Henry Schein (HSIC) 10-K risk factor changes: FY2018 vs FY2018

[removed: ####] Our future revenues and profitability depend on our ability to maintain satisfactory relationships with qualified sales personnel as well as customers, suppliers and manufacturers. [removed: If we fail to maintain our existing relationships with such persons or fail to acquire relationships with such key persons in the future, our business may be materially adversely affected.]

[removed: ####] Increases in shipping costs or service issues with our third-party shippers could harm our business.

[removed: #### Shipping is a significant expense in the operation of our business. We ship almost all of our orders through third-party delivery services, and typically bear the cost of shipment. Accordingly, any significant increase in shipping rates could have a material adverse effect on our business, financial condition or operating results.] Similarly, strikes or other service interruptions by those shippers could cause our operating expenses to rise and materially adversely affect our ability to deliver products on a timely basis.

| • | | the United Kingdom’s vote to leave the European Union (generally referred to as Brexit) and any other similar referenda or actions by other European Union member countries (during [removed: 2017,] [added: 2018,] approximately 7% of our consolidated net sales were invoiced to customers in the United Kingdom and approximately 25% of our consolidated net sales were invoiced to customers in Europe overall, including the U.K.); |

| • | | changes in regulatory and tax regulations; including without limitation, the Tax [removed: Cuts and Reform] Act; |

| • | [added: •] | [added: | |] increases in fuel and energy costs; |

[removed: ####] The market price for our common stock may be highly volatile.

Both our profitability and the profitability of our customers may be materially adversely affected by laws and regulations reducing reimbursement rates for pharmaceuticals and/or medical treatments or services, changes to the methodology by which reimbursement levels are [removed: determined and, in the case of animal health practitioners, changes in the use of feed additives (including, without limitation, antibiotics and growth promotants) used in the production of animal products due to trade restrictions, animal welfare and/or government regulations; and changes in customer buying habits (including customers purchasing animal health pharmaceuticals outside the veterinarians’ offices).][added: determined.]

[added: The Health Care] Reform Law has faced ongoing legal challenges, including litigation seeking to invalidate some of or all of the law or the manner in which it has been implemented.

Subsequently, the President has affirmed his intention to repeal and replace the Health Care Reform Law and has taken a number of administrative actions to materially weaken [added: it, including without limitation, by permitting] the [added: use of less robust plans with lower coverage and eliminating “premium support” for insurers providing policies under the] Health Care [added: Reform] Law.

On December 22, 2017, the President signed the Tax [removed: Cuts and Jobs] Act into law, which contains a broad range of tax reform provisions that impact the individual and corporate tax rates, international tax provisions, income tax add-back provisions and deductions.

The uncertain status of the Health Care Reform Law [removed: also] affects our ability to plan.

A Health Care Reform Law provision, generally referred to as the Physician Payment Sunshine Act, or Open Payments Program, imposes [added: annual] reporting and disclosure requirements for drug and device manufacturers with regard to payments or other transfers of value made to [removed: certain practitioners] [added: covered recipients] (including physicians, dentists and teaching hospitals), and for such manufacturers and for group purchasing organizations, with regard to certain ownership interests held by physicians in the reporting entity.

Under the Physician Payment Sunshine Act we are required to collect and report detailed information regarding certain financial relationships we have with [added: covered recipients such as] physicians, dentists and teaching hospitals.

Among the federal laws with which we must comply are the Controlled Substances Act, the [removed: Federal Food, Drug, and Cosmetic] [added: FDC] Act, as amended, and Section 361 of the Public Health Services Act.

Our business [removed: also] is [added: also] subject to requirements of similar and other foreign governmental laws and regulations affecting our operations abroad.

While we believe that we are substantially compliant with applicable [removed: fraud and abuse and other] laws and regulations, and believe we have adequate compliance programs and controls in place to ensure substantial compliance, if it is determined that we have not complied with these laws, we are potentially subject to penalties including warning letters, civil and criminal penalties, mandatory recall of product, seizure of product and injunction, consent decrees and suspension or limitation of product sale and distribution.

Other laws, referred to as “anti-kickback laws,” prohibit soliciting, offering, receiving or paying remuneration in order to induce the referral of a patient or ordering, purchasing, leasing or arranging [removed: for] [added: for,] or recommending ordering, purchasing or [removed: leasing, of] [added: leasing of,] items or services that are paid for by federal, state and other health care payers and programs.

Health care fraud measures may implicate, for example, our relationships with pharmaceutical manufacturers, our pricing and incentive programs for physician and dental practices, and our dental and physician practice management products that offer [removed: billing-related] [added: billing related] functionality.

The fraud and abuse [added: laws and] regulations have been subject to varying interpretations, as well as heightened enforcement [removed: activity,] [added: activity] over the past few years, and significant enforcement activity has been the result of [removed: “relators,”] [added: “relators”] who serve as whistleblowers by filing complaints in the name of the United States (and if applicable, particular [removed: states) under federal and state false claims laws.]

[removed: Under the] [added: states) under] federal [removed: False Claims Act relators can be entitled to] [added: and state false claims laws, and who may] receive up to 30% of total [added: government] recoveries.

[removed: The] [added: Furthermore, the] Health Care Reform Law significantly strengthened the federal False Claims Act and the federal Anti-Kickback Law provisions, [removed: which could lead to the possibility of increased whistleblower or relator suits, and among other things made clear] [added: clarifying] that a federal Anti-Kickback Law violation can be a basis for federal False Claims Act liability.

[removed: The] [added: With respect to measures of this type, the] United States government (among others) has expressed concerns about financial relationships between suppliers on the one hand and physicians and dentists on the other.

We also are subject to certain United States and foreign laws and regulations concerning the conduct of our foreign operations, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, [removed: the] German [removed: Anti-Corruption Law] [added: anti-corruption laws] and other anti-bribery [removed: laws, anti-corruption] laws and laws pertaining to the accuracy of our internal books and records, which have been the focus of increasing enforcement activity globally in recent years.

If we fail to comply with laws and regulations relating to the confidentiality of sensitive personal information or standards in electronic health [removed: data] [added: records or] transmissions, we could be required to make significant changes to our products, or incur substantial fines, penalties or other liabilities.

The FDA has become increasingly active in addressing the regulation of computer software intended for use in health care [removed: settings, and has developed and continues to develop policies on regulating clinical decision support tools and other types of software as medical devices.][added: settings.]

In addition, the European Parliament and the Council of the European Union have adopted the GDPR, effective from May 25, 2018, which [removed: increases] [added: increased] privacy rights for individuals in Europe, [removed: extends] [added: extended] the scope or responsibilities for data controllers and data processors and imposes increased requirements and potential penalties on companies offering goods or services to Data Subjects or monitoring the behavior of such individuals (including by companies based outside of Europe).

While we expect [removed: to] [added: we] have substantially compliant programs and controls in place to comply with the GDPR requirements, our compliance with the new regulation is likely to impose additional costs on us, and we cannot predict whether the interpretations of the requirements, or changes in our practices in response to new requirements or interpretations of the requirements, could have a material adverse effect on our business.

[removed: In addition,] [added: Various] federal initiatives [removed: provide a program of incentive payments available to certain health care providers involving] [added: involve] the adoption and use [added: by health care providers] of certain electronic health care records systems and processes.

Qualification for the [added: MIPS] incentive payments requires the use of EHRs that [removed: have] [added: are certified as having] certain capabilities [removed: for meaningful use pursuant to evolving] [added: designated in] standards adopted by CMS and ONC.

In order to maintain certification of our EHR products, we must satisfy [removed: these] [added: the] changing governmental [removed: criteria.][added: standards.]

Certain of our businesses involve the manufacture and sale of certified EHR systems and other products linked to [added: MIPS and other] incentive programs.

If any of our EHR systems do not meet these standards, yet have been relied upon by health care providers to receive federal incentive payments, [removed: as noted above,] we are exposed to [removed: risk] [added: risk, such as] under federal health care fraud and abuse laws, [removed: such as] [added: including] the False Claims Act.

For example, on May 31, 2017, the U.S. Department of Justice announced a $155 million settlement and 5-year corporate integrity agreement involving a vendor of certified EHR systems, based on allegations that the vendor, by misrepresenting capabilities to the certifying body, caused its health care provider customers to submit false Medicare and Medicaid claims for meaningful use [added: incentive] payments in violation of the False Claims Act.

[added: In many cases in which we have been sued in] connection with products manufactured by others, the manufacturer of the product provides us with indemnification.

There can be no assurance that the insurance coverage we maintain is sufficient or will be available in adequate amounts or at a reasonable cost, or that indemnification agreements will provide us with [removed: adequate protection.]

[removed: ####] We may experience competition from third-party online commerce sites.

If we fail to maintain our existing relationships with such persons or fail to acquire relationships with such key persons in the future, our business may be materially adversely affected.

| | | [Table of Contents](#TABLEOFCONTENTS) |

Shipping is a significant expense in the operation of our business.

We ship almost all of our orders through third-party delivery services, and typically bear the cost of shipment.

Accordingly, any significant increase in shipping rates could have a material adverse effect on our business, financial condition or operating results.

| | | [Table of Contents](#TABLEOFCONTENTS) |

| --- | --- | --- | --- | --- |

| | | [Table of Contents](#TABLEOFCONTENTS) |

The Health Care Reform Law increased federal oversight of private health insurance plans and included a number of provisions designed to reduce Medicare expenditures and the cost of health care generally, to reduce fraud and abuse, and to provide access to increased health coverage.

On December 22, 2017, the President signed into law the Tax Act, which contains a broad range of tax reform provisions that impact the individual and corporate tax rates, international tax provisions, income tax add-back provisions and deductions and which also repealed the individual mandate of the Health Care Reform Law.

Further, in December 2018, a Texas federal court struck down the entire Health Care Reform Law, a ruling which is being appealed, and, if upheld, could have a significant impact on the U.S. healthcare industry.

Effective January 1, 2022, transfers of value to physician assistants, nurse practitioners or clinical nurse specialists, certified registered nurse anesthetists, and certified nurse-midwives must also be reported.

| | | [Table of Contents](#TABLEOFCONTENTS) |

Penalties under fraud and abuse laws may be severe.

For example, under the federal False Claims Act, violations may result in treble damages, plus civil penalties of up to $22,363 per claim, as well as exclusion from federal health care programs and criminal penalties.

With respect to “anti-kickback laws,” violations of, for example, the federal Anti-Kickback Law may result in civil penalties of up to $100,000 for each violation, plus up to three times the total amount of remuneration offered, paid, solicited or received, as well as exclusion from federal health care programs and criminal penalties.

Notably, effective October 24, 2018, a new federal anti-kickback law (the “Eliminating Kickbacks in Recovery Act of 2018”) enacted in connection with broader addiction services legislation, may impose criminal penalties for kickbacks involving clinical laboratory services, regardless of whether the services at issue involved addiction services, and regardless of whether the services were reimbursed by a federal health care program or by a commercial health insurer.

The Cures Act, signed into law on December 13, 2016, amended the device definition to exclude certain software, including clinical decision support software that meet certain criteria.

In December 2017, the FDA issued draft guidance documents describing its proposed interpretation of the statutory language regarding

which types of clinical decision support tools and other software are exempt from regulations as medical devices.

The initiatives include, among others, programs that incentivize physicians and dentists, though Medicare’s MIPS, to use certified EHR technology in accordance with certain evolving requirements, including regarding quality, promoting interoperability, resource use, clinical practice improvement and improving patient access to health information.

These standards have been subject to change.

| | | [Table of Contents](#TABLEOFCONTENTS) |

If the Animal Health Spin-off or certain internal transactions undertaken in anticipation of the Animal Health Spin-off are determined to be taxable in whole or in part, we and our stockholders may incur substantial tax liabilities.

In connection with the Animal Health Spin-off, we obtained an opinion of outside tax counsel that the Animal Health Spin-off will qualify as a tax-free transaction to us and our stockholders for U.S. federal income tax purposes.

We have not sought or obtained a ruling from the Internal Revenue Service (“IRS”) on the tax consequences of the transaction.

In addition, the tax opinion is subject to customary qualifications and assumptions, and is based on factual representations and undertakings.

The failure of any factual representation or assumption to be true, correct and complete in all material respects, or any undertakings to be fully complied with, could affect the validity of the tax opinion.

Moreover, an opinion of counsel represents counsel’s best legal judgment, is not binding on the IRS or the courts, and the IRS or the courts may not agree with the conclusions set forth in the tax opinion.

Even if the Animal Health Spin-off otherwise qualified as a tax-free transaction for U.S. federal income tax purposes, it may become taxable to us if certain events occur that affect either us or Covetrus.

While Covetrus has agreed not to take certain actions that could cause the transaction not to qualify as a tax-free transaction and is generally obligated to indemnify us against any tax consequences if it breaches this agreement, the potential tax liabilities could have an adverse effect on us if we were not entitled to indemnification or if the indemnification obligations were not fulfilled.

If the Animal Health Spin-off or certain internal transactions undertaken in anticipation of the Animal Health Spin-off are determined to be taxable for U.S. federal income tax purposes, we and/or our U.S. stockholders who participated in the Animal Health Spin-off could incur substantial U.S. federal income tax liabilities.

There can be no assurance that we would be entitled to indemnification or that Covetrus would have the resources or liquidity required to indemnify us for any such taxable gain.

In addition, we and/or our stockholders who participated in the Animal Health Spin-off could incur tax costs in foreign jurisdictions in connection with the transaction, irrespective of whether the Animal Health Spin-off qualifies as tax-free for U.S. federal income tax purposes.

The Animal Health Spin-off may not achieve the intended benefits and may expose us to potential risks and liabilities.

We completed the Animal Health Spin-off on February 7, 2019.

We undertook the transaction because, among other things, we believed that our animal health business could achieve greater growth by combining with Vets First Choice and that we could benefit from greater strategic focus of our resources and management efforts.

We may not benefit as expected from the increased focus on our core business, strategic programs and objectives made possible by the Animal Health Spin-off.

In addition, the value of the transaction may be reduced by potential liabilities related to post-closing adjustments and indemnities, which could adversely affect our results of operations.

adequate protection.

| --- | --- | --- |

The Health Care Reform Law significantly expand health insurance coverage to uninsured Americans and changes the way health care is financed by both governmental and private payers.

The Health Care

The tax reform law also repealed the individual mandate of the Health Care Reform Law.

Another notable Medicare health care reform initiative, the Medicare Access and CHIP Reauthorization Act of 2015, enacted on April 16, 2015 (“MACRA”), establishes a new payment framework, called the Quality Payment Program, which modifies certain Medicare payments to “eligible clinicians,” including physicians, dentists and other practitioners.

Under MACRA, eligible clinicians will be required to participate in Medicare through MIPS or APMs.

MIPS generally will consolidate three current programs: the physician quality reporting system, the value-based payment modifier, and the Medicare EHR program into a single program in which Medicare reimbursement to eligible clinicians will include both positive and negative payment adjustments that take into account quality, resource use, clinical practice improvement and meaningful use of certified EHR technology.

Advanced APMs generally involve higher levels of financial and technology risk.

A final rule was published in the Federal Register on November 4, 2016 and allows eligible Medicare clinicians to pick their pace of participation for the first performance period that began January 1, 2017.

The data collected in the first performance year will determine payment adjustments beginning January 1, 2019.

A final rule updating certain Quality Payment Program regulations was published on November 16, 2017, which is effective as of January 1, 2018.

MACRA represents a fundamental change in physician reimbursement that is expected to provide substantial financial incentives for physicians to participate in risk contracts, and to increase physician information technology and reporting obligations.

The implications of the implementation of MACRA are uncertain and will depend on future regulatory activity and physician activity in the marketplace.

MACRA may encourage physicians to move from smaller practices to larger physician groups or hospital employment, leading to a consolidation of a portion of our customer base.

Although we believe that we are positioned to capitalize on this consolidation trend, there can be no assurances that we will be able to successfully accomplish this.

Also, violations of the federal False Claims Act can result in treble damages, and, in accordance with a final rule published by the Department of Justice on February 3, 2017, which substantially increased the maximum and minimum civil penalties for False Claims Act violations, the amounts for civil penalties assessed after February 3, 2017, whose associated violations occurred after November 2, 2015, were increased from a minimum per-claim penalty of $10,781 to $10,957, and from a maximum per-claim penalty of $21,563 to $21,916.

The initiatives include providing, among others, physicians and dentists, with financial incentives if they meaningfully use certified EHR systems in accordance with applicable and evolving requirements.

In addition, Medicare-eligible providers that fail to timely adopt certified EHR systems and meet “meaningful use” requirements for those systems in accordance with regulatory requirements are to be subject to cumulative Medicare reimbursement reductions, which reductions for applicable health professionals (including physicians and dentists) began on January 1, 2015.

CMS and ONC establish criteria for certified EHR systems and these criteria have been subject to change.

Although we believe we are positioned to accomplish this, the effort may involve increased costs, and our failure to implement product modifications, or otherwise satisfy applicable standards, could have a material adverse effect on our business.

Moreover in order to satisfy our customers, our products may need to incorporate increasingly complex reporting functionality.

