Henry Schein (HSIC) 10-K risk factor changes: FY2019 vs FY2018

[removed: The] [added: The] health care products distribution industry is highly competitive and consolidating, and we may not be able to compete [removed: successfully.][added: successfully.]

[removed: Because] [added: Because] substantially all of the products that we distribute are not manufactured by us, we are dependent upon third parties for the manufacture and supply of substantially all of our [removed: products.][added: products.]

[removed: Our] [added: Our] revenues and profitability depend on our relationships with capable sales personnel as well as customers, suppliers and manufacturers of the products that we [removed: distribute.][added: distribute.]

[removed: Our] [added: Our] future success is substantially dependent upon our senior [removed: management.][added: management.]

[removed: We] [added: We] experience fluctuations in quarterly earnings.

As a result, we may fail to meet or exceed the expectations of securities analysts and investors, which could cause our stock price to [removed: decline.][added: decline.]

[removed: | • | |] [added: -] timing and amount of sales and marketing expenditures; [removed: |]

[removed: | • | |] [added: -] timing of pricing changes offered by our suppliers; [removed: |]

[removed: | • | |] [added: -] timing of the introduction of new products and services by our suppliers; [removed: |]

[removed: | • | |] [added: -] timing of the release of upgrades and enhancements to our technology-related products and services; [removed: |]

[removed: | • | |] [added: -] changes in or availability of supplier contracts or rebate programs; [removed: |]

[removed: | • | |] [added: -] supplier rebates based upon attaining certain growth goals; [removed: |]

[removed: | • | |] [added: -] changes in the way suppliers introduce or deliver products to market; [removed: |]

[removed: | • | |] [added: -] costs of developing new applications and services; [removed: |]

[removed: | • | |] [added: -] our ability to correctly identify customer needs and preferences and predict future needs and preferences; [removed: |]

[removed: | • | |] [added: -] uncertainties regarding potential significant breaches of data security or disruptions of our information technology systems; [removed: |]

[removed: | • | |] [added: -] unexpected regulatory actions, or government regulation generally; [removed: |]

[removed: | • | |] [added: -] exclusivity requirements with certain suppliers, which may prohibit us from distributing competitive products manufactured by other suppliers; [removed: |]

[removed: | • | |] [added: -] loss of sales representatives; [removed: |]

[removed: | • | |] [added: -] costs related to acquisitions and/or integrations of technologies or businesses; [removed: |]

[removed: | • | |] [added: -] costs associated with our self-insured medical and dental insurance programs; [removed: |]

[removed: | • | |] [added: -] general market and economic conditions, as well as those specific to the health care industry and related industries; [removed: |]

[removed: | • | |] [added: -] our success in establishing or maintaining business relationships; [removed: |]

[removed: | • | |] [added: -] unexpected difficulties in developing and manufacturing products; [removed: |]

[removed: | • | |] [added: -] product demand and availability, or product recalls by manufacturers; [removed: |]

[removed: | • | |] [added: -] exposure to product liability and other claims in the event that the use of the products we sell results in injury; [removed: |]

[removed: | • | |] [added: -] increases in shipping costs or service issues with our third-party shippers; [removed: |]

[removed: | • | |] [added: -] fluctuations in the value of foreign currencies; [removed: |]

[removed: | • | |] [added: -] restructuring costs; [removed: |]

[removed: | • | |] [added: -] the adoption or repeal of legislation; [removed: |]

[removed: | • | |] [added: -] changes in accounting principles; and [removed: |]

[removed: | • | |] [added: -] litigation or regulatory judgments, expenses or settlements. [removed: |]

[removed: Expansion] [added: Expansion] of group purchasing organizations (“GPO”) or provider networks and the multi-tiered costing structure may place us at a competitive [removed: disadvantage.][added: disadvantage.]

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

[removed: Uncertain] [added: Uncertain] global macro-economic and political conditions could materially adversely affect our results of operations and financial [removed: condition.][added: condition.]

[removed: | • | |] [added: -] 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: 2018,] [added: 2019,] approximately [removed: 7%] [added: 3%] of our consolidated net sales were invoiced to customers in the United Kingdom and approximately [removed: 25%] [added: 20%] of our consolidated net sales were invoiced to customers in Europe overall, including the U.K.); [removed: |]

[removed: | • | |] [added: -] election results; [removed: |]

[removed: | • | |] [added: -] changes to laws and policies governing foreign trade (including, without limitation, [removed: North American Free Trade] [added: the United States-Mexico-Canada] Agreement [removed: (NAFTA)] [added: (USMCA)] and other international trade agreements); [removed: |]

[removed: | • | |] [added: -] greater restrictions on imports and exports; [removed: |]

[removed: | • | |] [added: -] changes in laws and policies governing health [removed: care; |][added: care or data privacy;]

of health care distribution companies; consolidation of health care manufacturers; collective purchasing arrangements and consolidation among office-based health care practitioners; and changes in reimbursements to customers, as well as growing enforcement activities (and related monetary recoveries) by governmental officials.

The fee on branded prescription drugs and biologics was implemented in 2011, and may adversely affect sales and cost of goods sold.

However, subsequent federal laws had suspended the imposition of the medical device excise tax through December 31, 2019, and the Further Consolidated Appropriations Act, 2020, signed into law on December 20, 2019, has permanently repealed the medical device excise tax.

Further, in December 2019, the Fifth Circuit ruled that the mandate within the Health Care Reform Law requiring that people buy health insurance was unconstitutional, though the ruling will likely be appealed.

