceedings
Financial Statements included under Item 1.
ITEM 1A. RISK FACTORS
There have been no material changes from the risk factors disclosed in Part 1, Item 1A, of our Annual Report on
Form 10-K for the year ended December 28, 2024.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Purchases of equity securities by the issuer
Our share repurchase program, announced on March 3, 2003, originally allowed us to repurchase up to two million
shares pre-stock splits (eight million shares post-stock splits) of our common stock, which represented
approximately 2.3% of the shares outstanding at the commencement of the program. Subsequent additional
increases since 2003 that have aggregated to an additional $5.9 billion, authorized by our Board, to the repurchase
program provide for a total of $6.0 billion (including $500 million authorized on January 27, 2025) of shares of our
common stock to be repurchased under this program, with $432 million currently available for future share
repurchases.
On May 19, 2025, we executed an accelerated share repurchase program to repurchase a total of $250 million of
our outstanding common stock based on volume-weighted average prices. As of June 28, 2025, we received
3,122,832 shares at an estimated fair value of $223 million, which were recorded in treasury stock. In July 2025,
we received an additional 368,651 shares at an estimated fair value of $27 million, representing the final amount of
shares to be received under this accelerated share repurchase program.
As of June 28, 2025, we had repurchased approximately $5.6 billion of common stock (101,727,771 shares,
including shares delivered after June 28, 2025) under these initiatives.
The following table summarizes repurchases of our common stock under our stock repurchase program during the
fiscal quarter ended June 28, 2025:
Total Number
Maximum Number
Total
of Shares
of Shares
Number
Average
Purchased as Part
that May Yet
of Shares
Price Paid
of Our Publicly
Be Purchased Under
Fiscal Month
Purchased (1)
Per Share
Announced Program
Our Program (2)
3/30/2025 through 4/26/2025
535,000
$
67.36
535,000
10,471,696
4/27/2025 through 5/31/2025
3,122,832
71.48
3,122,832
6,561,184
6/1/2025 through 6/28/2025
-
-
-
6,267,466
3,657,832
3,657,832
(1)
All repurchases were executed in the open market under our existing publicly announced authorized program.
(2)
The maximum number of shares that may yet be purchased under this program is determined at the end of each month based on the
closing price of our common stock at that time. This table excludes shares withheld from employees to satisfy minimum tax withholding
requirements for equity-based transactions.
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57
ITEM 5. OTHER INFORMATION
Amendment and Restatement of the Henry Schein, Inc. Supplemental Executive Retirement Plan
On August 1, 2025, the Compensation Committee approved the amendment and restatement of the Henry Schein,
Inc. Supplemental Executive Retirement Plan (the “SERP”), effective as of September 1, 2025. The amendment
and restatement incorporates the following changes:
•
Participants are permitted to make a one-time, irrevocable election to change the form of payment of their
vested account balance (as adjusted for earnings) as of the date they terminate employment from a lump
sum payment to annual installments paid over three or five years, in each case starting five years after the
originally scheduled payment date, or to elect to retain the lump sum form of payment but delay the
payment date for five years after the originally scheduled payment date.
•
Permits the Compensation Committee to increase “Recognized Compensation” to any specified amount
above the amount provided under the prior definition of “Recognized Compensation.” A participant’s
book-keeping contribution under the SERP each year is the amount that the participant’s base
compensation exceeds “Recognized Compensation,” multiplied by a contribution percentage established by
the Compensation Committee.
•
Additional other changes to reflect the Company’s administrative and procedural practices under the SERP.
The foregoing summary of the SERP does not purport to be complete and is subject to, and qualified in its entirety
by, the full text of the SERP, which is attached as Exhibit 10.1 and incorporated herein by reference.
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58
ITEM 6. EXHIBITS
10.1
Amended and Restated Term Loan Credit Agreement, dated as of June 6, 2025,
among us, the several lenders parties thereto, JPMorgan Chase Bank, N.A., as
administrative agent and joint lead arranger, U.S. Bank National Association, as
syndication agent and joint lead arranger, and The Toronto-Dominion Bank,
New York Branch, and Bank of America, N.A., as co-documentation agents and
joint lead arrangers and ING Bank, N.V. and BNP Paribas, as co-
documentation agents. (Incorporated by reference to Exhibit 10.1 to our Current
Report on Form 8-K filed on June 9, 2025.)
10.2
Third Amended and Restated Revolving Credit Agreement, dated as of June 6,
2025, among us, the several lenders parties thereto, and JPMorgan Chase Bank,
N.A., as administrative agent, U.S. Bank National Association, as syndication
agent, and The Toronto-Dominion Bank, New York Branch, Bank of America,
N.A., UniCredit Bank, A.G., the Bank of New York Mellon, ING Bank, N.V.
and HSBC Bank USA, N.A., as co-documentation agents. (Incorporated by
reference to Exhibit 10.2 to our Current Report on Form 8-K filed on June 9,
2025.)
10.3
Henry Schein, Inc. Supplemental Executive Retirement Plan, amended and
restated effective September 1, 2025.+**
31.1
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.+
31.2
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.+
32.1
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.+
101.INS
Inline XBRL Instance Document - the instance document does not appear in the
Interactive Data File because its XBRL tags are embedded within the Inline
XBRL document+
101.SCH
Inline XBRL Taxonomy Extension Schema Document+
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document+
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document+
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document+
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document+
104
The cover page of Henry Schein, Inc.’s Quarterly Report on Form 10-Q for the
quarter ended June 28, 2025, formatted in Inline XBRL (included within
Exhibit 101 attachments).+
_________
+ Filed or furnished herewith.
** Indicates management contract or compensatory plan or agreement.
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59
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Henry Schein, Inc.
(Registrant)
By: /s/ RONALD N. SOUTH
Ronald N. South
Senior Vice President and
Chief Financial Officer
(Authorized Signatory and Principal Financial
and Accounting Officer)
Dated: August 5, 2025
FAQ
How did Henry Schein's Q2 2025 revenue perform?
Net sales reached $3.24 billion, a 3.3% increase from the prior-year quarter.
What was HSIC's diluted EPS for Q2 2025?
Diluted earnings per share were $0.70, down from $0.80 in Q2 2024.
How much cash flow from operations did HSIC generate in the first half of 2025?
Operating cash flow was $157 million, compared with $493 million in the same period last year.
Has the cyber incident materially affected 2025 results?
YTD cyber-incident costs were offset by $20 million of insurance proceeds; no new expenses were recorded in Q2.
What is Henry Schein's current debt level?
Long-term debt stood at $2.09 billion as of June 28 2025, up $260 million since year-end.
How many shares are outstanding after the ASR and buybacks?
Shares outstanding decreased to 121.9 million as of July 28 2025.