On October 6, 2015, CMS and ONC released comprehensive final rules with respect to the EHR program that, among other things, established the more challenging “Stage 3” criteria, making certain adjustments to Stage 1 and Stage 2 standards (e.g., reducing the 2015 reporting period from a full year to 90 days), and finalized 2015 edition health technology (HIT) certification criteria (which is now added to the existing 2014 edition HIT certification criteria, but not required until 2018).

Notably, under the new rules, compliance with Stage 3 standards is optional for providers in 2017, and would generally be required for all eligible providers (regardless of prior participation in the EHR incentive program) for 2018 reporting periods and subsequently.

Developers and others involved in the manufacture of EHR program technology will have this interim period to develop and certify products, and work with customers to implement products for the 2018 EHR program period.

In connection with the release of the October 6 rules, HHS has also stated it will continue to modify applicable EHR program standards.

On November 14, 2016, CMS published a final rule that will impact Medicare and Medicaid EHR incentive programs

through revisions to the objectives and measures for eligible hospitals, critical access hospitals, and dual-eligible hospitals.

The use of certified EHR technology will continue as a feature of MACRA’s MIPS programs, and in connection with this, Medicare EHR program payment adjustments to eligible professionals will sunset at the end of 2018 and MIPS payment adjustments will begin on January 1, 2019.

The first performance period for MIPS began January 1, 2017, and will afford eligible clinicians different reporting options linked to the amount of data reported and the duration of the reporting period, with positive payment adjustments generally linked to more robust reporting.

Certain of our businesses involve the manufacture and sale of certified EHR systems and other products linked to incentive programs, and therefore we must maintain compliance with, and are affected by, these changing governmental criteria.

In many cases in which we have been sued in

We are still analyzing the complex new law to determine its impact.

Risk factors and uncertainties that could cause actual results to differ materially from current and historical results include, but are not limited to: effects of a highly competitive and consolidating market; our dependence on third parties for the manufacture and supply of our products; our dependence upon sales personnel, customers, suppliers and manufacturers; our dependence on our senior management; fluctuations in quarterly earnings; risks from expansion of customer purchasing power and multi-tiered costing structures; increases in shipping costs for our products or other service issues with our third-party shippers; general global macro-economic conditions; risks associated with currency fluctuations; risks associated with political and economic uncertainty; disruptions in financial markets; volatility of the market price of our common stock; changes in the health care industry; implementation of health care laws; failure to comply with regulatory requirements and data privacy laws; risks associated with our global operations; transitional challenges associated with [removed: acquisitions] [added: acquisitions, dispositions] and joint ventures, including the failure to achieve anticipated [removed: synergies;] [added: synergies/benefits;] financial [added: and tax] risks associated with [removed: acquisitions] [added: acquisitions, dispositions] and joint ventures; litigation risks; new or unanticipated litigation developments; the dependence on our continued product development, technical support and successful marketing in the technology segment; our dependence on third parties for certain technologically advanced components; increased competition by third party online commerce sites; risks from disruption to our information systems; cyberattacks or other privacy or data security breaches; certain provisions in our governing documents that may discourage third-party acquisitions of us; and changes in tax legislation.

[removed: #] Executive-Level Overview

We believe we are the world’s largest provider of health care products and services primarily to office-based [removed: dental, animal health] [added: dental] and medical practitioners.

We serve more than 1 million customers worldwide including dental practitioners and [removed: laboratories, animal health clinics] [added: laboratories] and physician practices, as well as government, institutional health care clinics and other alternate care clinics.

We believe that we have a strong brand identity due to our more than [removed: 85] [added: 86] years of experience distributing health care products.

We are headquartered in Melville, New York, employ more than [removed: 22,000] [added: 18,000] people (of which more than [removed: 11,400] [added: 8,800] are based outside the United States) and have operations or affiliates in [removed: 34] [added: 31] countries, including the United States, Australia, Austria, Belgium, Brazil, Canada, Chile, China, the Czech Republic, [removed: Denmark,] France, Germany, Hong Kong SAR, [removed: Ireland, Israel, Italy, Japan, Liechtenstein, Luxembourg, Malaysia, the Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Slovakia, South Africa, Spain, Sweden, Switzerland, Thailand, United Arab Emirates and the United Kingdom.]

The health care distribution reportable segment aggregates our global [removed: dental, animal health] [added: dental] and medical operating segments.

Our technology group offerings include practice management software systems for dental and medical [removed: practitioners and animal health clinics.][added: practitioners.]

[removed: #] Industry Overview

[removed: ###] Industry Consolidation

[removed: We also have invested in expanding our] sales/marketing infrastructure to include a focus on building relationships with decision makers who do not reside in the office-based practitioner setting.

According to the U.S. Census Bureau’s International Data Base, in [removed: 2017] [added: 2018] there were more than six million Americans aged 85 years or older, the segment of the population most in need of long-term care and elder-care [added: services.]

The Centers for Medicare and Medicaid Services, or CMS, published “National Health Expenditure Projections [removed: 2016-2025”] [added: 2017-2026”] indicating that total national health care spending reached approximately [removed: $3.4] [added: $3.7] trillion in [removed: 2016,] [added: 2018,] or [removed: 18.1%] [added: 18.2%] 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 [removed: $5.5] [added: $5.7] trillion in [removed: 2025,] [added: 2026,] approximately [removed: 19.9%] [added: 19.7%] of the nation’s gross domestic product.

However, with respect to the medical device excise tax, a two-year moratorium was imposed under the Consolidated Appropriations Act, 2016, suspending the imposition of the tax on device sales during the period beginning January 1, 2016 and ending on December 31, [removed: 2017, and on January 22, 2018 an additional two-year moratorium was imposed under Public Law No. 115-120, suspending the imposition of the tax on device sales during the period beginning January 1, 2018 and ending on December 31, 2019.]

Subsequently, the President has affirmed his intention to repeal and replace the Health Care Reform Law and has taken a number of administrative actions to materially weaken [added: it, including, without limitation, by permitting] the [added: use of less robust plans with lower coverage and eliminating “premium support” for insurers providing policies under the] Health Care Reform Law.

On December 22, 2017, the President signed [added: into law] the Tax Cuts and Jobs Act [removed: into law,] [added: (the “Tax Act”),] which contains a broad range of tax reform provisions that impact the individual and corporate tax rates, international tax provisions, income tax add-back provisions and [removed: deductions.][added: deductions, and which also repealed the individual mandate of the Health Care Reform Law.]

A Health Care Reform Law provision, generally referred to as the Physician Payment Sunshine Act or Open Payments Program, [removed: has imposed new] [added: imposes annual] reporting and disclosure requirements for drug and device manufacturers and distributors with regard to payments or other transfers of value made to certain covered recipients (including physicians, dentists and teaching hospitals), and for such manufacturers and distributors and for group purchasing organizations, with regard to certain ownership interests held by physicians in the reporting entity.

Under the Physician Payment Sunshine Act, we are required to collect and report detailed information regarding certain financial relationships we have with [added: covered recipients such as] physicians, dentists and teaching hospitals.

Another notable Medicare health care reform initiative, the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”), enacted on April 16, 2015, [removed: establishes] [added: established] a new payment framework, called the Quality Payment Program, which modifies certain Medicare payments to “eligible clinicians,” including physicians, dentists and other practitioners.

Under MACRA, [added: certain] eligible clinicians [removed: will be] [added: are] required to participate in Medicare through the Merit-Based Incentive Payment System (“MIPS”) or Advanced Alternative Payment Models (“APMs”).

MIPS generally [removed: will consolidate] [added: consolidated] three [removed: current] programs; the physician quality reporting system, the value-based payment modifier and the Medicare electronic health record (“EHR”) program, into a single program in which Medicare reimbursement to eligible clinicians [removed: will include] [added: includes] both positive and negative payment adjustments that take into account quality, [added: promoting interoperability,] resource use, clinical practice improvement and [removed: meaningful use of certified EHR technology.][added: improving patient access to health information.]

The [added: first MIPS performance year was 2017, and the] data collected in the first performance year [removed: will determine] [added: determines] payment adjustments beginning January 1, 2019.

[removed: Although we believe that we are] positioned to capitalize on this consolidation trend, there can be no assurances that we will be able to successfully accomplish this.

The fraud and abuse laws and regulations have been subject to varying interpretations, as well as heightened enforcement activity over the past few years, and significant enforcement activity has been the result of [removed: “relators,”] [added: “relators”] who serve as whistleblowers by filing complaints in the name of the United States (and if applicable, particular states) under federal and state false claims [removed: laws.][added: laws, and who may receive up to 30% of total government recoveries.]

[removed: The] [added: Furthermore, the] Health Care Reform Law significantly strengthened the federal False Claims Act and the federal Anti-Kickback Law provisions, [removed: which could lead to the possibility of increased whistleblower or relator suits, and among other things made clear] [added: clarifying] that a federal Anti-Kickback Law violation can be a basis for federal False Claims Act liability.

[removed: The] [added: With respect to measures of this type, the] United States government (among others) has expressed concerns about financial relationships between suppliers on the one hand and physicians and dentists on the other.

The law’s track and trace requirements applicable to manufacturers, wholesalers, repackagers and dispensers (e.g., pharmacies) of prescription drugs took effect in January 2015, and [removed: will continue] [added: continues] to be implemented.

The Food and Drug Administration Amendments Act of 2007 and the Food and Drug Administration Safety and Innovation Act of 2012 amended the [removed: FDCA] [added: FDC Act] to require the FDA to promulgate regulations to implement a unique device identification (“UDI”) system.

[added: We are also subject to] foreign government regulation of such products.

The FDA has become increasingly active in addressing the regulation of computer software intended for use in health care [removed: settings, and has developed and continues to develop policies on regulating clinical decision support tools and other types of software as medical devices.][added: settings.]

In addition, the European Parliament and the Council of the European Union have adopted a new pan-European General Data Protection Regulation (“GDPR”), effective from May 25, 2018, which [removed: increases] [added: increased] privacy rights for individuals in Europe, [removed: extends] [added: extended] the scope of responsibilities for data controllers and data processors and imposes [removed: increased requirements and potential penalties on companies offering goods or services to individuals who are located in Europe (“Data Subjects”) or monitoring the behavior of such individuals (including by companies based outside of Europe).]

While we expect [removed: to] [added: we] have substantially compliant programs and controls in place to comply with the GDPR requirements, our compliance with the new regulation is likely to impose additional costs on us, and we cannot predict whether the interpretations of the requirements, or changes in our practices in response to new requirements or interpretations of the requirements, could have a material adverse effect on our business.

Perceived or actual security vulnerabilities in our products or services, or the perceived or actual failure by us or our customers who use our products to comply with applicable legal or contractual requirements, may not only [added: cause us significant reputational harm, but may also lead to claims against us by our customers and/or governmental agencies and involve substantial fines, penalties and other liabilities and expenses and costs for remediation.]

[removed: Federal] [added: Various federal] initiatives [removed: provide a program of incentive payments available to certain health care providers involving] [added: involve] the adoption and use [added: by health care providers] of certain electronic health care records systems and processes.

The initiatives [removed: include providing,] [added: include,] among others, [added: programs that incentivize] physicians and dentists, [removed: with financial incentives if they meaningfully] [added: through Medicare’s MIPS, to] use certified EHR technology in accordance with [removed: applicable and] [added: certain] evolving requirements.

Qualification for the [added: MIPS] incentive payments requires the use of EHRs that [removed: have] [added: are certified as having] certain capabilities [removed: for meaningful use pursuant to evolving] [added: designated in] standards adopted by CMS and by the Office of the National Coordinator for Health Information Technology (“ONC”) of the Department of Health and Human Services (“HHS”).

Certain of our businesses involve the manufacture and sale of certified EHR systems and other products linked to [added: MIPS and other] incentive programs.

In order to maintain certification of our EHR products, we must satisfy [removed: these] [added: the] changing governmental [removed: criteria.][added: standards.]

If any of our EHR systems do not meet these standards, yet have been relied upon by health care providers to receive federal incentive [removed: payments, as noted above,] [added: payments] we are exposed to [removed: risk] [added: risk, such as] under federal health care fraud and abuse laws, [removed: such as] [added: including] the False Claims Act.

Ireland, Israel, Italy, Japan, Liechtenstein, Luxembourg, Malaysia, the Netherlands, New Zealand, Poland, Portugal, Singapore, Slovakia, South Africa, Spain, Switzerland, Thailand, United Arab Emirates and the United Kingdom.

Spin-Off of Henry Schein Animal Health Business

On February 7, 2019 (the “Distribution Date”), we completed the previously announced separation (the “Separation”) and subsequent merger of our animal health business (the “Henry Schein Animal Health Business”) with Direct Vet Marketing, Inc. (d/b/a Vets First Choice, “Vets First Choice”) (the “Merger”).

This was accomplished by a series of transactions among us, Vets First Choice, Covetrus, Inc. (f/k/a HS Spinco, Inc. “Covetrus”), a wholly owned subsidiary of ours prior to the Distribution Date, and HS Merger Sub, Inc., a wholly owned subsidiary of Covetrus (“Merger Sub”).

In connection with the Separation, we contributed, assigned and transferred to Covetrus certain applicable assets, liabilities and capital stock or other ownership interests relating to the Henry Schein Animal Health Business.

On the Distribution Date, we received a tax-free distribution of $1,120.0 million from Covetrus pursuant to certain debt financing incurred by Covetrus.

On the Distribution Date and prior to the Distribution, Covetrus issued shares of Covetrus common stock to certain institutional accredited investors (the “Share Sale Investors”) for $361.1 million (the “Share Sale”).

The proceeds of the Share Sale were paid to Covetrus and distributed to us.

Subsequent to the Share Sale, we distributed, on a pro rata basis, all of the shares of the common stock of Covetrus held by us to our stockholders of record as of the close of business on January 17, 2019 (the “Animal Health Spin-off”).

After the Share Sale and Animal Health Spin-off, Merger Sub consummated the Merger whereby it merged with and into Vets First Choice, with Vets First Choice surviving the Merger as a wholly owned subsidiary of Covetrus.

Immediately following the consummation of the Merger, on a fully diluted basis, (i) approximately 63% of the shares of Covetrus common stock were (a) owned by our stockholders and the Share Sale Investors, and (b) in respect of certain equity awards held by certain employees of the Henry Schein Animal Health Business, and (ii) approximately 37% of the shares of Covetrus common stock were (a) owned by stockholders of Vets First Choice immediately prior to the Merger, and (b) in respect of certain equity awards held by certain employees of Vets First Choice.

After the Separation and the Merger, we no longer beneficially owned any shares of Covetrus common stock and, following the Distribution Date, will not consolidate the financial results of Covetrus for the purpose of our financial reporting.

Following the Separation and the Merger, Covetrus was an independent, publicly traded company on the Nasdaq Global Select Market.

Effective first quarter 2019, we will report the historical earnings of the Henry Schein Animal Health Business as a discontinued operation.

The Company estimates that on a continuing operations basis, its 2018 revenues were $9.4 billion and its 2018 net income was $430.7 million.

We also have invested in expanding our

2017, and on January 22, 2018 an additional two-year moratorium was imposed under Public Law No. 115-120, suspending the imposition of the tax on device sales during the period beginning January 1, 2018 and ending on December 31, 2019.

Further, in December 2018, a Texas federal court struck down the entire Health Care Reform Law, a ruling which is being appealed, and if upheld, could have a significant impact on the U.S. healthcare industry.

Effective January 1, 2022, transfers of value to physician assistants, nurse practitioners or clinical nurse specialists, certified registered nurse anesthetists, and certified nurse-midwives must also be reported.

Although we believe that we are

Penalties under fraud and abuse laws may be severe.

For example, under the federal False Claims Act, violations may result in treble damages, plus civil penalties of up to $22,363 per claim, as well as exclusion from federal health care programs and criminal penalties.

With respect to “anti-kickback laws,” violations of, for example, the federal Anti-Kickback Law may result in civil penalties of up to $100,000 for each violation, plus up to three times the total amount of remuneration offered, paid, solicited or received, as well as exclusion from federal health care programs and criminal penalties.

Notably, effective October 24, 2018, a new federal anti-kickback law (the “Eliminating Kickbacks in Recovery Act of 2018”) enacted in connection with broader addiction services legislation, may impose criminal penalties for kickbacks involving clinical laboratory services, regardless of whether the services at issue involved addition services, and regardless of whether the services were reimbursed by a federal health care program or by a commercial health insurer.

Most compliance dates were reached as of September 24, 2018, with a final set of requirements for low risk devices being reach on September 24, 2022, which will complete the phase in.

The 21st Century Cures Act (“Cures Act”), signed into law on December 13, 2016, amended the device definition to exclude certain software, including clinical decision support software that meet certain criteria.

In December 2017, the FCA issued draft guidance documents describing its proposed interpretation of the statutory language regarding which types of clinical decision support tools and other software are exempt from regulation as medical devices.

increased requirements and potential penalties on companies offering goods or services to individuals who are located in Europe (“Data Subjects”) or monitoring the behavior of such individuals (including by companies based outside of Europe).

Including regarding quality, promoting interoperability, resource use, clinical practice improvement and improving patient access to health information.

These standards have been subject to change.

Certain of our businesses provide electronic practice

fines, penalties, and other liabilities and expenses, costs for remediation and harm to our reputation.

| | Litigation settlements.......................................................................................................................................................... | | | | 38,488 | | | 5,325 | | | \- |

| | Transaction costs related to Animal Health spin-off................................................................................................................. | | | | 38,756 | | | \- | | | \- |

On July 9, 2018, we committed to an initiative to rationalize our operations and provide expense efficiencies.