The Fifth Circuit remanded the remainder of the case, pertaining to the viability of the Health Care Reform Law, in the absence of the individual mandate, to the District Court of the Northern District of Texas.

Any outcome of these cases that changes the Health Care Reform Law could have a significant impact on the U.S. health care industry.

Recently, there has been increased scrutiny on drug pricing and concurrent efforts to control or reduce drug costs by Congress, the President, and various states, including that several related bills have been introduced at the federal level.

Such legislation, if enacted, could have the potential to impose additional costs on our business.

CMS publishes

abroad.

The EU Medical Device Regulation may adversely affect our business.

As of May 26, 2020, the European Union Medical Device Regulation No. 2017/745 (the “EU MDR”) applies to medical devices developed and/or commercialized in the European Union.

The EU MDR is anticipated to have a major impact on the medical device industry as a whole.

It may adversely affect our business in various ways.

First, to the extent new products require a conformity assessment and such conformity assessment requires involvement of a notified body, the current and persisting significant shortage of notified bodies may limit our options to seek certification and/or significantly delay certification.

Furthermore the (few) existing notified bodies designated under the EU MDR are experiencing significant capacity bottlenecks, which leads to above-average timelines for product certifications.

The same applies to timelines for recertification of our existing products for which the CE certificate is approaching expiry.

This may result in us not being able to launch or to continue commercializing products.

Furthermore, within the context of conformity assessment (both for self-certified devices, and for devices under conformity assessment with a notified body), the EU MDR is tightening the requirements for clinical evaluation of a device.

In the specific case of Class I products, where to date the legal manufacturer confirmed compliance with the regulatory requirements, oversight by supervisory authorities is expected to increase, and such authorities may have a stricter view.

It may be that, from a perspective of the legal manufacturer, or of an authority, the existing product documentation has to be expanded, which may require additional development work.

We may also have to decide to discontinue commercialization of certain products, if and to the extent investments into additional development are not commensurate with the business contribution of such products.

Additionally in the context of conformity assessment, certain national authorities as well as the European Commission have further scrutinized the business model of own brand labeling (private label products) under the EU MDR, i.e., the reliance of a manufacturer distributing a product under its name on an assessment of a supplier confirming that the product meets the regulatory requirements, including its technical file(s) for the supplied product.

While this question remains under intense discussion between the industry and the authorities, and while we are exploring all options, this may require us to adapt the supply chain structure (e.g., by switching suppliers or moving to a distribution business model under which the supplier of a product is labeled as the legal manufacturer), for certain of our products, and may make it more difficult to bring private label products to market in Europe.

We may not be able to continue commercializing products, if no alternative supply chain solution is found.

In addition, the EU MDR is imposing more stringent regulatory requirements across the whole value chain including post marketing requirements, additional requirements for the organization of the quality management

system such as a responsible person for regulatory compliance, post marketing safety reporting, the requirement of Unique Device Identification (UDI), and the input into a European Databank on Medical Devices (EUDAMED, which however is delayed in its operations, with unknown implications on the regulatory obligations for product owners and distributors).

Also, the regulatory requirements for our interactions with suppliers and distributors alike are tightened.

These additional regulatory requirements increase our compliance obligations and thus the risk for non-compliance and greater costs.

The uncertain impact of the new EU MDR regulations, as well as failure to comply with the EU MDR, could have a material adverse effect on our business.

securities, antitrust and marketing laws and regulations.

In addition, the European Parliament and the Council of the European Union have adopted the GDPR, effective from May 25, 2018, which increased privacy rights for individuals in Europe (“Data Subjects”), including individuals who are our customers, suppliers and employees.

The GDPR also provides rights to Data Subjects relating to modification, erasure and transporting of the personal data.

In the United States, the CCPA, which increases the privacy protections afforded California residents and was signed into law on June 28, 2018, became effective January 1, 2020.

The CCPA generally requires companies, such as us, to institute additional protections regarding the collection, use and disclosure of certain personal information of California residents.

The California Attorney General released proposed CCPA regulations on October 10, 2019, and is required to adopt final regulations on or before July 1, 2020.

In addition to providing for enforcement by the California Attorney General, the CCPA also provides for a private right of action.

Entities in violation of the CCPA may be liable for civil penalties.

Other states, as well as the federal government, have increasingly considered the adoption of similarly expansive personal privacy laws, backed by significant civil penalties for non-compliance.

changing governmental standards.

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

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

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

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, 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.

states) under federal and state false claims laws, and who may receive up to 30% of total government recoveries.

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

| • | | public health emergencies. |

adequate protection.

[removed: Cautionary] [added: Cautionary] Note Regarding Forward-Looking [removed: Statements][added: Statements]

These statements are [added: generally] identified by the use of such terms as “may,” “could,” “expect,” “intend,” “believe,” “plan,” “estimate,” “forecast,” “project,” [removed: “anticipate”] [added: “anticipate,” “to be,” “to make”] or other comparable terms.

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; [added: increased competition by third party commerce sites;] 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; [added: risks associated with the Coronavirus; risks associated with the United Kingdom’s withdrawal from the European Union;] transitional challenges associated with acquisitions, dispositions and joint ventures, including the failure to achieve anticipated synergies/benefits; financial and tax risks associated with acquisitions, dispositions and joint ventures; litigation risks; new or unanticipated litigation [removed: developments;] [added: developments and] the [added: status of litigation matters; 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; [removed: 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: Where] [added: Where] You Can Find Important [removed: Information][added: Information]

[removed: Executive-Level Overview][added: Executive-Level Overview]

We believe that we have a strong brand identity due to our more than [removed: 86] [added: 87] years of experience distributing health care products.