These actions will allow us to execute on our plan to reduce our cost structure and fund new initiatives that are expected to drive future growth under our 2018 to 2020 strategic plan.

This initiative is expected to include the elimination of approximately 2% to 3% of our workforce and the closing of certain facilities.

The total 2018 costs associated with the actions to complete this restructuring were initially expected to be in the range of $45 million to $55 million.

However, additional cost savings opportunities were identified in the fourth quarter of 2018 resulting in a charge of $35.4 million in the quarter, which increased our full year 2018 restructuring charges to $62.9 million, consisting primarily of severance costs.

We plan to continue restructuring activities in the first half of 2019 and expect to incur additional restructuring costs related to these activities during the first half of 2019.

This industry, which encompasses the dental, animal health and medical markets, was estimated to produce revenues of approximately $45 billion in 2017 in the global markets.

services.

The tax reform law also repealed the individual mandate of the Health Care Reform Law.

A final rule was published in the Federal Register on November 4, 2016 and allows eligible Medicare clinicians to pick their pace of participation for the first performance period that began January 1, 2017.

A final rule updating certain Quality Payment Program regulations was published on November 16, 2017, which became effective as of January 1, 2018.

Under the federal False Claims Act, relators can be entitled to receive up to 30% of total recoveries.

Also, violations of the federal False Claims Act can result in treble damages, and, in accordance with a final rule published by the Department of Justice on February 3, 2017, which substantially increased the maximum and minimum civil penalties for False Claims Act violations, the amounts for civil penalties assessed after February 3, 2017, whose associated violations occurred after November 2, 2015, were increased from a minimum per-claim penalty of $10,781 to $10,957, and from a maximum per-claim penalty of $21,563 to $21,916.

We are also subject to

cause us significant reputational harm, but may also lead to claims against us by our customers and/or governmental agencies and involve substantial fines, penalties and other liabilities and expenses and costs for remediation.

In addition, Medicare-eligible providers that fail to timely adopt certified EHR systems and meet “meaningful use” requirements for those systems in accordance with regulatory requirements are to be subject to cumulative Medicare reimbursement reductions, which reductions for applicable health professionals (including physicians and dentists) began on January 1, 2015.

The use of certified EHR technology will continue as a feature of MACRA’s MIPS program, and in connection with this, Medicare EHR program payment adjustments to eligible professionals will sunset at the end of 2018 and MIPS payment adjustments will begin on January 1, 2019.

The first performance period for MIPS began January 1, 2017, and will afford eligible clinicians different reporting options linked to the amount of data reported and the duration of the reporting period, with positive payment adjustments generally linked to more robust reporting.

On October 6, 2015, CMS and ONC released comprehensive final rules with respect to the EHR program that, among other things, established the more challenging “Stage 3” criteria, made certain adjustments to Stage 1 and Stage 2 standards (e.g., reducing the 2015 reporting period from a full year to 90 days), and finalized 2015 edition health information technology (HIT) certification criteria (which is now added to the existing 2014 edition HIT certification criteria, but not required until 2018).

Notably, under the new rules, compliance with Stage 3 standards is optional for providers in 2017, and would generally be required for all eligible providers (regardless of prior participation in the EHR incentive program) for 2018 reporting periods and subsequently.

Developers and others involved in the manufacture of EHR program technology will have this interim period to develop and certify products, and work with customers to implement products for the 2018 EHR program period.

In connection with the release of the October 6 rules, HHS has also stated that it will continue to modify applicable EHR program standards.

On November 14, 2016, CMS published a final rule that will impact Medicare and Medicaid EHR incentive programs through revisions to the objectives and measures for eligible hospitals, critical access hospitals and dual-eligible hospitals.

CMS and ONC establish criteria for certified EHR systems, and these criteria have been subject to change.

business.

As of December 31, 2016 our restructuring activities are complete and we did not incur any additional restructuring charges in fiscal 2017.

During the second quarter of 2016, the effective tax rate was affected by a federal tax audit settlement, which reduced our income tax expense by approximately $4.5 million.

For 2018, we expect our effective tax rate to be in the range of 24%.

The U.S.

The Company is in the process of assessing the effects of these provisions for 2018.

The ultimate impacts of the Tax Act may differ from the estimate above, possibly materially, due to additional guidance from the U.S. Department of Treasury, updates or changes in our assumptions, revision of accounting standards for income taxes or related interpretations and future information that may become available.

We currently anticipate finalizing and recording any resulting adjustments by the quarter ended September 29, 2018.

If the information necessary to finalize and record the related tax impacts are available prior to the quarter ended September 29, 2018, we will book these impacts accordingly.

2016 Compared to 2015

| | | | | 2016 | | | Total | | | 2015 | | | Total | | | $ | | | % | |

| | Dental .......................................................................................................................................................................................... | | | $ | 5,555,299 | | 48.0 | % | | $ | 5,276,407 | | 49.6 | % | | $ | 278,892 | | 5.3 | % |

| | Animal health ................................................................................................................................................................................. | | | | 3,253,095 | | 28.1 | | | | 2,921,624 | | 27.5 | | | | 331,471 | | 11.3 | |

| | Medical ........................................................................................................................................................................................ | | | | 2,337,661 | | 20.2 | | | | 2,072,915 | | 19.5 | | | | 264,746 | | 12.8 | |

| | | Total health care distribution .............................................................................................................................................................. | | | 11,146,055 | | 96.3 | | | | 10,270,946 | | 96.6 | | | | 875,109 | | 8.5 | |

| Technology and value-added services (2) ...................................................................................................................................................... | | | | | 425,613 | | 3.7 | | | | 358,773 | | 3.4 | | | | 66,840 | | 18.6 | |

| | | Total ........................................................................................................................................................................................ | | $ | 11,571,668 | | 100.0 | % | | $ | 10,629,719 | | 100.0 | % | | $ | 941,949 | | 8.9 | |

The fiscal year ended December 31, 2016 consisted of 53 weeks as compared to the fiscal year ended December 26, 2015, which consisted of 52 weeks.

The growth in internally generated animal health revenue is affected by the revenue for certain products being recognized on a gross basis in 2016 that had been recognized on an agency basis in the prior year.

The growth in internally generated medical revenue is affected by certain sales being recognized on a gross basis in 2016 that had been recognized on an agency basis in the prior year.

When excluding the effects of this change, internally generated revenue grew by 7.9%

| | | | 2016 | | | Margin % | | | 2015 | | | Margin % | | | $ | | | % | |

A hypothetical 5% change in the average value of the U.S. dollar in [removed: 2017] [added: 2018] compared to foreign currencies would have changed our [removed: 2017] [added: 2018] reported Net income attributable to Henry Schein, Inc. by approximately [removed: $7.3] [added: $8.0] million.

As of December [removed: 30, 2017,] [added: 29, 2018,] we had forward foreign currency exchange agreements, which expire through [removed: June] [added: November] 27, [removed: 2018,] [added: 2019,] which include a [removed: mark-to-market loss] [added: fair value gain] of [removed: $1.0] [added: $1.4] million as determined by quoted market prices.

As of December [removed: 30, 2017,] [added: 29, 2018,] Henry Schein, Inc. had Euro to Brazilian Real (BRL) cross currency swap contracts notionally totaling an amount of [removed: €78] [added: €94.6] million, with a reported fair value of these contracts as a net asset of [removed: $10.7] [added: $9.4] million.

A 5% [removed: increase] [added: hypothetical change] in the value of the Euro to the BRL from December [removed: 30, 2017,] [added: 29, 2018,] with all other variables held constant, would have had [removed: a favorable effect on] [added: changed] the [added: value] fair value of these swap contracts by [removed: increasing the value of these instruments by $4.8] [added: approximately $5.3] million.

As of December [removed: 30, 2017,] [added: 29, 2018,] we had variable interest rate exposure for certain of our revolving credit facilities and our U.S. trade accounts receivable securitization.

Our revolving credit facility which we entered into on April 18, 2017 and expires [removed: in] [added: on] April [added: 18,] 2022, has an interest rate that is based on the U.S. Dollar LIBOR plus a spread based on our leverage ratio at the end of each financial reporting quarter.

As of December [removed: 30, 2017,] [added: 29, 2018,] there was [removed: $320.0] [added: $175.0] million outstanding under this revolving credit facility.

During the year ended December [removed: 30, 2017,] [added: 29, 2018,] the average outstanding balance under this revolving credit facility was approximately [removed: $324.6] [added: $393.8] million.

Based upon our average outstanding balance for this revolving credit facility, for each hypothetical increase of 25 basis points, our interest expense thereunder would have increased by [removed: $0.8] [added: $1.0] million.

Our U.S trade accounts receivable securitization, which we entered into on April 17, 2013 and which expires on April 29, 2020, has an interest rate that is based upon the asset-backed commercial paper [removed: rate of 153 basis points plus 75 basis points.][added: rate.]

[removed: As of] [added: At] December [removed: 30, 2017, we had an] [added: 29, 2018 the] outstanding balance [removed: of] [added: was] $350.0 million under this securitization facility.

During the year ended December [removed: 30, 2017,] [added: 29, 2018,] the average outstanding balance under this securitization facility was approximately [removed: $349.6] [added: $349.0] million.

[added: Based upon our average outstanding balance for this] securitization facility, for each hypothetical increase of 25 basis points, our interest expense thereunder would have increased by $0.9 million.

As of December 29, 2018, the commercial paper rate was 2.66% plus 0.75%, for a combined rate of 3.41%.

Based upon our average outstanding balance for this

We believe we are the world’s largest provider of health care products and services primarily to office-based [removed: dental, animal health] [added: dental] and medical practitioners.

We serve more than 1 million customers worldwide including dental practitioners and [removed: laboratories, animal health clinics] [added: laboratories] and physician practices, as well as government, institutional health care clinics and other alternate care clinics.

We believe that we have a strong brand identity due to our more than [removed: 85] [added: 86] years of experience distributing health care products.

We are headquartered in Melville, New York, employ more than [removed: 22,000] [added: 18,000] people (of which more than [removed: 11,400] [added: 8,800] are based outside the United States) and have operations or affiliates in [removed: 34] [added: 31] countries, including the United States, Australia, Austria, Belgium, Brazil, Canada, Chile, China, the Czech Republic, [removed: Denmark,] France, Germany, Hong Kong SAR, Ireland, Israel, Italy, Japan, Liechtenstein, Luxembourg, Malaysia, the Netherlands, New Zealand, [removed: Norway,] Poland, Portugal, [removed: Romania,] [added: Singapore,] Slovakia, South Africa, Spain, [removed: Sweden,] Switzerland, Thailand, United Arab Emirates and the United Kingdom.

[removed: We operate through a centralized and automated distribution network] with a selection of more than 120,000 branded products and Henry Schein private brand products in stock, as well as more than 180,000 additional products available as special order items.

We have established over [removed: 4.5] [added: 3.5] million square feet of space in [removed: 63] [added: 30] strategically located distribution centers around the world to enable us to better serve our customers and increase our operating efficiency.

The health care distribution reportable segment aggregates our global dental, [added: medical and, prior to the completion of the Animal Health Spin-off,] animal health [removed: and medical] operating segments.

Our technology group offerings include practice management software systems for [removed: dental and] [added: dental,] medical [removed: practitioners and] [added: and, prior to the completion of the Animal Health Spin-off,] animal health [removed: clinics.][added: practitioners.]

[removed: ###] Competition

In North America, we compete with other distributors, as well as several manufacturers, of [removed: dental, animal health] [added: dental] and medical products, primarily on the basis of price, breadth of product line, customer service and value-added products and services.

[removed: In the animal health market, our primary competitors are the MWI Animal Health division of AmerisourceBergen and the Patterson Veterinary division of Patterson Companies, Inc.] Our primary competitors in the medical market are McKesson Corporation and Medline Industries, Inc., which are national distributors.

We also compete against a number of regional and local [removed: animal health and] medical distributors, as well as a number of manufacturers that sell directly to [removed: veterinarians and] physicians.

With regard to our dental practice management software, we compete against numerous companies, including Carestream Health, Inc. and the Patterson Dental division of Patterson Companies, Inc. [removed: In the animal health practice management market, our primary competitors are IDEXX Laboratories, Inc. and the Patterson Veterinary division of Patterson Companies, Inc.] The medical practice management and electronic medical records [added: market is very fragmented and we compete with numerous companies such as the NextGen division of Quality Systems, Inc., eClinicalWorks and Allscripts Healthcare Solutions, Inc.]

We also face significant competition internationally, where we compete on the basis of price and customer service against several large competitors, including the GACD Group, Pluradent AG & Co., Lifco AB, Planmeca Oy, Billericay Dental Supply Co. Ltd., [removed: National Veterinary Services Limited (Patterson Veterinary division of Patterson Companies, Inc.), Centaur Services Limited (MWI Animal Health division of AmerisourceBergen) and Alcyon SA,] as well as a large number of [removed: dental, animal health] [added: dental] and medical product distributors and manufacturers in Australia, Austria, Belgium, Brazil, Canada, Chile, China, the Czech Republic, [removed: Denmark,] France, Germany, Hong Kong SAR, Ireland, Israel, Italy, Japan, Liechtenstein, Luxembourg, Malaysia, the Netherlands, New Zealand, [removed: Norway,] Poland, Portugal, [removed: Romania,] [added: Singapore,] Slovakia, South Africa, Spain, [removed: Sweden,] Switzerland, Thailand, United Arab Emirates and the United Kingdom.

We have more than [removed: 85] [added: 86] years of experience in distributing products to health care practitioners resulting in strong awareness of the Henry Schein® brand.

| | • | | _Field sales [removed: consultants_.] [added: consultants._] We have over [removed: 4,200] [added: 3,600] field sales consultants, including equipment sales specialists, covering major North American, European and other international markets. These consultants complement our direct marketing and telesales efforts and enable us to better market, service and support the sale of more sophisticated products and equipment. |

| | • | | _Direct marketing_. During [removed: 2017,] [added: 2018,] we distributed approximately [removed: 35] [added: 26] million pieces of direct marketing material, including catalogs, flyers, order stuffers and other promotional materials to existing and potential office-based health care customers. |

| | • | | _Telesales_. We support our direct marketing effort with approximately [removed: 2,300] [added: 1,900] inbound and outbound telesales representatives, who facilitate order processing, generate new sales through direct and frequent contact with customers and stay abreast of market developments and the hundreds of new products, services and technologies introduced each year to educate practice personnel. |

| | • | | _Electronic commerce [removed: solutions._] [added: solutions_.] We provide our customers and sales teams with innovative and competitive Internet, PC and mobile e-commerce solutions. |

| | • | | [added: |] _Consumable supplies and equipment_. We offer over 120,000 Stock Keeping Units, or SKUs, to our customers. [removed: Of the SKUs offered, approximately 49,000 are offered to our dental customers, approximately 14,000 to our animal health customers and approximately 48,000 to our medical customers.] We offer over 180,000 additional SKUs to our customers in the form of special order items. |

| | [added: |] • | | _Technology and other value-added products and services_. We sell practice management software systems to our [removed: dental, animal health] [added: dental] and medical customers. Our practice management solutions provide practitioners with electronic medical records, patient treatment history, billing, accounts receivable analyses and management, appointment calendars, electronic claims processing and word processing programs. We have [removed: over 700] [added: approximately 500] technical representatives supporting customers using our practice management solutions. As of December [removed: 30, 2017,] [added: 29, 2018,] we had an active user base of almost [removed: 97,000] [added: 66,000] practices, including users of Dentrix® Dental Systems, Dentrix® Enterprise, Dentrix® Dental VisionTM, Dentrix Ascend®, Easy Dental®, OasisTM, Evolution® and EXACT®, Gesden®, Julie®Software, Power Practice® Px, AxiUmTM, EndoVision®, PerioVision®, OMSVision® and Viive® for dental practices; [removed: Advantage+TM, AVImark®, DVM Manager®, InfinityTM, Triple Crown®, Vetstreet®, VisionVPMTM, Robovet®,] and [removed: RxWorks®, and eVetPracticeTM for animal health practices; and] MicroMD® for physician practices. |

| | • | | _Repair services_. We have over [removed: 200] [added: 180] equipment sales and service centers worldwide that provide a variety of repair, installation and technical services for our health care customers. Our over 2,000 technicians provide installation and repair services for: dental handpieces; [removed: dental, animal health] [added: dental] and medical small equipment; table top sterilizers; and large dental equipment. |

| | | | • | | _Exceptional order fulfillment_. We ship an average of approximately [removed: 190,000] [added: 180,000] cartons daily. Approximately 99% of items ordered are shipped without back ordering and are shipped on the same business day the order is received. |

| | | _Cost-effective purchasing_. We believe that cost-effective purchasing is a key element to maintaining and enhancing our position as a competitive-pricing provider of health care products. We continuously evaluate our purchase requirements and suppliers’ offerings and prices in order to obtain products at the lowest possible cost. In [removed: 2017,] [added: 2018,] our top 10 health care distribution suppliers and our single largest supplier accounted for approximately [removed: 34%] [added: 32%] and [removed: 5%,] [added: 6%,] respectively, of our aggregate purchases. |

| | | | | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | |

| | Dental products (1) [removed: ............................................................................................................................................................] [added: ...........................................................................................................................................................] | | | | [removed: 48.5] [added: 48.1] | % | | [removed: 48.0] [added: 48.5] | % | | [removed: 49.6] [added: 48.0] | % |

| | Animal health products (2) [removed: ..................................................................................................................................................] [added: .................................................................................................................................................] | | | | 27.9 | | | [removed: 28.1] [added: 27.9] | | | [removed: 27.5] [added: 28.1] | |

| | Medical products (3) [removed: ..........................................................................................................................................................] [added: .........................................................................................................................................................] | | | | 20.1 | | | [removed: 20.2] [added: 20.1] | | | [removed: 19.5] [added: 20.2] | |

| | Total health care distribution [removed: ..............................................................................................................................................] [added: ............................................................................................................................................] | | | | [removed: 96.5] [added: 96.1] | | | [removed: 96.3] [added: 96.5] | | | [removed: 96.6] [added: 96.3] | |

| | | | other value-added products (4) [removed: .................................................................................................................................] [added: ................................................................................................................................] | | [removed: 3.5] [added: 3.9] | | | [removed: 3.7] [added: 3.5] | | | [removed: 3.4] [added: 3.7] | |

| Total [removed: .......................................................................................................................................................................................] [added: ......................................................................................................................................................................................] | | | | | 100.0 | % | | 100.0 | % | | 100.0 | % |