We are headquartered in Melville, New York, employ more than [removed: 18,000] [added: 19,000] people (of which more than [removed: 8,800] [added: 9,400] are based outside the United States) and have operations or affiliates in 31 countries, including the United States, Australia, Austria, Belgium, Brazil, Canada, Chile, China, the Czech Republic, France, Germany, Hong Kong SAR, [added: Ireland, Israel, Italy, Japan, Liechtenstein, Luxembourg, Malaysia, the Netherlands, New Zealand, Poland, Portugal, Singapore, South Africa, Spain, Sweden, Switzerland, Thailand, United Arab Emirates and the United Kingdom.]

On February 7, 2019 (the “Distribution Date”), we completed the [removed: 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”).

On the Distribution Date, we received a tax-free distribution of [removed: $1,120.0] [added: $1,120] million from Covetrus pursuant to certain debt financing incurred by Covetrus.

On the Distribution Date and prior to the [removed: Distribution,] [added: Animal Health Spin-off,] Covetrus issued shares of Covetrus common stock to certain institutional accredited investors (the “Share Sale Investors”) for $361.1 million (the “Share Sale”).

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) [removed: in respect of certain equity awards] held by certain employees of the Henry Schein Animal Health [removed: Business,] [added: Business (in the form of certain equity awards),] 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) [removed: in respect of certain equity awards] held by certain employees of Vets First [removed: Choice.][added: Choice (in the form of certain equity awards).]

[removed: Industry Overview][added: *Industry Overview*]

[removed: Industry Consolidation][added: *Industry Consolidation*]

[added: 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.

[removed: Aging] [added: *Aging] Population and Other Market [removed: Influences][added: Influences*]

According to the U.S. Census Bureau’s International Data Base, in [removed: 2018] [added: 2019] there were more than six [added: and a half\`] million Americans aged 85 years or older, the segment of the population most in need of long-term care and elder-care services.

The population aged 65 to 84 years is projected to increase [removed: over 50%] [added: by approximately 41%] during the same time period.

The Centers for Medicare and Medicaid Services, or CMS, published “National Health Expenditure Projections [removed: 2017-2026”] [added: 2018-2027”] indicating that total national health care spending reached approximately [removed: $3.7] [added: $3.6] trillion in 2018, or [removed: 18.2%] [added: 17.7%] 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: $5.7] [added: $6.0] trillion in [removed: 2026,] [added: 2027,] approximately [removed: 19.7%] [added: 19.4%] of the nation’s [added: projected] gross domestic product.

[removed: Government][added: *Government*]

[removed: Health] [added: *Health] Care [removed: Reform][added: Reform*]

The Health Care Reform Law [removed: requirements include] [added: included] a 2.3% excise tax on domestic sales of many medical devices by manufacturers and importers that [removed: began] [added: was to begin] in 2013 and a fee on branded prescription drugs and [removed: biologics that was implemented in 2011, both of which may affect sales.][added: biologics.]

[removed: Effective] [added: Amendments expanded the law to also require reporting, effective] January 1, 2022, [added: of payments or other] transfers of value to physician assistants, nurse [removed: practitioners or] [added: practitioners,] clinical nurse specialists, certified registered nurse anesthetists, and certified [removed: nurse-midwives must also] [added: nurse-midwives, and this new requirement will] be [removed: reported.][added: effective for data collected beginning in calendar year 2021.]

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

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

MACRA [removed: represents] [added: standards continue to evolve, and represent] 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.

[added: 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.

[removed: Health] [added: *Health] Care [removed: Fraud][added: Fraud*]

For example, under the federal False Claims Act, violations may result in treble damages, plus civil penalties of up to [removed: $22,363] [added: $22,927] 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 [removed: $100,000] [added: $102,522] 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 [removed: addition] [added: addiction] services, and regardless of whether the services were reimbursed by a federal health care program or by a commercial health insurer.

[removed: Operating,] [added: *Operating,] Security and Licensure [removed: Standards][added: Standards*]

Section 361 of the Public Health Service Act, which provides authority to prevent the [added: introduction, transmission or] spread of communicable diseases, serves as the legal basis for the United States Food and Drug Administration’s (“FDA”) regulation of human cells, tissues and cellular and tissue-based products, also known as “HCT/P products.”

The Federal Drug Quality and Security Act of 2013 brought about significant changes with respect to pharmaceutical supply chain [removed: requirements and pre-empts state law.][added: requirements.]

The DSCSA product tracing requirements replace the former FDA drug pedigree requirements and pre-empt [added: certain] state requirements that are inconsistent with, more stringent than, or in addition to, the DSCSA requirements.

Current state licensing requirements [added: concerning wholesalers] will [removed: likely] remain in effect until the FDA issues new regulations as directed by the DSCSA.

The [removed: FDA is phasing] [added: UDI rule phased] in the implementation of the UDI regulations over seven years, generally beginning with the highest-risk devices (i.e., Class III medical devices) and ending with the lowest-risk devices.

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

The UDI regulations [added: and subsequent FDA guidance regarding the UDI requirements] provide for certain exceptions, alternatives and time extensions.

We are also subject to other statutory and regulatory requirements relating to the storage, sale, marketing, [removed: handling] [added: handling, reporting, record keeping] and distribution of such drugs, in accordance with the Controlled Substances Act and its implementing regulations, and these requirements have been subject to heightened enforcement activity in recent times.