Our objective is to continue to expand as a global value-added provider of health care products and services to office-based [removed: dental, animal health] [added: dental] and medical practitioners.

| • | | _Increase penetration of our existing customer [removed: base_.] [added: base._] We have over 1 million customers worldwide and we intend to increase sales to our existing customer base and enhance our position as their primary supplier. |

| • | | _Increase the number of customers we [removed: serve_.] [added: serve._] This strategy includes increasing the number and productivity of field sales consultants, as well as using our customer database to focus our marketing efforts in all of our operating segments. In the dental business, we provide products and services to traditional dental practices as well as new emerging segments, such as dental service organizations and community health centers. Leveraging our unique assets and capabilities, we offer solutions to address these new markets. In the medical business, we have expanded to serve customers located in settings outside of the traditional office, such as urgent care clinics, retail and occupational health settings. As settings of health care shift, we remain committed to serving these practitioners and providing them with the products and services they need. |

| • | | _Leverage our value-added products and [removed: services_.] [added: services._] We continue to increase cross-selling efforts for key product lines utilizing a consultative selling process. In the dental business, we have significant cross-selling opportunities between our dental practice management software users and our dental distribution customers. In the [removed: animal health business, we have opportunities to cross-sell practice management software and other products. In the] medical business, we have opportunities to expand our vaccine, injectables and other pharmaceuticals sales to health care practitioners, as well as cross-selling core products and electronic health record and practice management software. Our strategy extends to providing health systems, integrated delivery networks and other large group and multi-site health care organizations, that include physician clinics, these same value added products and services. As physicians and health systems closely align, we have increased access to opportunities for cross-marketing and selling our product and service portfolios. |

| • | | _Pursue strategic acquisitions and joint [removed: ventures_.] [added: ventures._] Our acquisition strategy includes acquiring businesses and entering into joint ventures complementary to ours that will provide, among other things, additional sales to be channeled through our existing distribution infrastructure, access to additional product lines and field sales consultants and an opportunity to further expand into new geographic markets. |

Between [removed: 2017] [added: 2018] and [removed: 2027,] [added: 2028,] the 45 and older population is expected to grow by approximately 12%.

Between [removed: 2017] [added: 2018] and [removed: 2037,] [added: 2038,] this age group is expected to grow by approximately 24%.

This compares with expected total U.S. population growth rates of approximately 8% between [removed: 2017] [added: 2018] and [removed: 2027] [added: 2028] and approximately [removed: 15%] [added: 14%] between [removed: 2017] [added: 2018] and [removed: 2037.][added: 2038.]

Additionally, we are expanding our dental full-service [removed: model, our animal health presence] [added: model] and our medical offerings in countries where opportunities exist.

Spin-Off of Henry Schein Animal Health Business

On February 7, 2019 (the “Distribution Date”), we completed the previously announced separation (the “Separation”) and subsequent merger of our animal health business (the “Henry Schein Animal Health Business”) with Direct Vet Marketing, Inc. (d/b/a Vets First Choice, “Vets First Choice”) (the “Merger”).

This was accomplished by a series of transactions among us, Vets First Choice, Covetrus, Inc. (f/k/a HS Spinco, Inc. “Covetrus”), a wholly owned subsidiary of ours prior to the Distribution Date, and HS Merger Sub, Inc., a wholly owned subsidiary of Covetrus (“Merger Sub”).

In connection with the Separation, we contributed, assigned and transferred to Covetrus certain applicable assets, liabilities and capital stock or other ownership interests relating to the Henry Schein Animal Health Business.

On the Distribution Date, we received a tax-free distribution of $1,120.0 million from Covetrus pursuant to certain debt financing incurred by Covetrus.

On the Distribution Date and prior to the Distribution, Covetrus issued shares of Covetrus common stock to certain institutional accredited investors (the “Share Sale Investors”) for $361.1 million (the “Share Sale”).

The proceeds of the Share Sale were paid to Covetrus and distributed to us.

Subsequent to the Share Sale, we distributed, on a pro rata basis, all of the shares of the common stock of Covetrus held by us to our stockholders of record as of the close of business on January 17, 2019 (the “Animal Health Spin-off”).

After the Share Sale and Animal Health Spin-off, Merger Sub consummated the Merger whereby it merged with and into Vets First Choice, with Vets First Choice surviving the Merger as a wholly owned subsidiary of Covetrus.

Immediately following the consummation of the Merger, on a fully diluted basis, (i) approximately 63% of the shares of Covetrus common stock were (a) owned by our stockholders and the Share Sale Investors, and (b) in respect of certain equity awards held by certain employees of the Henry Schein Animal Health Business, and (ii) approximately 37% of the shares of Covetrus common stock were (a) owned by stockholders of Vets First Choice immediately prior to the Merger, and (b) in respect of certain equity awards held by certain employees of Vets First Choice.

After the Separation and the Merger, we no longer beneficially owned any shares of Covetrus common stock and, following the Distribution Date, will not consolidate the financial results of Covetrus for the purpose of our financial reporting.

Following the Separation and the Merger, Covetrus was an independent, publicly traded company on the Nasdaq Global Select Market, under the symbol CVET.

All financial information within this Form 10-K includes the Henry Schein Animal Health Business as the Separation occurred in 2019.

Effective first quarter 2019, we will report the historical earnings of the Henry Schein Animal Health Business as a discontinued operation.

The Company estimates that on a continuing operations basis, its 2018 revenues were $9.4 billion and its 2018 net income was $430.7 million.

The description of our business throughout this Form 10-K excludes our global animal health business as the filing date of this Form 10-K is subsequent to the effective date of the Separation.

We operate through a centralized and automated distribution network

| | | | [Table of Contents](#TABLEOFCONTENTS) |

| | | [Table of Contents](#TABLEOFCONTENTS) |

| | | [Table of Contents](#TABLEOFCONTENTS) |

| | | | [Table of Contents](#TABLEOFCONTENTS) |

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

requirements for low risk devices being reached on September 24, 2022, which will complete the phase in.

Penalties under fraud and abuse laws may be severe.

For example, under the federal False Claims Act, violations may result in treble damages, plus civil penalties of up to $22,363 per claim, as well as exclusion from federal health care programs and criminal penalties.

With respect to “anti-kickback laws,” violations of, for example, the federal Anti-Kickback Law may result in civil penalties of up to $100,000 for each violation, plus up to three times the total amount of remuneration offered, paid, solicited or received, as well as exclusion from federal health care programs and criminal penalties.

Notably, effective October 24, 2018, a new federal anti-kickback law (the “Eliminating Kickbacks in Recovery Act of 2018”) enacted in connection with broader addiction services legislation, may impose criminal penalties for kickbacks involving clinical laboratory services, regardless of whether the services at issue involved addiction services, and regardless of whether the services were reimbursed by a federal health care program or by a commercial health insurer.

Further, in December 2018, a Texas federal court struck down the entire Health Care Reform Law, a ruling which is being appealed, and, if upheld could have a significant impact on the U.S. healthcare industry.

Effective January 1, 2022, transfers of value to physician assistants, nurse practitioners or clinical nurse specialists, certified registered nurse anesthetists, and certified nurse-midwives must be reported.

MIPS generally consolidated three current programs; the physician quality reporting system, the value-based payment

The 21st Century Cures Act (“Cures Act”), signed into law on December 13, 2016, amended the device definition to exclude certain software, including clinical decision support software that meet certain criteria.

In December 2017, the FDA issued draft guidance documents describing its proposed interpretation of the statutory language regarding which types of clinical decision support tools and other software are exempt from regulation as medical devices.

While we expect we have substantially compliant programs and controls in place to comply with the GDPR requirements, our compliance

The initiatives include, among others, programs that incentivize physicians and dentists, through Medicare’s MIPS, to use certified EHR technology in accordance with certain evolving requirements, including regarding quality, promoting interoperability, resource use, clinical practice improvement and improving patient access to health information.

These standards have been subject to change.

| James P. Breslawski ..................................................................................................................................................... | | 65 | | Vice Chairman, President, Director |

| --- | --- | --- | --- | --- |

| | | | | |

| David Brous.................................................................................................................................................................... | | 50 | | President, Strategic Business Units Group and Asia Pacific & Brazil Dental |

| Brad Connett................................................................................................................................................................... | | 60 | | President, U.S. Medical Group |

Our global animal health group serves animal health practices and clinics.

This industry, which encompasses the dental, animal health and medical markets, was estimated to produce revenues of approximately $45 billion in 2017 in the global markets.

market is very fragmented and we compete with numerous companies such as the NextGen division of Quality Systems, Inc., eClinicalWorks and Allscripts Healthcare Solutions, Inc.

| --- | --- | --- | --- |

The animal health market, impacted by growing companion pet ownership and care, as well as increased focus on safety and efficiency in livestock production, continues to provide additional growth opportunities for us.

We support the animal health practitioners we serve through the distribution of biologicals, pharmaceuticals, supplies and equipment and by actively engaging in the development, sale and distribution of veterinary practice management software.

The UDI regulations require “labelers” to include unique device identifiers (“UDIs”), with

Some of these laws, referred to as

Under the federal False Claims Act relators can be entitled to receive up to 30% of total recoveries.

Also violations of the federal False Claims Act can result in treble damages, and, in accordance with a final rule published by the Department of Justice on February 3, 2017, which substantially increased the maximum and minimum civil penalties for False Claims Act violations, the amounts for civil penalties assessed after February 3, 2017, whose associated violations occurred after November 2, 2015, were increased from a minimum per-claim penalty of $10,781 to $10,957, and from a maximum per-claim penalty of $21,563 to $21,916.

that was implemented in 2011, both of which may affect sales.

The tax reform law also repealed the individual mandate of the Health Care Reform Law.

A final rule was published in the Federal Register on November 4, 2016 and allows eligible Medicare clinicians to pick their pace of participation for the first performance period that began January 1, 2017.

A final rule updating certain Quality Payment Program regulations was published on November 16, 2017, which became effective as of January 1, 2018.

The initiatives include providing, among others, physicians and dentists, with financial incentives, if they meaningfully use certified EHR

technology in accordance with applicable and evolving requirements.

In addition, Medicare-eligible providers that fail to timely adopt certified EHR systems and meet “meaningful use” requirements for those systems in accordance with regulatory requirements are to be subject to cumulative Medicare reimbursement reductions, which reductions for applicable health professionals (including physicians and dentists) began on January 1, 2015.

The use of certified EHR technology will continue as a feature of MACRA’s MIPS program, and in connection with this, Medicare EHR program payment adjustments to eligible clinicians will sunset at the end of 2018 and MIPS payment adjustments will begin on January 1, 2019.

The first performance period for MIPS began January 1, 2017, and will afford eligible clinicians different reporting options linked to the amount of data reported and the duration of the reporting period, with positive payment adjustments generally linked to more robust reporting.

On October 6, 2015, CMS and ONC released comprehensive final rules with respect to the EHR program that, among other things, established the more challenging “Stage 3” criteria, made certain adjustments to Stage 1 and Stage 2 standards (e.g., reducing the 2015 reporting period from a full year to 90 days), and finalized 2015 edition health information technology (HIT) certification criteria (which is now added to the existing 2014 edition HIT certification criteria, but not required until 2018).

Notably, under the new rules, compliance with Stage 3 standards is optional for providers in 2017, and would generally be required for all eligible providers (regardless of prior participation in the EHR incentive program) for 2018 reporting periods and subsequently.

Developers and others involved in the manufacture of EHR program technology will have this interim period to develop and certify products and work with customers to implement products for the 2018 EHR program period.

In connection with the release of the October 6 rules, HHS has also stated that it will continue to modify applicable EHR program standards.

On November 14, 2016, CMS published a final rule that will impact Medicare and Medicaid EHR incentive programs through revisions to the objectives and measures for eligible hospitals, critical access hospitals and dual-eligible hospitals.

Certain of our businesses involve the manufacture and sale of certified EHR systems and other products linked to incentive programs.

CMS and ONC establish criteria for certified EHR systems, and these criteria have been subject to change.

Failure to abide by electronic health data transmission

The above information is also available at the SEC’s Office of Investor Education and Advocacy at United States Securities and Exchange Commission, 100 F Street, N.E., Washington, D.C. 20549-0213 or obtainable by calling the SEC at (800) 732-0330.

In addition, the SEC maintains an Internet website at www.sec.gov, where the above information can be viewed.

| James P. Breslawski ...................................................................................................................................................... | | 64 | | President, Henry Schein and CEO, Global Dental Group, Director |

| David C. McKinley ........................................................................................................................................................ | | 65 | | Chief Commercial Officer and President, Corporate Commercial Development |

| | | | | Group |

| | | | | Medical and Dental Surgical Group |

David C.

McKinley has been Chief Commercial Officer and President, Corporate Commercial Development Group since 2016.

Before assuming his current position, Mr. McKinley was President of Henry Schein’s Medical Group since 2008.

Mr. McKinley was President of Henry Schein Practice Solutions from 2006 to 2008 and President of Dental Prosthetic Solutions from 2005 to 2006.

Prior to joining us, Mr. McKinley served as the Group Executive for Olympus Medical North America and as General Manager for the Bard Urology and Bard Germany businesses.

Mr. McKinley currently serves on the Health Industry Distributors Association (HIDA) Education Foundation.

Before joining us, Ms. Prange was Senior Vice President and President, Urology and Pelvic Health at Boston Scientific Corporation since 2012 and held various positions of increasing responsibility at Johnson & Johnson, most recently as General Manager of the Micrus Endovascular and Codman Neurovascular businesses.

Beginning in January 2016, [added: purported] class action complaints were filed against Patterson Companies, Inc. (“Patterson”), Benco Dental Supply Co. (“Benco”) and Henry Schein, Inc. [removed: Each] [added: Although there were factual and legal variations among these complaints, each] of these complaints [removed: allege,] [added: alleges,] among other things, that defendants conspired to fix prices, allocate customers and foreclose competitors by boycotting manufacturers, state dental associations and others that deal with defendants’ competitors.

[removed: Each] [added: The consolidated] class action complaint asserts a single count under Section 1 of the Sherman Act, and seeks equitable relief, compensatory and treble damages, jointly and severally, and reasonable costs and expenses, including attorneys’ fees and expert fees.

On August 31, 2012, Archer and White Sales, Inc. (“Archer”) filed a complaint against Henry Schein, Inc. as well as Danaher Corporation and its subsidiaries Instrumentarium Dental, Inc., Dental Equipment, LLC, Kavo Dental Technologies, LLC and Dental Imaging Technologies Corporation (collectively, the “Danaher Defendants”) in the [removed: United States] [added: U.S.] District Court for the Eastern District of Texas, Civil Action No. 2:12-CV-00572-JRG, styled as an antitrust action under Section 1 of the Sherman Act, and the Texas Free Enterprise Antitrust Act.

Archer alleges a conspiracy between Henry Schein, [removed: Inc.,] an unnamed company and the Danaher Defendants to terminate or limit Archer’s distribution rights.

On October 1, 2012, [removed: Henry Schein] [added: we] filed a motion for an order: (i) compelling Archer to arbitrate its claims against [removed: Henry Schein;] [added: us;] (2) staying all proceedings pending arbitration; and (3) joining the Danaher Defendants’ motion to arbitrate and stay.

On December 21, 2017, the [removed: United States] [added: U.S.] Court of Appeals for the Fifth Circuit affirmed the District Court’s order denying the motions to compel arbitration.

On August 1, 2017, Archer filed an amended complaint, adding Patterson and Benco as defendants, and alleging that Henry Schein, [removed: Inc.,] Patterson, Benco and Burkhart conspired to fix prices and refused to compete with each other for sales of dental equipment to dental professionals and agreed to enlist their common suppliers, the Danaher Defendants, to join a price-fixing conspiracy and boycott by reducing the distribution territory of, and eventually terminating, their price-cutting competing distributor Archer.