Recent Developments

During the fourth quarter of 2019, we sold an equity investment in Hu-Friedy Mfg.

Co., LLC, a manufacturer of dental instruments and infection prevention solutions.

Our investment was non-controlling, we were not involved in running the business and had no representation on the board of directors.

During the fourth quarter of 2019, we also sold certain other equity investments.

In aggregate, the sales of these investments resulted in a pre-tax gain of approximately $250.2 million and an after-tax gain of approximately $186.8 million.

The fee on branded prescription drugs and biologics was implemented in 2011.

However, subsequent federal laws had suspended the imposition of the medical device excise tax through December 31, 2019, and the Further Consolidated Appropriations Act, 2020, signed into law on December 20, 2019, has permanently repealed the medical device excise tax.

Further, in December 2019, the Fifth Circuit ruled that the mandate within the Health Care Reform Law requiring that people buy health insurance was unconstitutional, though the ruling will likely be appealed.

The Fifth Circuit remanded the remainder of the case pertaining to the viability of the remainder of the Health Care Reform Law, in the absence of the individual mandate, to the District Court of the Northern District of Texas.

Any outcome of these cases that changes the Health Care Reform Law, could have a significant impact on the U.S. health care industry.

reimbursement to eligible clinicians includes both positive and negative payment adjustments that take into account quality, promoting interoperability, cost and improvement activities.

Recently, there has been increased scrutiny on drug pricing and concurrent efforts to control or reduce drug costs by Congress, the President, and various states, including that several related bills have been introduced at the federal level.

Such legislation, if enacted, could have the potential to impose additional costs on our business.

The DSCSA requires wholesalers and 3PLs to submit annual reports to the FDA, which include information regarding each state where the wholesaler or PL is licensed, the name and address of each facility and contact information.

In the European Union, the EU Medical Device Regulation No. 2017/745 (“EU MDR”) will apply as of May 26, 2020.

The EU MDR significantly modifies and intensifies the regulatory compliance requirements for the medical device industry as a whole.

In particular, the EU MDR imposes stricter requirements for confirmation that a product meets the regulatory requirements, including regarding a product’s clinical evaluation and a company’s quality systems and for the distribution, marketing and sale of medical devices, including post-market surveillance.

Medical devices that have been assessed and/or certified under the EU Medical Device Directive may continue to be placed on the market until 2024 (or until the expiry of their certificates, if applicable and earlier); however, requirements regarding the distribution, marketing and sale including quality systems and post-market surveillance

are required to be observed by manufacturers, importers and distributors as of the application date.

Furthermore, compliance with legal requirements has required and may in the future require us to institute voluntary recalls of products we sell, which could result in financial losses and potential reputational harm.

Our customers are also subject to significant federal, state, local and foreign governmental regulation.

The GDPR also, provides rights to Data Subjects relating to the modification, erasure and transporting of the personal data.

In the United States, the California Consumer Privacy Act (“CCPA”), which increases the privacy protections afforded California residents and was signed into law on June 28, 2018, became effective January 1, 2020.

The CCPA generally requires companies, such as us, to institute additional protections regarding the collection use and disclosure of certain personal information of California residents.

The California Attorney General released proposed CCPA regulations on October 10, 2019, and is required to adopt final regulations on or before July 1, 2020.

In addition to providing for enforcement by the California Attorney General, the CCPA also provides for a private right of action.

Entities in violation of the CCPA may be liable for substantial civil penalties.

Other states, as well as the federal government, have increasingly considered the adoption of similarly expansive personal privacy laws, also backed by substantial civil penalties for non-compliance.

While we

For example on September 6, 2017, the FDA issued final guidance to assist industry in

| Net sales | | | | $ | 9,985,803 | | $ | 9,417,603 | | $ | 8,883,438 |

| Cost of sales | | | | | 6,894,917 | | | 6,506,856 | | | 6,136,776 |

| | Gross profit | | | | 3,090,886 | | | 2,910,747 | | | 2,746,662 |

| | Selling, general and administrative | | | | 2,357,920 | | | 2,217,273 | | | 2,071,576 |

| | Restructuring costs | | | | 14,705 | | | 54,367 | | | \- |

| | | Operating income | | $ | 718,261 | | $ | 600,619 | | $ | 669,761 |

| Other expense, net | | | | $ | (37,954) | | $ | (63,783) | | $ | (39,967) |

| Net gain (loss) on sale of equity investments | | | | | 186,769 | | | \- | | | (17,636) |

| Net income from continuing operations | | | | | 725,461 | | | 450,441 | | | 318,476 |

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.

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

Spin-Off of Henry Schein Animal Health Business

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

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,

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.

Although we believe that we are

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

management products that must meet these requirements.

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

| Net sales .............................................................................................................................................................................. | | | | $ | 13,201,995 | | $ | 12,461,543 | | $ | 11,571,668 |

| Cost of sales ......................................................................................................................................................................... | | | | | 9,606,911 | | | 9,062,440 | | | 8,345,195 |

| | Gross profit ...................................................................................................................................................................... | | | | 3,595,084 | | | 3,399,103 | | | 3,226,473 |

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

| | Restructuring costs ............................................................................................................................................................ | | | | 62,912 | | | \- | | | 45,891 |

| | | Operating income .......................................................................................................................................................... | | $ | 753,052 | | $ | 859,369 | | $ | 771,574 |

| Net income .......................................................................................................................................................................... | | | | | 562,126 | | | 459,293 | | | 556,395 |

| Net cash provided by operating activities ................................................................................................................................... | | | | $ | 684,706 | | $ | 545,515 | | $ | 642,576 |

| Net cash used in investing activities .......................................................................................................................................... | | | | | (192,954) | | | (342,276) | | | (316,422) |

| Net cash used in financing activities .......................................................................................................................................... | | | | | (603,776) | | | (112,551) | | | (327,344) |

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.

At this time we are identifying specific opportunities and cannot reasonably estimate the amount of additional restructuring costs in 2019.

On November 6, 2014, we announced a corporate initiative to rationalize our operations and provide expense efficiencies, which was expected to be completed by the end of fiscal 2015.

This initiative originally planned for the elimination of approximately 2% to 3% of our workforce and the closing of certain facilities.

We subsequently announced our plan to extend these restructuring activities through the end of 2016 to further implement cost-savings initiatives, which ultimately resulted in the elimination of approximately 900 positions, representing slightly more than 4% of our workforce.

The total costs associated with the actions for this restructuring included $34.9 million pre-tax, which was recorded in fiscal 2015, and $45.9 million pre-tax, which was recorded in fiscal 2016.

| | Dental ........................................................................................................................................................................................... | | | $ | 6,348,945 | | 48.1 | % | | $ | 6,048,813 | | 48.5 | % | | $ | 300,132 | | 5.0 | % |

| | Animal health .................................................................................................................................................................................. | | | | 3,682,639 | | 27.9 | | | | 3,476,635 | | 27.9 | | | | 206,004 | | 5.9 | |

| | | Total health care distribution .............................................................................................................................................................. | | | 12,692,750 | | 96.1 | | | | 12,023,442 | | 96.5 | | | | 669,308 | | 5.6 | |

| Technology and value-added services (2)....................................................................................................................................................... | | | | | 509,245 | | 3.9 | | | | 438,101 | | 3.5 | | | | 71,144 | | 16.2 | |

| | | Total .......................................................................................................................................................................................... | | $ | 13,201,995 | | 100.0 | % | | $ | 12,461,543 | | 100.0 | % | | $ | 740,452 | | 5.9 | |

| | | and other services. | | | | | | | | | | | | | | | | | | |

The growth in internally generated animal health revenue is affected by year-over-year changes to certain supplier agreements where we acted as an agent in 2018 versus acting as a principal in the prior year.

When excluding the effects of this change, internally generated revenue grew by 5.4%.

| Health care distribution ........................................................................................................................................................................ | | | $ | 3,253,452 | | 25.6 | % | | $ | 3,112,436 | | 25.9 | % | | $ | 141,016 | | 4.5 | % |

| Technology and value-added services ....................................................................................................................................................... | | | | 341,632 | | 67.1 | | | | 286,667 | | 65.4 | | | | 54,965 | | 19.2 | |

[removed: Foreign] [added: *Foreign] Currency [removed: Agreements][added: Agreements*]

We purchase short-term (i.e., [added: generally] 18 months or less) foreign currency forward contracts to protect against currency exchange risks associated with intercompany loans due from our international subsidiaries and the payment of merchandise purchases to foreign suppliers.

A hypothetical 5% change in the average value of the U.S. dollar in [removed: 2018] [added: 2019] compared to foreign currencies would have changed our [removed: 2018] [added: 2019] reported Net income attributable to Henry Schein, Inc. by approximately [removed: $8.0] [added: $6.0] million.

As of December [removed: 29, 2018,] [added: 28, 2019,] we had forward foreign currency exchange agreements, which expire through November [removed: 27, 2019,] [added: 16, 2023,] which include a [removed: fair value gain] [added: mark-to-market loss] of [removed: $1.4] [added: $3.9] million as determined by quoted market prices.

As of December [removed: 29, 2018,] [added: 28, 2019,] Henry Schein, Inc. had Euro to Brazilian Real (BRL) cross currency swap contracts notionally totaling an amount of [removed: €94.6] [added: €83.6] million, with a reported fair value of these contracts as a net [removed: asset] [added: liability] of [removed: $9.4] [added: $1.4] million.

A 5% [removed: hypothetical change] [added: increase] in the value of the Euro to the BRL from December [removed: 29, 2018,] [added: 28, 2019,] with all other variables held constant, would have had [removed: changed] [added: a favorable effect on] the [removed: value] fair value of these swap contracts by [removed: approximately $5.3] [added: increasing the value of these instruments by $4.6] million.

[removed: Short-Term Investments][added: *Short-Term Investments*]

[removed: Variable] [added: *Variable] Interest Rate [removed: Debt][added: Debt*]

As of December [removed: 29, 2018,] [added: 28, 2019,] we had variable interest rate exposure for certain of our revolving credit facilities and our U.S. trade accounts receivable securitization.

As of December [removed: 29, 2018,] [added: 28, 2019,] there was [removed: $175.0] [added: $0.0] million outstanding under this revolving credit [removed: facility.]

During the year ended December [removed: 29, 2018,] [added: 28, 2019,] the average outstanding balance under this revolving credit facility was approximately [removed: $393.8] [added: $147.5] 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: $1.0] [added: $0.4] million.

Our U.S trade accounts receivable securitization, which we entered into on April 17, 2013 and which expires on April 29, [removed: 2020,] [added: 2022,] has an interest rate that is based upon the asset-backed commercial paper rate.

As of December [removed: 29, 2018,] [added: 28, 2019,] the commercial paper rate was [removed: 2.66%] [added: 1.90%] plus 0.75%, for a combined rate of [removed: 3.41%.][added: 2.65%.]