Archer seeks [removed: injunctive relief, and] damages in an amount to be proved at trial, to be trebled with interest and costs, including attorneys’ fees, jointly and [removed: severally.][added: severally, as well as injunctive relief.]

On October 30, 2017, Archer filed a second amended [removed: complaint under seal,] [added: complaint,] to add additional allegations that it believes support its claims.

On August 17, 2017, IQ Dental Supply, Inc. (“IQ Dental”) filed a complaint in the [removed: United States] [added: U.S.] District Court for the Eastern District of New York, entitled IQ Dental Supply, Inc. v.

SourceOne had previously brought an antitrust lawsuit against [removed: the Company,] [added: Henry Schein,] Patterson and [removed: Benco] [added: Benco,] which [removed: the Company] [added: Henry Schein] settled in the second quarter of 2017 and which is described in [removed: the Company’s] [added: our] prior filings with the SEC.

[added: Plaintiff seeks injunctive relief,] compensatory, treble and punitive damages, jointly and severally, and reasonable costs and expenses, including attorneys’ fees and expert fees.

We intend to [removed: vigorously] defend ourselves [added: vigorously] against this action.

[removed: The Company believes] [added: We believe] this matter will not have a material adverse effect on our [added: consolidated] financial [removed: condition] [added: position, liquidity] or results of operations.

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 [added: consolidated] financial [removed: condition] [added: position, liquidity] or results of operations.

As of December [removed: 30, 2017,] [added: 29, 2018,] 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.

On February 9, 2016, the U.S. District Court for the Eastern District of New York ordered all of these actions, and all other actions filed thereafter asserting substantially similar claims against defendants, consolidated for pre-trial purposes.

On February 26, 2016, a consolidated class action complaint was filed by Arnell Prato, D.D.S., P.L.L.C., d/b/a Down to Earth Dental, Evolution Dental Sciences, LLC, Howard M.

May, DDS, P.C., Casey Nelson, D.D.S., Jim Peck, D.D.S., Bernard W.

Kurek, D.M.D., Larchmont Dental Associates, P.C., and Keith Schwartz, D.M.D., P.A. (collectively, “putative class representatives”) in the U.S. District Court for the Eastern District of New York, entitled In re Dental Supplies Antitrust Litigation, Civil Action No. 1:16-CV-00696-BMC-GRB.

In the consolidated class action complaint, putative class representatives allege a nationwide agreement among Henry Schein, Benco, Patterson and non-party Burkhart Dental Supply Company, Inc. (“Burkhart”) not to compete on price.

On September 28, 2018, the parties executed a settlement agreement that proposes, subject to court approval, a full and final settlement of the lawsuit on a classwide basis.

Subject to certain exceptions, the settlement class consists of all persons or entities that purchased dental products directly from Henry Schein, Patterson, Benco, Burkhart, or any combination thereof, during the period August 31, 2008 through and including March 31, 2016.

As a result, we recorded a charge of $38.5 million in our third quarter 2018 results.

On June 25, 2018, the Supreme Court of the United States granted defendants’ petition for writ of certiorari.

On October 29, 2018, the Supreme Court heard oral arguments.

On January 8, 2019, the Supreme Court issued its published decision vacating the judgment of the Fifth Circuit and remanding the case to the Fifth Circuit for further proceedings consistent with the Supreme Court’s opinion.

The U.S. Court of Appeals for the Second Circuit heard oral argument on the appeal on September 13, 2018.

The court’s decision is pending.

A hearing before an administrative law judge began on October 16, 2018 and is ongoing.

On March 7, 2018, Joseph Salkowitz, individually and on behalf of all others similarly situated, filed a putative class action complaint for violation of the federal securities laws against Henry Schein, Inc., Stanley M.

Bergman and Steven Paladino in the U.S. District Court for the Eastern District of New York, Case No. 1:18-cv-01428.

The complaint sought to certify a class consisting of all persons and entities who, subject to certain exclusions, purchased Henry Schein securities from March 7, 2013 through February 12, 2018 (the “Class Period”).

The complaint alleged, among other things, that the defendants had made materially false and misleading statements about Henry Schein’s business, operations and prospects during the Class Period, including matters relating to the issues in the antitrust class action and the FTC action described above, thereby causing the plaintiff and members of the purported class to pay artificially inflated prices for Henry Schein securities.

The complaint sought unspecified monetary damages and a jury trial.

Pursuant to the provisions of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”), the court appointed lead plaintiff and lead counsel on June 22, 2018 and recaptioned the putative class action as In re Henry Schein, Inc. Securities Litigation, under the same case number.

Lead plaintiff filed a consolidated class action complaint on September 14, 2018.

The consolidated class action complaint asserts similar claims against the same defendants (plus Timothy Sullivan) on behalf of the same putative class of purchasers during the Class Period.

It alleges that Henry Schein’s stock price was inflated during that period because Henry Schein had misleadingly portrayed its dental-distribution business “as successfully producing excellent profits while operating in a highly competitive environment” even though, “in reality, \[Henry Schein\] had engaged for years in collusive and anticompetitive practices in order to maintain Schein’s margins, profits, and market share.” The complaint alleges that the stock price started to fall from August 8, 2017, when the company announced below-expected financial performance that allegedly “revealed that Schein’s poor results were a product of abandoning prior attempts to inflate sales volume and margins through anticompetitive collusion,” through February 13, 2018, after the FTC filed a complaint against Benco, Henry Schein and Patterson alleging that they

violated U.S. antitrust laws.

The complaint alleges violations of Section 10(b) of the Exchange Act and Rule 10b-5 and Section 20(a) of the Exchange Act.

We intend to defend ourselves vigorously against this action.

Henry Schein has also received a request under 8 Del.

C.

§ 220 to inspect corporate books and records relating to the issues raised in the securities class action and the antitrust matters discussed above.

On May 3, 2018, a purported class action complaint, Marion Diagnostic Center, LLC, et al.

v.

Becton, Dickinson, and Co., et al., Case No. 3:18-cv-010509, was filed in the U.S. District Court for the Southern District of Illinois against Becton, Dickinson, and Co. (“Becton”); Premier, Inc. (“Premier”), Vizient, Inc. (“Vizient”), Cardinal Health, Inc. (“Cardinal”), Owens & Minor Inc. (“O&M”), Henry Schein, Inc., and Unnamed Becton Distributor Co-Conspirators.

The complaint alleges that the defendants entered into a vertical conspiracy to force healthcare providers into long-term exclusionary contracts that restrain trade in the nationwide markets for conventional and safety syringes and safety IV catheters and inflate the prices of certain Becton products to above-competitive levels.

The named plaintiffs seek to represent three separate classes consisting of all healthcare providers that purchased (i) Becton’s conventional syringes, (ii) Becton’s safety syringes, or (iii) Becton’s safety catheters directly from Becton, Premier, Vizient, Cardinal, O&M or Henry Schein on or after May 3, 2014.

The complaint asserts a single count under Section 1 of the Sherman Act, and seeks equitable relief, treble damages, reasonable attorneys’ fees and costs and expenses, and pre-judgment and post-judgment interest.

On June 15, 2018, an amended complaint was filed asserting the same allegations against the same parties and adding McKesson Medical-Surgical, Inc. as an additional defendant.

On November 30, 2018, the District Court granted defendants’ motion to dismiss and entered a final judgment, dismissing plaintiffs’ complaint with prejudice.

On December 27, 2018, plaintiffs appealed the District Court’s decision to the Seventh Circuit Court of Appeals.

We intend to defend ourselves vigorously against this action.

On May 29, 2018, an amended complaint was filed in the MultiDistrict Litigation (“MDL”) proceeding In Re National Prescription Opiate Litigation (MDL No. 2804; Case No. 17-md-2804) in an action entitled The County of Summit, Ohio et al.

Subject to certain exclusions, these classes seek to represent all persons who purchased dental supplies or equipment in the United States directly from any of the defendants or Burkhart Dental Supply Co. (“Burkhart”) since August 31, 2008.

Trial is currently scheduled for May 2018.

Plaintiff seeks injunctive relief,

10-K 1 [removed: the10k_2017.htm] [added: the10k_2018.htm] THE [removed: 2017] [added: 2018] ANNUAL 10-K REPORT

For the fiscal year ended December [removed: 30, 2017][added: 29, 2018]

[removed: ] [added: ] HENRY SCHEIN, INC.

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Web site, if any,] every Interactive Data File required to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit [removed: and post] such files).

The aggregate market value of the registrant’s voting stock held by non-affiliates of the registrant, computed by reference to the closing sales price as quoted on the [removed: NASDAQ] [added: Nasdaq] Global Select Market on [removed: July 1, 2017,] [added: June 30, 2018,] was approximately [removed: $14,360,474,000.][added: $11,016,833,000.]

As of February [removed: 15, 2018,] [added: 12, 2019,] there were [removed: 153,694,200] [added: 151,403,703] shares of registrant’s Common Stock, par value $.01 per share, outstanding.

Portions of the Registrant’s definitive proxy statement to be filed pursuant to Regulation 14A not later than 120 days after the end of the fiscal year (December [removed: 30, 2017)] [added: 29, 2018)] are incorporated by reference in Part III hereof.

| | [ITEM 1.](#Item1) | | | [removed: [Business](#Item1).............................................................................................................................................................................] [added: [Business](#Item1) ..............................................................................................................................................................................] | | | 3 |

| | [ITEM 1A.](#Item1A) | | | [Risk [removed: Factors](#Item1A).........................................................................................................................................................................] [added: Factors](#Item1A) .........................................................................................................................................................................] | | | 21 |

| | [ITEM 1B.](#Item1B) | | | [Unresolved Staff [removed: Comments](#Item1B)....................................................................................................................................................] [added: Comments](#Item1B) ...................................................................................................................................................] | | | 36 |

| | [ITEM 2.](#Item2) | | | [removed: [Properties](#Item2)............................................................................................................................................................................] [added: [Properties](#Item2) .............................................................................................................................................................................] | | | 37 |

| | [ITEM 3.](#Item3) | | | [Legal [removed: Proceedings](#Item3).................................................................................................................................................................] [added: Proceedings](#Item3) ..................................................................................................................................................................] | | | 38 |

| | [ITEM 4.](#Item4) | | | [Mine Safety [removed: Disclosures](#Item4)........................................................................................................................................................] [added: Disclosures](#Item4) .........................................................................................................................................................] | | | [removed: 39] [added: 41] |

| | | | | | | [and Issuer Purchases of Equity [removed: Securities](#Item5).............................................................................................................................] [added: Securities](#Item5) ..............................................................................................................................] | [removed: 40] [added: 42] |

| | [ITEM 6.](#Item6) | | | [Selected Financial [removed: Data](#Item6)..........................................................................................................................................................] [added: Data](#Item6) ..........................................................................................................................................................] | | | [removed: 43] [added: 45] |

| | | | | | | [and Results of [removed: Operations](#Item7)..................................................................................................................................................] [added: Operations](#Item7) ..................................................................................................................................................] | [removed: 45] [added: 47] |

| | [ITEM 7A.](#Item7A) | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#Item7A).........................................................................................................] [added: Risk](#Item7A) .........................................................................................................] | | | 75 |

| | [ITEM 8.](#Item8) | | | [Financial Statements and Supplementary [removed: Data](#Item8)............................................................................................................................] [added: Data](#Item8) ..........................................................................................................................] | | | 77 |

| | | | | | | [and Financial [removed: Disclosure](#Item9)....................................................................................................................................................] [added: Disclosure](#Item9) ....................................................................................................................................................] | [removed: 123] [added: 133] |

| | [ITEM 9A.](#Item9A) | | | [Controls and [removed: Procedures](#Item9A)........................................................................................................................................................] [added: Procedures](#Item9A) .........................................................................................................................................................] | | | [removed: 123] [added: 133] |

| | [ITEM 10.](#Item10) | | | [Directors, Executive Officers and Corporate [removed: Governance](#Item10)...............................................................................................................] [added: Governance](#Item10) ..............................................................................................................] | | | [removed: 127] [added: 136] |

| | [ITEM 11.](#Item11) | | | [Executive [removed: Compensation](#Item11)........................................................................................................................................................] [added: Compensation](#Item11) ........................................................................................................................................................] | | | [removed: 127] [added: 136] |

| | | | | | | [and Related Stockholder [removed: Matters](#Item12).........................................................................................................................................] [added: Matters](#Item12) .........................................................................................................................................] | [removed: 128] [added: 137] |

| | [ITEM 13.](#Item13) | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#Item13)....................................................................................] [added: Independence](#Item13) ...................................................................................] | | | [removed: 128] [added: 137] |

| | [ITEM 14.](#Item14) | | | [Principal [removed: Accountant] [added: Accounting] Fees and [removed: Services](#Item14)....................................................................................................................................] [added: Services](#Item14) .....................................................................................................................................] | | | [removed: 128] [added: 137] |

| | | [ITEM 15.](#Item15) | | | [Exhibits,Financial Statement [removed: Schedules](#Item15)....................................................................................................................................] [added: Schedules](#Item15) ...................................................................................................................................] | | [removed: 129] [added: 137] |

| | | [ITEM 16.](#Item16) | | | [removed: [Form 10-K Summary](#Item16)..............................................................................................................................................................] [added: [Form10-K Summary](#Item16) ............................................................................................................................................................] | | [removed: 136] [added: 145] |

| | | | | | [Signatures](#Signatures) ............................................................................................................................................................................ | | 146 |

| | | | | | | | |

(Do not check if a smaller reporting company)

| | [ITEM 9B.](#Item9B) | | | [Other Information](#Item9B)................................................................................................................................................................. | | | 127 |

| | | | | | [Signatures](#Signatures)........................................................................................................................................................................... | | 137 |

We have no unresolved comments from the staff of the SEC that were issued 180 days or more preceding the end of our [removed: 2017] [added: 2018] fiscal year.

| Corporate Headquarters [removed: .................................................................................................................................................] [added: ...................................................................................................................................................] | | Melville, NY | | Lease | | 185,000 | | June 2020 |

| Corporate Headquarters [removed: .................................................................................................................................................] [added: ...................................................................................................................................................] | | Melville, NY | | Own | | 105,000 | | N/A |

| Office and Distribution Center [removed: .........................................................................................................................................] [added: ...........................................................................................................................................] | | Tours, France | | Own | | 166,000 | | N/A |

| Office and Distribution Center [removed: .........................................................................................................................................] [added: ...........................................................................................................................................] | | Gillingham, United Kingdom | | Lease/Own | | 165,000 | | June 2033 |

| Office and Distribution Center [removed: .........................................................................................................................................] [added: ...........................................................................................................................................] | | Fiumana-Predappio, Italy | | Own | | 183,000 | | N/A |

| Office and Distribution Center [removed: .........................................................................................................................................] [added: ...........................................................................................................................................] | | Eastern Creek, New South Wales, Australia | | Lease | | 161,000 | | July 2030 |

| Office and Distribution Center [removed: .........................................................................................................................................] [added: ...........................................................................................................................................] | | Niagara on the Lake, Canada | | Lease | | 128,000 | | September 2021 |

| Office and Distribution Center [removed: .........................................................................................................................................] [added: ...........................................................................................................................................] | | Bastian, VA | | Own | | 108,000 | | N/A |

| Office and Distribution Center [removed: .........................................................................................................................................] [added: ...........................................................................................................................................] | | West Allis, WI | | Lease | | 106,000 | | October 2027 |

| Distribution Center [removed: ......................................................................................................................................................] [added: ........................................................................................................................................................] | | Denver, PA | | Lease | | 624,000 | | December 2021 |

| Distribution Center [removed: ......................................................................................................................................................] [added: ........................................................................................................................................................] | | Indianapolis, IN | | Lease | | 380,000 | | March 2022 |

| Distribution Center [removed: ......................................................................................................................................................] [added: ........................................................................................................................................................] | | Sparks, NV | | Lease | | 370,000 | | December 2021 |

| Distribution Center [removed: ......................................................................................................................................................] [added: ........................................................................................................................................................] | | Indianapolis, IN | | Own | | 287,000 | | N/A |

| Distribution Center [removed: ......................................................................................................................................................] [added: ........................................................................................................................................................] | | Grapevine, TX | | Lease | | 242,000 | | July [removed: 2018] [added: 2023] |

| Distribution Center [removed: ......................................................................................................................................................] [added: ........................................................................................................................................................] | | Gallin, Germany | | Own | | 215,000 | | N/A |

| Distribution Center [removed: ......................................................................................................................................................] [added: ........................................................................................................................................................] | | Jacksonville, FL | | Lease | | 212,000 | | February [removed: 2019] [added: 2026] |

| Distribution Center [removed: ......................................................................................................................................................] [added: ........................................................................................................................................................] | | Heppenheim, Germany | | Lease | | 194,000 | | March 2030 |

In addition, we lease numerous other distribution, office, showroom, manufacturing and sales space in locations including the United States, Australia, Austria, Belgium, Brazil, Canada, Chile, China, the Czech Republic, [removed: Denmark,] France, Germany, Hong Kong SAR, Ireland, Israel, Italy, Japan, Liechtenstein, Luxembourg, Malaysia, the Netherlands, New Zealand, [removed: Norway,] Poland, Portugal, [removed: Romania,] [added: Singapore,] Slovakia, South Africa, Spain, [removed: Sweden,] Switzerland, Thailand, United Arab Emirates and the United Kingdom.

| Office and Distribution Center ......................................................................................................................................... | | Lyssach, Switzerland | | Lease | | 147,000 | | June 2021 |

| Office and Distribution Center ......................................................................................................................................... | | Plymouth, MA | | Lease | | 223,000 | | December 2019 |

| Office and Distribution Center ......................................................................................................................................... | | Langeskov, Denmark | | Lease | | 157,000 | | December 2022 |

| Office and Distribution Center ......................................................................................................................................... | | Cuijk, Netherlands | | Lease | | 146,000 | | May 2022 |

| Distribution Center ...................................................................................................................................................... | | Fort Worth, TX | | Lease | | 120,000 | | May 2021 |

On October 2, 2007, our common stock became a component of the [removed: NASDAQ-100] [added: Nasdaq -100] stock market index.