At December [removed: 29, 2018] [added: 28, 2019] the outstanding balance was [removed: $350.0] [added: $100.0] million under this securitization facility.

During the year ended December [removed: 29, 2018,] [added: 28, 2019,] the average outstanding balance under this securitization facility was approximately [removed: $349.0] [added: $274.8] million.

Based upon our average outstanding balance for this securitization facility, for each hypothetical increase of 25 basis points, our interest expense thereunder would have increased by [removed: $0.9] [added: $0.7] million.

Included in the forward foreign currency exchange agreements, Henry Schein, Inc. had EUR/USD forward contracts notionally totaling an amount of €200 million, with a reported fair value of these contracts as a net liability of $0.3 million.

A 5% increase in the value of the Euro to the USD from December 28, 2019, with all other variables held constant, would have had an unfavorable effect on the fair value of these forward contracts by decreasing the value of these instruments by $12.0 million.

facility.

| ITEM 8. Financial Statements and Supplementary Data | | | |

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

| | | | |

| | | | |

| | | INDEX TO FINANCIAL STATEMENTS | |

| | | HENRY SCHEIN, INC. | |

| | | | Page |

| | | | |

| [Report of Independent Registered Public Accounting Firm](#Report1) | | | 85 |

| | | | |

| [Consolidated Financial Statements](#FinancialStatements2): | | | |

| | | | |

| | [Balance Sheets as of December 28, 2019 and December 29, 2018](#BalanceSheets) | | 88 |

| | | | |

| | [Statements of Income for the years ended December 28, 2019,](#IncomeStatement) | | |

| | | [December 29, 2018 and December 30, 2017](#IncomeStatement) | 89 |

| | | | |

| | [Statements of Comprehensive Income for the years ended December 28, 2019,](#CompInc) | | |

| | | [December 29, 2018 and December 30, 2017](#CompInc) | 90 |

| | | | |

| | [Statements of Changes in Stockholders’ Equity for the years ended](#SE) | | |

| | | [December 28, 2019, December 29, 2018 and December 30, 2017](#SE) | 91 |

| | | | |

| | [Statements of Cash Flows for the years ended December 28, 2019,](#CashFlow) | | |

| | | [December 29, 2018 and December 30, 2017](#CashFlow) | 92 |

| | | | |

| | [Notes to Consolidated Financial Statements](#notes2fs) | | 93 |

| | [Note 1 – Significant Accounting Policies](#sap) | | 93 |

| | [Note 2 – Discontinued Operations](#discop) | | 103 |

| | [Note 3 – Property and Equipment, Net](#prop) | | 106 |

| | [Note 4 – Goodwill and Other Intangibles, Net](#gw) | | 107 |

| | [Note 5 – Investments and Other](#inves) | | 108 |

| | [Note 6 – Debt](#debt) | | 109 |

| | [Note 7 – Leases](#lease) | | 113 |

| | [Note 8 – Redeemable Noncontrolling Interests](#RNCI) | | 115 |

| | [Note 9 – Comprehensive Income](#cinc) | | 116 |

| | [Note 10 – Fair Value Measurements](#FV) | | 117 |

[removed: Spin-Off] [added: Spin-Off] of Henry Schein Animal Health [removed: Business][added: Business]

On February 7, 2019 (the “Distribution Date”), we completed the [removed: previously announced] separation (the “Separation”) and subsequent merger [added: (“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 [removed: Choice”) (the “Merger”).][added: Choice”).]

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

On the Distribution Date, we received a tax-free distribution of [removed: $1,120.0] [added: $1,120] million from Covetrus pursuant to certain debt financing incurred by Covetrus.

On the Distribution Date and prior to the [removed: Distribution,] [added: Animal Health Spin-off,] Covetrus issued shares of Covetrus common stock to certain institutional accredited investors (the “Share Sale Investors”) for $361.1 million (the “Share Sale”).

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) [removed: in respect of certain equity awards] held by certain employees of the Henry Schein Animal Health [removed: Business,] [added: Business (in the form of certain equity awards),] 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) [removed: in respect of certain equity awards] held by certain employees of Vets First [removed: Choice.][added: Choice (in the form of certain equity awards).]

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

[removed: General][added: General]

We believe that we have a strong brand identity due to our more than [removed: 86] [added: 87] years of experience distributing health care products.

We are headquartered in Melville, New York, employ more than [removed: 18,000] [added: 19,000] people (of which [removed: more than 8,800] [added: approximately 9,400] are based outside the United States) and have operations or affiliates in 31 countries, including the United States, Australia, Austria, Belgium, Brazil, Canada, Chile, China, the Czech Republic, France, Germany, Hong Kong SAR, Ireland, Israel, Italy, Japan, Liechtenstein, Luxembourg, Malaysia, the Netherlands, New Zealand, Poland, Portugal, Singapore, [removed: Slovakia,] South Africa, Spain, [added: Sweden,] Switzerland, Thailand, United Arab Emirates and the United Kingdom.

[added: 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 3.5 million square feet of space in [removed: 30] [added: 29] 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 [removed: dental,] [added: dental and] medical [removed: and, prior to the completion of the Animal Health Spin-off, animal health] operating segments.

Our [added: global] technology and value-added services group provides software, technology and other value-added services to health care practitioners.