On February [removed: 15, 2018,] [added: 12, 2019,] there were approximately [removed: 467] [added: 324] holders of record of our common stock and the last reported sales price was [removed: $68.38.][added: $61.01.]

As summarized in the table below, subsequent additional increases totaling [removed: $2.8] [added: $3.2] billion, authorized by our Board of Directors, to the repurchase program provide for a total of [removed: $2.9] [added: $3.3] billion of shares of our common stock to be repurchased under this program.

As of December [removed: 30, 2017,] [added: 29, 2018,] we had repurchased approximately [removed: $2.7] [added: $2.9] billion of common stock [removed: (55,670,990] [added: (58,189,377] shares) under these initiatives, with [removed: $200.0] [added: $400.0] million available for future common stock share repurchases.

The following table summarizes repurchases of our common stock under our stock repurchase program during the fiscal quarter ended December [removed: 30, 2017:][added: 29, 2018:]

We have not declared any cash or stock dividends on our common stock during fiscal years [removed: 2017] [added: 2018] or [removed: 2016.][added: 2017.]

The graph below compares the cumulative total stockholder return on $100 invested, assuming the reinvestment of all dividends, on December [removed: 29, 2012,] [added: 28, 2013,] the last trading day before the beginning of our [removed: 2013] [added: 2014] fiscal year, through the end of our [removed: 2017] [added: 2018] fiscal year with the cumulative total return on $100 invested for the same period in the Dow Jones U.S. Health Care Index and the [removed: NASDAQ] [added: Nasdaq] Stock Market Composite Index.

[removed: ][added: ]

| ASSUMES $100 INVESTED ON DECEMBER [removed: 29, 2012] [added: 28, 2013] | | | | | | | | | | | | | | | | | | |

| | | December [removed: 29, | | | December] 28, | | | December 27, | | | December 26, | | | December 31, | | | December 30, | | [added: | December 29, | |]

| | | [removed: 2012 | | |] 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017 | | [added: | 2018 | |]

| | December 12, 2018 | | | 400,000,000 | |

| 9/30/2018 through 11/3/18 | | | | | $ | \- | | | | 1,028,543 |

| 11/04/18 through 12/01/18 | | | 275,000 | | | 87.23 | | 275,000 | | 694,004 |

| 12/02/18 through 12/29/18 | | | 722,179 | | | 85.72 | | 722,179 | | 5,133,472 |

| | | | 997,179 | | | | | 997,179 | | |

| Henry Schein, Inc. ................................................................................................................................................................ | | $ | 100.00 | | $ | 120.06 | | $ | 137.28 | | $ | 132.58 | | $ | 122.14 | | $ | 136.19 |

| Care Index ....................................................................................................................................................................... | | | 100.00 | | | 127.46 | | | 135.05 | | | 131.05 | | | 160.98 | | | 168.59 |

| Composite Index ................................................................................................................................................................ | | | 100.00 | | | 117.02 | | | 124.33 | | | 134.27 | | | 174.07 | | | 167.82 |

The effects of the stock split on share and per share amounts have been retroactively reflected for all periods presented in this form 10-K.

The following table sets forth, for the periods indicated, the high and low reported sales prices of our common stock as reported on NASDAQ for each quarterly period in fiscal 2017 and 2016:

| | | High | | | Low | |

| --- | --- | --- | --- | --- | --- | --- |

| Fiscal 2017: | | | | | | |

| 1st Quarter ................................................................................................................................................................... | | $ | 88.25 | | $ | 75.51 |

| 2nd Quarter .................................................................................................................................................................. | | | 93.50 | | | 83.11 |

| 3rd Quarter ................................................................................................................................................................... | | | 93.14 | | | 78.56 |

| 4th Quarter ................................................................................................................................................................... | | | 84.88 | | | 65.28 |

| | | | | | | |

| Fiscal 2016: | | | | | | |

| 1st Quarter ................................................................................................................................................................... | | $ | 85.12 | | $ | 71.32 |

| 2nd Quarter .................................................................................................................................................................. | | | 90.49 | | | 82.58 |

| 3rd Quarter ................................................................................................................................................................... | | | 91.50 | | | 79.27 |

| 4th Quarter ................................................................................................................................................................... | | | 82.24 | | | 73.12 |

| 10/01/17 through 11/04/17 | | | | | $ | \- | | | | 5,473,914 |

| 11/05/17 through 12/02/17 | | | 1,821,631 | | | 68.62 | | 1,821,631 | | 4,245,684 |

| 12/03/17 through 12/30/17 | | | 1,417,543 | | | 70.54 | | 1,417,543 | | 2,862,051 |

| | | | 3,239,174 | | | | | 3,239,174 | | |

| Henry Schein, Inc. ................................................................................................................................................................ | | $ | 100.00 | | $ | 143.12 | | $ | 171.81 | | $ | 196.47 | | $ | 189.74 | | $ | 174.79 |

| Care Index ....................................................................................................................................................................... | | | 100.00 | | | 143.42 | | | 182.80 | | | 193.68 | | | 187.95 | | | 230.88 |

| Composite Index ................................................................................................................................................................ | | | 100.00 | | | 142.22 | | | 166.42 | | | 176.82 | | | 190.97 | | | 247.56 |

The following selected financial data, with respect to our financial position and results of operations for each of the five fiscal years in the period ended December [removed: 30, 2017,] [added: 29, 2018,] set forth below, has been derived from, should be read in conjunction with and is qualified in its entirety by reference to, our consolidated financial statements and notes thereto.

| [added: [Table of Contents](#TABLEOFCONTENTS)] | | Years ended | | | | | | | | | | | | | |

| | | December [removed: 30,] [added: 29,] | | | December [removed: 31,] [added: 30,] | | | December [removed: 26,] [added: 31,] | | | December [removed: 27,] [added: 26,] | | | December [removed: 28,] [added: 27,] | |

| | | [added: 2018 | | |] 2017 | | | 2016 | | | 2015 | | | 2014 | | [removed: | 2013 | |]

| Net sales .................................................................................................................................................................................. | | $ | [removed: 12,461,543] [added: 13,201,995] | | $ | [removed: 11,571,668] [added: 12,461,543] | | $ | [removed: 10,629,719] [added: 11,571,668] | | $ | [removed: 10,371,390] [added: 10,629,719] | | $ | [removed: 9,560,647] [added: 10,371,390] |

| Gross profit [removed: ...............................................................................................................................................................................] [added: ..............................................................................................................................................................................] | | | [added: 3,595,084 | | |] 3,399,103 | | | 3,226,473 | | | 3,006,954 | | | 2,910,820 | [removed: | | 2,655,247 |]

| Selling, general and administrative [removed: expenses (5)......................................................................................................................................] [added: expenses..........................................................................................................................................] | | | [removed: 2,539,734] [added: 2,701,876] | | | [removed: 2,409,008] [added: 2,534,409] | | | [removed: 2,238,051] [added: 2,409,008] | | | [removed: 2,195,678] [added: 2,238,051] | | | [removed: 1,978,193] [added: 2,195,678] |

| Restructuring costs (1) .................................................................................................................................................................. | | | [removed: \-] [added: 62,912] | | | [removed: 45,891] [added: \-] | | | [removed: 34,931] [added: 45,891] | | | [removed: \-] [added: 34,931] | | | \- |

| Operating income ........................................................................................................................................................................ | | | [added: 753,052 | | |] 859,369 | | | 771,574 | | | 733,972 | | | 715,142 | [removed: | | 677,054 |]

| Other expense, [removed: net (2) ..................................................................................................................................................................] [added: net.......................................................................................................................................................................] | | | [added: (57,704) | | |] (36,521) | | | (15,739) | | | (13,214) | | | (5,830) | [removed: | | (12,360) |]

| of affiliates ........................................................................................................................................................................... | | | [added: 695,348 | | |] 822,848 | | | 755,835 | | | 720,758 | | | 709,312 | [removed: | | 664,694 |]

| Income taxes [removed: (3)] [added: (2)] ......................................................................................................................................................................... | | | [added: (155,492) | | |] (362,506) | | | (217,958) | | | (211,391) | | | (215,610) | [removed: | | (190,891) |]

| Equity in earnings of affiliates [removed: ..........................................................................................................................................................] [added: .........................................................................................................................................................] | | | [added: 22,270 | | |] 16,587 | | | 18,518 | | | 14,060 | | | 11,734 | [removed: | | 10,194 |]

| Loss on sale of equity investment [removed: (4)] [added: (3)] ................................................................................................................................................. | | | [removed: (17,636)] [added: \-] | | | [removed: \-] [added: (17,636)] | | | \- | | | \- | | | [removed: (12,535)] [added: \-] |

| Net income ............................................................................................................................................................................... | | | [added: 562,126 | | |] 459,293 | | | 556,395 | | | 523,427 | | | 505,436 | [removed: | | 471,462 |]

| noncontrolling interests .............................................................................................................................................................. | | | [added: (26,245) | | |] (52,994) | | | (49,617) | | | (44,369) | | | (39,359) | [removed: | | (39,908) |]

| Net income attributable to Henry Schein, Inc. ........................................................................................................................................ | | $ | [removed: 406,299] [added: 535,881] | | $ | [removed: 506,778] [added: 406,299] | | $ | [removed: 479,058] [added: 506,778] | | $ | [removed: 466,077] [added: 479,058] | | $ | [removed: 431,554] [added: 466,077] |

| Henry Schein, Inc.: [removed: (6)] [added: (4)] | | | | | | | | | | | | | | | |

| Basic ................................................................................................................................................................................... | | $ | [removed: 2.59] [added: 3.51] | | $ | [removed: 3.14] [added: 2.59] | | $ | [removed: 2.89] [added: 3.14] | | $ | [removed: 2.77] [added: 2.89] | | $ | [removed: 2.51] [added: 2.77] |

| Diluted ................................................................................................................................................................................. | | | [added: 3.49 | | |] 2.57 | | | 3.10 | | | 2.85 | | | 2.72 | [removed: | | 2.46 |]

| Basic ................................................................................................................................................................................... | | | [added: 152,656 | | |] 156,787 | | | 161,641 | | | 165,687 | | | 168,531 | [removed: | | 171,852 |]

| Diluted ................................................................................................................................................................................. | | | [added: 153,707 | | |] 158,208 | | | 163,723 | | | 168,250 | | | 171,480 | [removed: | | 175,244 |]

| Health care distribution [removed: (7):] [added: (5):] | | | | | | | | | | | | | | | |

| Dental [removed: .................................................................................................................................................................................] [added: ..................................................................................................................................................................................] | ....................................................................................................................................................................................................... | $ | [removed: 6,048,813] [added: 6,348,945] | | $ | [removed: 5,555,299] [added: 6,048,813] | | $ | [removed: 5,276,407] [added: 5,555,299] | | $ | [removed: 5,381,215] [added: 5,276,407] | | $ | [removed: 4,997,972] [added: 5,381,215] |

| Animal health ......................................................................................................................................................................... | ....................................................................................................................................................................................................... | | [added: 3,682,639 | | |] 3,476,635 | | | 3,253,095 | | | 2,921,624 | | | 2,898,612 | [removed: | | 2,599,461 |]

| Medical ................................................................................................................................................................................ | ....................................................................................................................................................................................................... | | [added: 2,661,166 | | |] 2,497,994 | | | 2,337,661 | | | 2,072,915 | | | 1,742,685 | [removed: | | 1,643,167 |]

| Total health care distribution [removed: .....................................................................................................................................................] [added: ......................................................................................................................................................] | ....................................................................................................................................................................................................... | | [added: 12,692,750 | | |] 12,023,442 | | | 11,146,055 | | | 10,270,946 | | | 10,022,512 | [removed: | | 9,240,600 |]

| Technology and value-added services [removed: (8) .............................................................................................................................................] [added: (6) ............................................................................................................................................] | ....................................................................................................................................................................................................... | | [added: 509,245 | | |] 438,101 | | | 425,613 | | | 358,773 | | | 348,878 | [removed: | | 320,047 |]

| Total [removed: ................................................................................................................................................................................] [added: .................................................................................................................................................................................] | ....................................................................................................................................................................................................... | $ | [removed: 12,461,543] [added: 13,201,995] | | $ | [removed: 11,571,668] [added: 12,461,543] | | $ | [removed: 10,629,719] [added: 11,571,668] | | $ | [removed: 10,371,390] [added: 10,629,719] | | $ | [removed: 9,560,647] [added: 10,371,390] |

| Long-term debt [removed: .........................................................................................................................................................................] [added: ..........................................................................................................................................................................] | ....................................................................................................................................................................................................... | | [added: 1,003,873 | | |] 907,756 | | | 715,457 | | | 463,752 | | | 542,776 | [removed: | | 450,233 |]

| Redeemable noncontrolling interests [removed: .................................................................................................................................................] [added: ..................................................................................................................................................] | ....................................................................................................................................................................................................... | | [added: 312,156 | | |] 832,138 | | | 607,636 | | | 542,194 | | | 564,527 | [removed: | | 497,539 |]

| Stockholders' equity .................................................................................................................................................................... | ....................................................................................................................................................................................................... | | [added: 3,541,788 | | |] 2,824,410 | | | 2,800,804 | | | 2,886,814 | | | 2,816,445 | [removed: | | 2,788,001 |]

| (1) | Restructuring costs for the year ended December [added: 29, 2018 consist primarily of severance costs, including severance pay and benefits of $58.2 million, facility closing costs of $3.6 million and other costs of $1.1 million. Restructuring costs for the year ended December] 31, 2016 consist primarily of severance costs, including severance pay and benefits of $40.7 million, facility closing costs of $3.6 million and other costs of $1.6 million. Restructuring costs for the year ended December 26, 2015 consist primarily of severance costs, including severance pay and benefits of $26.7 million, facility closing costs of $5.7 million and other costs of $2.5 million. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Plans of Restructuring” herein and the consolidated financial statements and related notes contained in ITEM 8. |

| [removed: (3)] [added: (2)] | In [removed: 2017 there was] [added: 2018 we recorded (a) a $10.0 million net credit to income tax representing a change in our estimate of the transition tax on deemed repatriated foreign earnings, (b) a one-time income tax charge of $3.9 million to income tax as a result of a reorganization of legal entities related to Henry Schein One, (c)] an [removed: estimated one-time-charge] [added: income tax credit] of [added: $13.9 million ($10.6 million attributable to Henry Schein, Inc.) resulting from a legal entity reorganization outside of the United States and (d) a one-time income tax charge of $3.1 million as a result of the reorganization of legal entities completed in preparation for the Animal Health spin-off. In 2017 we recorded a one-time income tax charge of] $140 million related to the transition tax on deemed repatriated foreign earnings and a one-time [added: income tax] charge of $3.0 million for the revaluation of deferred taxes associated with U.S. tax reform legislation. In 2015, [removed: there was] [added: we recorded] a $6.3 million income tax benefit related to a favorable response to a tax petition, which allowed us to conclude that it is was more likely than not that certain unrecognized tax benefits, which had been previously reserved, would be realized. [removed: In 2013, there was a $13.4 million reduction of our valuation allowance related to certain deferred tax assets related to tax loss carryforwards originating outside the United States.] |

| [removed: (6)] [added: (4)] | On August 16, 2017, we announced that our Board of Directors approved a two-for-one stock split of our common stock. Each Henry Schein, Inc. stockholder of record at the close of business on September 1, 2017 received a distribution of one additional share for every share held. Trading began on a split-adjusted basis on September 15, 2017. The effects of the stock split on share and per share amounts have been retroactively reflected for all periods presented in this Form 10-K. |

| [removed: (7)] [added: (5)] | Consists of consumable products, small equipment, laboratory products, large equipment, equipment repair services, branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products and vitamins. |

| [removed: (8)] [added: (6)] | Consists of practice management software and other value-added products, which are distributed primarily to health care providers, and financial services on a non-recourse basis, e-services, continuing education services for practitioners, consulting and other services. |

| Litigation settlements................................................................................................................................................................. | | | 38,488 | | | 5,325 | | | \- | | | \- | | | \- |

| Transaction costs related to Animal Health spin-off.............................................................................................................................. | | | 38,756 | | | \- | | | \- | | | \- | | | \- |

| | | December 29, | | | December 30, | | | December 31, | | | December 26, | | | December 27, | |

| | | 2018 | | | 2017 | | | 2016 | | | 2015 | | | 2014 | |

| | | December 29, | | | December 30, | | | December 31, | | | December 26, | | | December 27, | |

| | | 2018 | | | 2017 | | | 2016 | | | 2015 | | | 2014 | |

| Total assets .............................................................................................................................................................................. | ....................................................................................................................................................................................................... | $ | 8,500,527 | | $ | 7,863,995 | | $ | 6,811,763 | | $ | 6,580,775 | | $ | 6,184,320 |

| (3) | Represents a 2017 loss on divestiture of an equity ownership in E4D Technologies. |

| | | | | | | | | | | | | | | | |

| Total assets .............................................................................................................................................................................. | ....................................................................................................................................................................................................... | $ | 7,811,235 | | $ | 6,760,396 | | $ | 6,534,740 | | $ | 6,138,807 | | $ | 5,624,636 |

| (2) | Includes approximately $6.2 million of one-time expenses related to the refinancing of Henry Schein Animal Health debt in 2013. These expenses reflect the non-cash write-off of deferred financing costs. |

| (4) | Represents a 2017 loss on divestiture of an equity ownership in E4D Technologies and a 2013 loss on divestiture of a noncontrolling interest in a dental wholesale distributor in the Middle East. |

| (5) | Includes a pre-tax charge of $5,325 related to a litigation settlement in 2017. |

| [Report of Independent Registered Public Accounting [removed: Firm](#Report1)....................................................................................................] [added: Firm](#Report1) ....................................................................................................] | | | 78 |

| | [Balance Sheets as of December [removed: 30, 2017] [added: 29, 2018] and December [removed: 31, 2016](#BalanceSheets)........................................................................................] [added: 30, 2017](#BalanceSheets) ...................................................................................] | | 79 |

| | [Statements of Income for the years ended December [removed: 30, 2017,](#IncomeStatement)] [added: 29, 2018,](#IncomeStatement)] | | |

| | | [December [removed: 31, 2016] [added: 30, 2017] and December [removed: 26, 2015](#IncomeStatement)...........................................................................................................] [added: 31, 2016](#IncomeStatement) ......................................................................................................] | 80 |

| | [Statements of Comprehensive Income for the years ended December [removed: 30, 2017,](#CompInc)] [added: 29, 2018,](#CompInc)] | | |

| | | [December [removed: 31, 2016] [added: 30, 2017] and December [removed: 26, 2015](#CompInc)...........................................................................................................] [added: 31, 2016](#CompInc) ......................................................................................................] | 81 |

| | | [December [removed: 30, 2017,] [added: 29, 2018,] December [removed: 31, 2016] [added: 30, 2017] and December [removed: 26, 2015](#SE).................................................................................] [added: 31, 2016](#SE) ..........................................................................] | 82 |

| | [Statements of Cash Flows for the years ended December [removed: 30, 2017,](#CashFlow)] [added: 29, 2018,](#CashFlow)] | | |

| | | [December [removed: 31, 2016] [added: 30, 2017] and December [removed: 26, 2015](#CashFlow)...........................................................................................................] [added: 31, 2016](#CashFlow) ......................................................................................................] | 83 |

| | [Notes to Consolidated Financial [removed: Statements](#Notes2FS).................................................................................................................] [added: Statements](#Notes2FS) ................................................................................................................] | | 84 |

| | [Note 1 [removed: -] [added: –] Significant Accounting [removed: Policies](#Notes2FS)..............................................................................................................] [added: Policies](#Notes2FS) ..............................................................................................................] | | 84 |

| | [Note 2 - Property and Equipment, Net](#Note2) [removed: .................................................................................................................] [added: ................................................................................................................] | | [removed: 92] [added: 96] |

| | [Note 3 - Goodwill and Other Intangibles, Net](#Note3) [removed: ........................................................................................................] [added: .......................................................................................................] | | [removed: 93] [added: 97] |

| | [Note 4 - Investments and Other](#Note4) [removed: .........................................................................................................................] [added: ........................................................................................................................] | | [removed: 94] [added: 98] |

| | [Note 5 - [removed: Debt](#Note5)..................................................................................................................................................] [added: Debt](#Note5) ..................................................................................................................................................] | | [removed: 94] [added: 98] |

[removed: | | [Note] [added: Note] 6 [removed: -] [added: –] Redeemable Noncontrolling [removed: Interests](#Note6)....................................................................................................... | | 97 |][added: Interests]

| | [Note 7 - Comprehensive Income](#Note7) [removed: ........................................................................................................................] [added: .......................................................................................................................] | | [removed: 98] [added: 102] |

| | [Note 8 - Fair Value [removed: Measurements](#Note8).......................................................................................................................] [added: Measurements](#Note8) .....................................................................................................................] | | [removed: 100] [added: 104] |

| | [Note 9 - Business [removed: Acquisitions and Divestiture](#Note9)....................................................................................................] [added: Acquisitions](#Note9) ..........................................................................................................................] | | [removed: 102] [added: 106] |

| | [Note 10 - Plans of [removed: Restructuring](#Note10).........................................................................................................................] [added: Restructuring](#Note10) .........................................................................................................................] | | [removed: 104] [added: 109] |

[removed: | | [Note] [added: Note] 11 [removed: -] [added: –] Earnings Per [removed: Share](#Note11).............................................................................................................................. | | 105 |][added: Share]

| | [Note 12 - Income [removed: Taxes](#Note12).....................................................................................................................................] [added: Taxes](#Note12) ...................................................................................................................................] | | [removed: 105] [added: 111] |

| | [Note 13 - Concentrations of Risk](#Note13) [removed: .......................................................................................................................] [added: ......................................................................................................................] | | [removed: 109] [added: 116] |

| | [Note 14 - Derivatives and Hedging [removed: Activities](#Note14)........................................................................................................] [added: Activities](#Note14) ........................................................................................................] | | [removed: 110] [added: 116] |

[removed: | | [Note 15 - Segment and] [added: Note 16 – Segment and] Geographic [removed: Data](#Note15)............................................................................................................... | | 111 |][added: Data]

[removed: | | [Note 16 -] [added: Note 17 –] Employee Benefit [removed: Plans](#Note16)........................................................................................................................ | | 113 |][added: Plans]

[removed: | | [Note 17 -] [added: Note 18 –] Commitments and [removed: Contingencies](#Note17)........................................................................................................... | | 117 |][added: Contingencies]

[removed: | | [Note 18 -] [added: Note 19 –] Quarterly Information [removed: (Unaudited)](#Note18)......................................................................................................... | | 121 |][added: (Unaudited)]

[removed: | | [Note 19 - Supplemental] [added: Note 20 – Supplemental] Cash Flow [removed: Information](#Note19)...................................................................................................... | | 123 |][added: Information]

| [Schedule II - Valuation and Qualifying Accounts for the years ended December [removed: 30, 2017,](#schedqualifying)] [added: 29, 2018,](#ScheduleII)] | | | |

We have audited the accompanying consolidated balance sheets of Henry Schein, Inc. (the “Company”) and subsidiaries as of December [removed: 30, 2017] [added: 29, 2018] and December [removed: 31, 2016,] [added: 30, 2017,] the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December [removed: 30, 2017,] [added: 29, 2018,] and the related notes and schedule presented in Item 15 (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company and subsidiaries at December [removed: 30, 2017] [added: 29, 2018] and December [removed: 31, 2016,] [added: 30, 2017,] and the results of their operations and their cash flows for each of the three years in the period ended December [removed: 31, 2017,] [added: 29, 2018,] in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December [removed: 30, 2017,] [added: 29, 2018,] based on criteria established in _Internal Control – Integrated Framework_ _(2013)_ issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated February [removed: 21, 2018] [added: 20, 2019] expressed an unqualified opinion thereon.

| | | | | | December [added: 29, | | | December] 30, | | | December 31, | |

| | | | | | [added: 2018 | | |] 2017 | | | 2016 | |

| | Cash and cash equivalents .............................................................................................................................................................. | | | | $ | [removed: 174,658] [added: 80,209] | | $ | [removed: 62,381] [added: 174,658] |

| | Inventories, net ............................................................................................................................................................................. | | | | | [removed: 1,933,803] [added: 1,970,742] | | | [removed: 1,665,750] [added: 1,933,803] |

| | Prepaid expenses and other ............................................................................................................................................................. | | | | | [removed: 454,752] [added: 520,558] | | | [removed: 360,510] [added: 454,752] |

| Property and equipment, net ................................................................................................................................................................ | | | | | | [removed: 375,001] [added: 382,398] | | | [removed: 333,906] [added: 375,001] |

| Goodwill .......................................................................................................................................................................................... | | | | | | [removed: 2,301,331] [added: 2,820,295] | | | [removed: 2,019,740] [added: 2,301,331] |

| | [Note 15 - Revenue from Contracts with Customers](#Revenue_Contracts) ............................................................................................................................... | | 117 |

| | [Note 21 – Subsequent Event](#Subsequent_Event)........................................................................................................................................................................ | | 131 |

| | [December 30, 2017 and December 31, 2016](#ScheduleII) ................................................................................................................ | | 147 |

February 20, 2019

| | | | [Table of Contents](#TABLEOFCONTENTS) | | December 29, | | | December 30, | |

| | Accounts receivable, net of reserves of $60,533 and $53,832 ................................................................................................................ | | | | | 1,603,711 | | | 1,522,807 |

| | | | Total current assets ................................................................................................................................................................ | | | 4,175,220 | | | 4,086,020 |

| | | | Total assets .......................................................................................................................................................................... | | $ | 8,500,527 | | $ | 7,863,995 |

| | | Other ....................................................................................................................................................................................... | | | | 579,276 | | | 455,780 |

| | | | Total current liabilities ............................................................................................................................................................ | | | 3,218,827 | | | 2,828,975 |

| | | | Total liabilities ...................................................................................................................................................................... | | | 4,646,583 | | | 4,207,447 |

| | | 151,401,668 outstanding on December 29, 2018 and 240,000,000 shares authorized, | | | | | | | |

| | Noncontrolling interests .................................................................................................................................................................. | | | | | 580,456 | | | 12,911 |

| | | | [Table of Contents](#TABLEOFCONTENTS) | | | | | | | | | |

| | Litigation settlements.................................................................................................................................................................. | | | | | 38,488 | | | 5,325 | | | \- |

| | Transaction costs related to Animal Health spin-off......................................................................................................................... | | | | | 38,756 | | | \- | | | \- |

| | | | [Table of Contents](#TABLEOFCONTENTS) | | | | | | | | | |

| | [Table of Contents](#TABLEOFCONTENTS) | | | | | | | | | | | | | Accumulated | | | | | | | |

| Deferred tax benefit arising from acquisition of partnership................................................................................................................................ | | | | | | | | | | | | | | | | | | | | | |

| | noncontrolling interests in partnership................................................................................................................................................. | | \- | | | \- | | | 48,037 | | | \- | | | \- | | | \- | | | 48,037 |

| Cumulative impact of adopting new accounting standards | | | \- | | | \- | | | \- | | | 2,594 | | | \- | | | \- | | | 2,594 |

| | noncontrolling interests) .............................................................................................................................................................. | | \- | | | \- | | | \- | | | 535,881 | | | \- | | | 4,397 | | | 540,278 |

| | attributable to Redeemable noncontrolling interests) ................................................................................................................................... | | \- | | | \- | | | \- | | | \- | | | (122,360) | | | (965) | | | (123,325) |

| | net of tax of $396..................................................................................................................................................................... | | \- | | | \- | | | \- | | | \- | | | 626 | | | \- | | | 626 |

| Dividends paid ......................................................................................................................................................................... | | | \- | | | \- | | | \- | | | \- | | | \- | | | (656) | | | (656) |

| Other adjustments ....................................................................................................................................................................... | | | \- | | | \- | | | (19) | | | \- | | | \- | | | 713 | | | 694 |

| Purchase of noncontrolling interests ...................................................................................................................................................... | | | \- | | | \- | | | \- | | | \- | | | \- | | | (214) | | | (214) |

| Change in fair value of redeemable securities .............................................................................................................................................. | | | \- | | | \- | | | (148,919) | | | \- | | | \- | | | \- | | | (148,919) |

| Repurchase and retirement of common stock .............................................................................................................................................. | | | (2,518,387) | | | (25) | | | (36,206) | | | (163,769) | | | \- | | | \- | | | (200,000) |

| Stock issued upon exercise of stock options............................................................................................................................................... | | | 153,516 | | | 1 | | | 3,075 | | | \- | | | \- | | | \- | | | 3,076 |

| Stock-based compensation expense ...................................................................................................................................................... | | | 340,794 | | | 4 | | | 36,236 | | | \- | | | \- | | | \- | | | 36,240 |

| Shares withheld for payroll taxes ......................................................................................................................................................... | | | (267,772) | | | (3) | | | (18,140) | | | \- | | | \- | | | \- | | | (18,143) |

| Settlement of stock-based compensation awards .......................................................................................................................................... | | | 3,371 | | | \- | | | (727) | | | \- | | | \- | | | \- | | | (727) |

| Transfer of charges in excess of capital .................................................................................................................................................... | | | \- | | | \- | | | 106,146 | | | (106,146) | | | \- | | | \- | | | \- |

| Balance, December 29, 2018 ............................................................................................................................................................. | | | 151,401,668 | | $ | 1,514 | | $ | \- | | $ | 3,208,589 | | $ | (248,771) | | $ | 580,456 | | $ | 3,541,788 |

| | | | | Accounts receivable ............................................................................................................................................................... | | | (147,499) | | | (160,266) | | | (7,655) |

| | Repayments from (borrowings for) loan to affiliate ................................................................................................................................. | | | | | | (25,700) | | | 6,700 | | | (4,500) |

| | Other ............................................................................................................................................................................................... | | | | | | (16,047) | | | (12,850) | | | (13,168) |

We consolidate a Variable Interest Entity (“VIE”) where we hold a variable interest and are the primary beneficiary.

The VIE is a trade accounts receivable securitization.

| | [December 31, 2016 and December 26, 2015](#schedqualifying).................................................................................................................... | | 138 |

February 21, 2018

| | Accounts receivable, net of reserves of $106,592 and $90,329 ................................................................................................................. | | | | | 1,470,047 | | | 1,254,139 |

| | | | Total current assets ............................................................................................................................................................... | | | 4,033,260 | | | 3,342,780 |

| | | | Total assets .......................................................................................................................................................................... | | $ | 7,811,235 | | $ | 6,760,396 |

| | | Other ...................................................................................................................................................................................... | | | | 403,020 | | | 391,785 |

| | | | Total current liabilities ............................................................................................................................................................ | | | 2,776,215 | | | 2,320,646 |

| | | | Total liabilities ...................................................................................................................................................................... | | | 4,154,687 | | | 3,351,956 |

| | | 158,805,010 outstanding on December 31, 2016 ................................................................................................................................ | | | | 1,537 | | | 1,588 |

| | Additional paid-in capital ................................................................................................................................................................ | | | | | \- | | | 126,742 |

| | | | | | | | | | | | | |

| | | | | | | | | | | | | | | Accumulated | | | | | | | |

| Balance, December 27, 2014 ............................................................................................................................................................... | | | 168,017,074 | | $ | 1,680 | | $ | 264,523 | | $ | 2,642,523 | | $ | (95,132) | | $ | 2,851 | | $ | 2,816,445 |

| | noncontrolling interests) ............................................................................................................................................................. | | \- | | | \- | | | \- | | | 479,058 | | | \- | | | 781 | | | 479,839 |

| | attributable to Redeemable noncontrolling interests) ................................................................................................................................... | | \- | | | \- | | | \- | | | \- | | | (129,205) | | | (40) | | | (129,245) |

| | net of tax of $153 ..................................................................................................................................................................... | | \- | | | \- | | | \- | | | \- | | | 1,994 | | | \- | | | 1,994 |

| Dividends paid ........................................................................................................................................................................... | | | \- | | | \- | | | \- | | | \- | | | \- | | | (657) | | | (657) |

| Other adjustments ........................................................................................................................................................................ | | | \- | | | \- | | | 222 | | | \- | | | \- | | | (9) | | | 213 |

| Repurchase and retirement of common stock ................................................................................................................................................ | | | (4,168,594) | | | (42) | | | (74,226) | | | (225,584) | | | \- | | | \- | | | (299,852) |

| | including tax benefit of $20,802 ....................................................................................................................................................... | | 595,732 | | | 6 | | | 35,666 | | | \- | | | \- | | | \- | | | 35,672 |

| Stock-based compensation expense ........................................................................................................................................................ | | | 785,710 | | | 8 | | | 44,606 | | | \- | | | \- | | | \- | | | 44,614 |

| Shares withheld for payroll taxes .......................................................................................................................................................... | | | (399,282) | | | (4) | | | (28,310) | | | \- | | | \- | | | \- | | | (28,314) |

| Liability for cash settlement stock-based compensation awards .............................................................................................................................. | | | 55,886 | | | \- | | | 4,052 | | | \- | | | \- | | | \- | | | 4,052 |

| Stock issued upon exercise of stock options................................................................................................................................................ | | | 197,434 | | | 2 | | | 5,264 | | | \- | | | \- | | | \- | | | 5,266 |

| | | | | Accounts receivable .............................................................................................................................................................. | | | (159,876) | | | (1,904) | | | (120,001) |

| | Proceeds from sales of available-for-sale securities ................................................................................................................................... | | | | | | \- | | | \- | | | 20 |

| | Other .............................................................................................................................................................................................. | | | | | | (6,150) | | | (17,668) | | | (16,506) |

The effects of the stock split on share and per share amounts have been retroactively reflected for all periods presented in this Form 10-K.