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

[removed: Industry][added: Industry]

[removed: Competition][added: Competition]

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., as well as a large number of dental and medical product distributors and manufacturers in Australia, Austria, Belgium, Brazil, Canada, Chile, China, the Czech Republic, France, Germany, Hong Kong SAR, Ireland, Israel, Italy, Japan, Liechtenstein, Luxembourg, Malaysia, the Netherlands, New Zealand, Poland, Portugal, Singapore, [removed: Slovakia,] South Africa, Spain, [added: Sweden,] Switzerland, Thailand, United Arab Emirates and the United Kingdom.

[removed: Competitive Strengths][added: Competitive Strengths]

We have more than [removed: 86] [added: 87] years of experience in distributing products to health care practitioners resulting in strong awareness of the Henry Schein® brand.

[removed: | _A focus on meeting our customers’ unique needs_.] We are committed to providing customized solutions to our customers that are driven by our understanding of the market and reflect the technology-driven products and services best suited for their practice needs. [removed: |]

[removed: | _Direct] [added: *Direct] sales and marketing [removed: expertise_.] [added: expertise.*] Our sales and marketing efforts are designed to establish and solidify customer relationships through personal visits by field sales representatives, frequent direct marketing and telesales contact, emphasizing our broad product lines, including exclusive distribution agreements, competitive prices and ease of order placement. [removed: The key elements of our direct sales and marketing efforts are: | | | |]

[removed: | | • | | _Field sales consultants._ We have over 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. [removed: |]

[removed: | | • | | _Direct marketing_.] [added: - *Direct marketing.*] During [removed: 2018,] [added: 2019,] we distributed approximately [removed: 26] [added: 30] million pieces of direct marketing material, including catalogs, flyers, order stuffers and other promotional materials to existing and potential office-based health care customers. [removed: |]

[removed: | | • | | _Telesales_.] [added: - *Telesales.*] We support our direct marketing effort with approximately [removed: 1,900] [added: 2,000] 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. [removed: |]

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

[removed: | | • | | _Social media_.] [added: - *Social media.*] Our operating entities and employees engage our customers and supplier partners through various social media platforms. [removed: |]

[removed: | | | _Broad] [added: *Broad] product and service offerings at competitive [removed: prices_.] [added: prices.*] We offer a broad range of products and services to our customers, at competitive prices, in the following categories: [removed: |]

[removed: | | • | | | _Consumable supplies and equipment_.] We offer over [removed: 120,000 Stock Keeping Units, or SKUs, to our customers. We offer over] 180,000 additional SKUs to our customers in the form of special order items. [removed: |]

[removed: | | | • | | _Technology and other value-added products and services_. We sell practice management software systems to our 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 approximately 500 technical representatives supporting customers using our practice management solutions.] As of December [removed: 29, 2018,] [added: 28, 2019,] we had an active user base of [removed: almost 66,000] [added: approximately 83,600] 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; and MicroMD® for physician practices. [removed: |]

[removed: | | • | | _Repair services_. We have over 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; dental and medical small equipment; table top sterilizers; and large dental equipment. [removed: |]

[removed: | | • | | _Financial services_.] [added: - *Financial services.*] We offer our customers solutions in operating their practices more efficiently by providing access to a number of financial services and products [added: provided by third party vendors] (including non-recourse financing for equipment, technology and software products; non-recourse patient financing; collection services and credit card processing) at rates that we believe are generally lower than what our customers would be able to secure independently. [removed: We also provide consulting services, dental practice valuation and brokerage services. |]

[removed: | | | _Commitment to superior customer service_.] We [removed: maintain a strong commitment to providing superior customer service. We] frequently monitor our customer service through customer surveys, focus groups and statistical reports. [removed: Our customer service policy primarily focuses on: | | | |]

[removed: | | | | • | | _Exceptional order fulfillment_. We ship an average of approximately 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. [removed: |]

[removed: | | • | | _Streamlined ordering process_.] Customers may place orders 24 hours a day, 7 days a week by mail, fax, telephone, e-mail, Internet and by using our computerized order entry systems. [removed: |]

[removed: | | | _Integrated management information systems_.] Our information systems generally allow for centralized management of key functions, including accounts receivable, inventory, accounts payable, payroll, purchasing, sales and order fulfillment. [removed: These systems allow us to manage our growth, deliver superior customer service, properly target customers, manage financial performance and monitor daily operational statistics. |]

[removed: | | | _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. [removed: We continuously evaluate our purchase requirements and suppliers’ offerings and prices in order to obtain products at the lowest possible cost. In 2018, our top 10 health care distribution suppliers and our single largest supplier accounted for approximately 32% and 6%, respectively, of our aggregate purchases. |]

[removed: Products][added: Products]

| | | | | [added: 2019] | [removed: 2018] | | | [removed: 2017] [added: 2018] | | | [removed: 2016] | [added: 2017] | [added: | |]

| [removed: Health] [added: Health] care [removed: distribution:] [added: distribution:] | | | | | | | | | | | | | [added: | |]

Sub”).

In connection with the completion of the Animal Health Spin-off, we entered into a transition services agreement with Covetrus under which we have agreed to provide certain transition services for up to twenty-four months in areas such as information technology, finance and accounting, human resources, supply chain, and real estate and facility services.

As a result of the Separation, the financial position and results of operations of the Henry Schein Animal Health Business are presented as discontinued operations and have been excluded from continuing operations and segment results for all periods presented.

*A focus on meeting our customers’ unique needs*.

The key elements of our direct sales and marketing efforts are:

- *Field sales consultants.* We have over 3,650 field sales consultants, including equipment sales specialists, covering major North American, European and other international markets.