We believe that the shipment date is the most appropriate point in time indicating the completion of the earnings process because we have no post-shipment obligations, the product price is fixed and determinable, collection of the resulting receivable is reasonably assured and product returns are reasonably estimable.

Revenue derived from multiple element arrangements, and the related deferral of such revenue (which is insignificant to our financial statements), is recognized as follows.

We allocate revenue for such arrangements based on the relative selling prices of the elements applying the following hierarchy: first VSOE, then third-party evidence (“TPE”) of selling price if VSOE is not available, and finally our estimate of the selling price if neither VSOE nor TPE is available.

VSOE exists when we sell the deliverables separately and represents the actual price charged by us for each deliverable.

Each element that has standalone value is accounted for as a separate unit of accounting.

Revenue allocated to each unit of accounting is recognized when the service is provided or the product is delivered.

The reserve for accounts receivable is comprised of allowance for doubtful accounts and sales returns.

From

Additionally, advertising and promotional costs incurred in connection with direct marketing, including product catalogs and printed material, are deferred and amortized on a straight-line basis over the period which is benefited, generally not exceeding one year.

As of December 30, 2017 and December 31, 2016, we had $4.0 million and $3.5 million of deferred direct marketing expenses included in other current assets.

######

earnings and cash flow are not achieved, the value of the redeemable noncontrolling interests might be impacted.

Based on this evaluation, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures were effective as of December [removed: 30, 2017] [added: 29, 2018] 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.

The combination of [added: acquisitions,] continued acquisition integrations and systems implementations undertaken during the quarter and carried over from prior quarters, when considered in the aggregate, represents a material change in our internal control over financial reporting.

[removed: In addition,] [added: During the quarter ended December 29, 2018,] post-acquisition integration related activities continued for our global [removed: dental] [added: dental, technology] and animal health businesses acquired during prior quarters, representing aggregate annual revenues of approximately [removed: $511] [added: $362] million.

Also, during the quarter ended December [removed: 30, 2017, we] [added: 29, 2018, post-implementation systems improvement activities] continued [removed: the phased implementation of] [added: for] a new equipment system [added: implemented during prior quarters] for our U.S. dental business [removed: to centers] representing approximate aggregate annual revenues of [removed: $159] [added: $453] million.

All [removed: acquisition] [added: acquisitions] integrations and systems implementations involved necessary and appropriate change-management controls that are considered in our annual assessment of the design and operating effectiveness of our internal control over financial reporting.

Based on our evaluation under the COSO Framework, our management concluded that our internal control over financial reporting was effective at a reasonable assurance level as of December [removed: 30, 2017.][added: 29, 2018.]

The effectiveness of our internal control over financial reporting as of December [removed: 30, 2017] [added: 29, 2018] has been independently audited by BDO USA, LLP, an independent registered public accounting firm, and their attestation is included herein.

We have audited Henry Schein Inc.’s (the “Company’s”) internal control over financial reporting as of December [removed: 30, 2017,] [added: 29, 2018,] based on criteria established in _Internal Control – Integrated Framework (2013)_ issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December [removed: 30, 2017,] [added: 29, 2018,] based on the COSO criteria_._

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December [removed: 30, 2017] [added: 29, 2018] and December [removed: 31, 2016,] [added: 30, 2017,] the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December [removed: 30, 2017,] [added: 29, 2018,] and the related notes and schedule and our report dated February [removed: 21, 2018] [added: 20, 2019] expressed an unqualified opinion thereon.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that [added: controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.]

February 20, 2019

PART III

During the quarter ended December 30, 2017, we completed the acquisition of a US dental business with approximate aggregate annual revenues of $16 million.

Additionally, we completed the implementation of a new ERP system at a dental business in Italy having approximate aggregate annual revenues of $49 million.

Finally, our U.S. medical business continued the phased implementation of a new sales commission application which now covers approximately $84 million of annual sales commission expense.

controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

February 21, 2018

Information required by this item regarding our directors and executive officers and our corporate governance is hereby incorporated by reference to the Section entitled “Election of Directors,” with respect to directors, and the first paragraph of the Section entitled “Corporate Governance - Board of Directors Meetings and Committees - Audit Committee,” with respect to corporate governance, in each case in our definitive [removed: 2018] [added: 2019] Proxy Statement to be filed pursuant to Regulation 14A and to the Section entitled “Executive Officers of the Registrant” in Part I of this report, with respect to executive officers.

There have been no changes to the procedures by which stockholders may recommend nominees to our Board of Directors since our last disclosure of such procedures, which appeared in our definitive [removed: 2017] [added: 2018] Proxy Statement filed pursuant to Regulation 14A on April [removed: 10, 2017.][added: 12, 2018.]

Information required by this item concerning compliance with Section 16(a) of the Securities Exchange Act of 1934 is hereby incorporated by reference to the Section entitled “Section 16(a) Beneficial Ownership Reporting Compliance” in our definitive [removed: 2018] [added: 2019] Proxy Statement to be filed pursuant to Regulation 14A.

We have adopted a Code of Ethics that applies to our Chief Executive Officer, Chief Financial Officer, [removed: Vice President of Corporate Finance] [added: Chief Accounting Officer] and Controller.

The information required by this item is hereby incorporated by reference to the Sections entitled “Compensation Discussion and Analysis,” “Compensation Committee Report” (which information shall be deemed furnished in this Annual Report on Form 10-K), “Executive and Director Compensation” and “Compensation Committee Interlocks and Insider Participation” in our definitive [removed: 2018] [added: 2019] Proxy Statement to be filed pursuant to Regulation 14A.

###

The following table summarizes information relating to these plans as of December [removed: 30, 2017:][added: 29, 2018:]

The other information required by this item is hereby incorporated by reference to the Section entitled “Security Ownership of Certain Beneficial Owners and Management” in our definitive [removed: 2018] [added: 2019] Proxy Statement to be filed pursuant to Regulation 14A.

| Plans Approved by Stockholders ........................................................................................................................................................ | | | 2,000 | | $ | 17.22 | | 6,518,438 |

| | Total ....................................................................................................................................................................................... | | 2,000 | | $ | 17.22 | | 6,518,438 |

| Plans Approved by Stockholders ....................................................................................................................................................... | | | 155,516 | | $ | 29.65 | | 7,696,304 |

| | Total ....................................................................................................................................................................................... | | 155,516 | | $ | 29.65 | | 7,696,304 |

The information required by this item is hereby incorporated by reference to the Section entitled “Certain Relationships and Related Transactions” and “Corporate Governance – Board of Directors Meetings and Committees – Independent Directors” in our definitive [removed: 2018] [added: 2019] Proxy Statement to be filed pursuant to Regulation 14A.

The information required by this item is hereby incorporated by reference to the Section entitled “Independent Registered Public Accounting Firm Fees and Pre-Approval Policies and Procedures” in our definitive [removed: 2018] [added: 2019] Proxy Statement to be filed pursuant to Regulation 14A.

[removed: PART IV][added: PART IV]

(Incorporated by reference to Exhibit [removed: 3.1] [added: 10.46] to our Annual Report on Form 10-K for the fiscal year ended December [removed: 30, 2006] [added: 31, 2016] filed on February [removed: 28, 2007.)](http://www.sec.gov/Archives/edgar/data/1000228/000095012307002886/y30969exv3w1.htm)][added: 21, 2017.)](http://www.sec.gov/Archives/edgar/data/1000228/000100022817000011/exhibit1046_2016.htm)]

(Incorporated by reference to Exhibit [removed: 3.2] [added: 10.52] to our Annual Report on Form 10-K for the fiscal year ended December [removed: 30, 2006] [added: 31, 2016] filed on February [removed: 28, 2007.)](http://www.sec.gov/Archives/edgar/data/1000228/000095012307002886/y30969exv3w2.htm)][added: 21, 2017.)](http://www.sec.gov/Archives/edgar/data/1000228/000100022817000011/exhibit1052_2016.htm)]

(Incorporated by reference to Exhibit [removed: 3.1] [added: 10.4] to our Quarterly Report on Form 10-Q for the fiscal quarter ended [removed: June 25, 2005] [added: March 31, 2018] filed on [removed: August 4, 2005.)](http://www.sec.gov/Archives/edgar/data/1000228/000095012305009366/y11335exv3w1.htm)][added: May 8, 2018.)](http://www.sec.gov/Archives/edgar/data/1000228/000100022818000022/exhibit104.htm)]

(Incorporated by reference to Exhibit [removed: 3.1 of] [added: 10.1 to] our Current Report on Form 8-K filed on May [removed: 16, 2012.)](http://www.sec.gov/Archives/edgar/data/1000228/000119312512236772/d353926dex31.htm)][added: 21, 2018.)](http://www.sec.gov/Archives/edgar/data/1000228/000119312518169501/d591807dex101.htm)]

[removed: 3.6 [Amended] [added: [3.2](http://www.sec.gov/Archives/edgar/data/1000228/000119312518181713/d586703dex32.htm) [Second Amended] and Restated [removed: By-laws] [added: By-Laws] of Henry Schein, [removed: Inc., as amended] [added: Inc.] (Incorporated by reference to Exhibit [removed: 3.1] [added: 3.2] to our [removed: Quarterly] [added: Current] Report on Form [removed: 10-Q for the fiscal quarter ended July 1, 2017] [added: 8-K] filed on [removed: August 8, 2017.)](http://www.sec.gov/Archives/edgar/data/1000228/000100022817000049/exhibit31.htm)][added: June 1, 2018.)](http://www.sec.gov/Archives/edgar/data/1000228/000119312518181713/d586703dex32.htm)]

[removed: 4.1 [Amended] [added: [4.1](http://www.sec.gov/Archives/edgar/data/1000228/000119312518211389/d671414dex43.htm) [Second Amended] and Restated [added: Multicurrency] Master Note Purchase Agreement dated [removed: September 15, 2017,] [added: as of June 29, 2018,] by and among us, Metropolitan Life Insurance Company, MetLife Investment Advisors Company, LLC and each MetLife affiliate which becomes party thereto.

(Incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K filed on [removed: September 18, 2017.)](http://www.sec.gov/Archives/edgar/data/1000228/000119312517286814/d451923dex43.htm)][added: July 2, 2018.)](http://www.sec.gov/Archives/edgar/data/1000228/000119312518211389/d671414dex43.htm)]

[removed: 4.2 [Amended] [added: [4.2](http://www.sec.gov/Archives/edgar/data/1000228/000119312518211389/d671414dex42.htm) [Second Amended] and Restated Master Note Facility dated [removed: September 15, 2017,] [added: as of June 29, 2018,] by and among us, NYL Investors LLC and each New York Life affiliate which becomes party thereto.

(Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed on [removed: September 18, 2017.)](http://www.sec.gov/Archives/edgar/data/1000228/000119312517286814/d451923dex42.htm)][added: July 2, 2018.)](http://www.sec.gov/Archives/edgar/data/1000228/000119312518211389/d671414dex42.htm)]

[removed: 4.3 [Amended] [added: [4.3](http://www.sec.gov/Archives/edgar/data/1000228/000119312518211389/d671414dex41.htm) [Second Amended] and Restated [added: Multicurrency] Private Shelf Agreement dated [removed: September 15, 2017,] [added: as of June 29, 2018,] by and among us, PGIM, Inc. and each Prudential affiliate which becomes party thereto.

(Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed on [removed: September 18, 2017.)](http://www.sec.gov/Archives/edgar/data/1000228/000119312517286814/d451923dex41.htm)][added: July 2, 2018.)](http://www.sec.gov/Archives/edgar/data/1000228/000119312518211389/d671414dex41.htm)]

[removed: 10.1] [added: [10.1](http://www.sec.gov/Archives/edgar/data/1000228/000095012307005242/y33040def14a.htm)] [Henry Schein, Inc. 1994 Stock Incentive Plan, as amended and restated effective as of March 27, 2007.

[removed: 10.2] [added: [10.2](http://www.sec.gov/Archives/edgar/data/1000228/000100022809000011/exhibit10_22008.htm)] [Amendment Number One to the Henry Schein, Inc. 1994 Stock Incentive Plan, effective as of January 1, 2005.

[removed: 10.3] [added: [10.3](http://www.sec.gov/Archives/edgar/data/1000228/000100022809000030/exhibit10_12q09.htm)] [Amendment Number Two to the Henry Schein, Inc. 1994 Stock Incentive Plan, effective as of May 28, 2009.

[removed: 10.4] [added: [10.4](http://www.sec.gov/Archives/edgar/data/1000228/000100022810000021/exhibit10_1.htm)] [Amendment Number Three to the Henry Schein, Inc. 1994 Stock Incentive Plan, effective as of February 23, 2010.

[removed: 10.5] [added: [10.5](http://www.sec.gov/Archives/edgar/data/1000228/000100022811000049/exhibit10_22q11.htm)] [Amendment Number Four to the Henry Schein, Inc. 1994 Stock Incentive Plan, effective as of May 18, 2011.

[removed: 10.6] [added: [10.6](http://www.sec.gov/Archives/edgar/data/1000228/000100022811000049/exhibit10_32q11.htm)] [Amendment Number Five to the Henry Schein, Inc. 1994 Stock Incentive Plan, effective as of May 18, 2011.

[removed: 10.7] [added: [10.7](http://www.sec.gov/Archives/edgar/data/1000228/000119312513224319/d542871dex102.htm)] [Henry Schein, Inc. 2013 Stock Incentive Plan, as amended and restated effective as of May 14, 2013.

[removed: 10.8] [added: [10.8](http://www.sec.gov/Archives/edgar/data/1000228/000100022815000017/exhibit101_1q15.htm)] [Form of [added: 2015] Restricted Stock Agreement for time-based restricted stock awards pursuant to the Henry Schein, Inc. 2013 Stock Incentive Plan (as amended and restated effective as of May 14, 2013).

(Incorporated by reference to Exhibit [removed: 10.1] [added: 10.5] to our Quarterly Report on Form 10-Q for the fiscal quarter ended March [removed: 29, 2014] [added: 31, 2018] filed on May [removed: 6, 2014.)](http://www.sec.gov/Archives/edgar/data/1000228/000100022814000017/exhibit101_1q14.htm)][added: 8, 2018.)](http://www.sec.gov/Archives/edgar/data/1000228/000100022818000022/exhibit105.htm)]

[removed: 10.9] [added: [10.14](http://www.sec.gov/Archives/edgar/data/1000228/000100022817000025/exhibit101.htm)] [Form of [added: 2017] Restricted Stock Agreement for performance-based restricted stock awards pursuant to the Henry Schein, Inc. 2013 Stock Incentive Plan (as amended and restated effective as of May 14, 2013).

(Incorporated by reference to Exhibit [removed: 10.2] [added: 10.6] to our Quarterly Report on Form 10-Q for the fiscal quarter ended March [removed: 29, 2014] [added: 31, 2018] filed on May [removed: 6, 2014.)](http://www.sec.gov/Archives/edgar/data/1000228/000100022814000017/exhibit102_1q14.htm)][added: 8, 2018.)](http://www.sec.gov/Archives/edgar/data/1000228/000100022818000022/exhibit106.htm)]

[removed: 10.10] [added: [10.10](http://www.sec.gov/Archives/edgar/data/1000228/000100022816000066/exhibit_101.htm)] [Form of [added: 2016] Restricted Stock [removed: Unit] Agreement for time-based restricted stock awards pursuant to the Henry Schein, Inc. 2013 Stock Incentive Plan (as amended and restated effective as of May 14, 2013).

[removed: 10.11] [added: [10.11](http://www.sec.gov/Archives/edgar/data/1000228/000100022816000066/exhibit_102.htm)] [Form of [added: 2016] Restricted Stock [removed: Unit] Agreement for performance-based restricted stock awards pursuant to the Henry Schein, Inc. 2013 Stock Incentive Plan (as amended and restated effective as of May 14, 2013).

[removed: 10.12] [added: [10.12](http://www.sec.gov/Archives/edgar/data/1000228/000100022816000066/exhibit_103.htm)] [Form of [removed: 2015] [added: 2016] Restricted Stock [added: Unit] Agreement for time-based restricted stock awards pursuant to the Henry Schein, Inc. 2013 Stock Incentive Plan (as amended and restated effective as of May 14, 2013).

[removed: 10.13] [added: [10.9](http://www.sec.gov/Archives/edgar/data/1000228/000100022815000017/exhibit103_1q15.htm)] [Form of 2015 Restricted Stock [added: Unit] Agreement for [removed: performance-based] [added: time-based] restricted stock awards pursuant to the Henry Schein, Inc. 2013 Stock Incentive Plan.

[removed: 10.14] [added: [10.15](http://www.sec.gov/Archives/edgar/data/1000228/000100022817000025/exhibit102.htm)] [Form of [removed: 2015] [added: 2017] Restricted Stock Unit Agreement for time-based restricted stock awards pursuant to the Henry Schein, Inc. 2013 Stock Incentive [removed: Plan.][added: Plan (as amended and restated effective as of May 14, 2013).]