- *Consumable supplies and equipment.* We offer over 120,000 Stock Keeping Units, or SKUs, to our customers.

- *Technology and other value-added products and services.* We sell practice management software systems to our 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, network and hardware services, transition services and training and education programs for practitioners.

We have approximately 800 technical representatives supporting customers using our practice management solutions.

- *Repair services.* We have over 170 equipment sales and service centers worldwide that provide a variety of repair, installation and technical services for our health care customers.

We also provide consulting services, dental practice valuation and brokerage services.

*Commitment to superior customer service*.

We maintain a strong commitment to providing superior customer service.

Our customer service policy primarily focuses on:

- *Exceptional order fulfillment*.

We ship an average of approximately 124,000 cartons daily.

- *Streamlined ordering process*.

*Integrated management information systems*.

These systems allow us to manage our growth, deliver superior customer service, properly target customers, manage financial performance and monitor daily operational statistics.

*Cost-effective purchasing*.

We continuously evaluate our purchase requirements and suppliers’ offerings and prices in order to obtain products at the lowest possible cost.

In 2019, our top 10 health care distribution suppliers and our single largest supplier accounted for approximately 31% and 6%, respectively, of our aggregate purchases.

*Efficient distribution*.

We distribute our products from our strategically located distribution centers.

We strive to maintain optimal inventory levels in order to satisfy customer demand for prompt delivery and complete order fulfillment.

These inventory levels are managed on a daily basis with the aid of our management information systems.

Once an order is entered, it is electronically transmitted to the distribution center nearest the customer’s location and a packing slip for the entire order is printed for order fulfillment.

| | | | | December 28, | | | | December 29, | | | | December 30, | | |

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

| | Dental products (1) | | | | 64.2 | % | | | 67.4 | % | | | 68.1 | % |

| | Medical products (2) | | | | 29.8 | | | | 28.3 | | | | 28.1 | |

| | | Total health care distribution | | | 94.0 | | | | 95.7 | | | | 96.2 | |

| Technology and value-added services: | | | | | | | | | | | | | | |

| | | other value-added products (3) | | | 5.2 | | | | 4.3 | | | | 3.8 | |

| Total excluding Corporate TSA revenues | | | | | 99.2 | | | | 100.0 | | | | 100.0 | |

| | Corporate TSA revenues (4) | | | | 0.8 | | | | \- | | | | \- | |

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

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

| (4) | Corporate TSA revenues represents sales of certain products to Covetrus under the transition services agreement entered into in connection with the Animal Health spin-off, which we expect to continue through August 2020. | | | | | | | | | | | | | |

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

| --- |

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

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| | | | | | |

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

| | | _Efficient distribution_. We distribute our products from our strategically located distribution centers. We strive to maintain optimal inventory levels in order to satisfy customer demand for prompt delivery and complete order fulfillment. These inventory levels are managed on a daily basis with the aid of our management information systems. Once an order is entered, it is electronically transmitted to the distribution center nearest the customer’s location and a packing slip for the entire order is printed for order fulfillment. |

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

| | Dental products (1) ........................................................................................................................................................... | | | | 48.1 | % | | 48.5 | % | | 48.0 | % |

| | Animal health products (2) ................................................................................................................................................. | | | | 27.9 | | | 27.9 | | | 28.1 | |

| | Medical products (3) ......................................................................................................................................................... | | | | 20.1 | | | 20.1 | | | 20.2 | |

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

| | Total health care distribution ............................................................................................................................................ | | | | 96.1 | | | 96.5 | | | 96.3 | |

| Technology: | | | | | | | | | | | | |

| | | | other value-added products (4) ................................................................................................................................ | | 3.9 | | | 3.5 | | | 3.7 | |

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

| | repair and high-tech and digital restoration equipment. | | | | | | | | | | | |

| (2) | Includes branded and generic pharmaceuticals, surgical and consumable products and services and equipment. | | | | | | | | | | | |

| | products, equipment and vitamins. | | | | | | | | | | | |

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

| | services. | | | | | | | | | | | |

| • | | _Increase the number of customers we 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 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 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. |

| | | | |

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

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, 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.

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

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.

Executive Officers of the Registrant

| James A. Harding ........................................................................................................................................................... | | 63 | | Chief Executive Officer, Henry Schein One |

James A.

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

On August 1, 2017, Archer filed an amended complaint, adding Patterson [added: Companies, Inc. (“Patterson”)] and Benco [added: Dental Supply Co. (“Benco”)] as defendants, and alleging that Henry Schein, Patterson, Benco and Burkhart [added: Dental Supply] 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.

Plaintiff [removed: alleges] [added: alleged] that it is a distributor of dental supplies and equipment, and sells dental products through an online dental distribution platform operated by SourceOne Dental (“SourceOne”).

IQ Dental [removed: alleges,] [added: alleged,] among other things, that defendants conspired to suppress competition from IQ Dental and SourceOne for the marketing, distribution and sale of dental supplies and equipment in the United States, and that defendants unlawfully agreed with one another to boycott dentists, manufacturers and state dental associations that deal with, or considered dealing with, plaintiff and SourceOne.

Plaintiff [removed: claims] [added: claimed] that this alleged conduct constitutes unreasonable restraint of trade in violation of Section 1 of the Sherman Act, New York’s Donnelly Act and the New Jersey Antitrust Act, and also [removed: makes] [added: made] pendant state law claims for tortious interference with prospective business relations, civil conspiracy and aiding and abetting.

[removed: On January 19,] 2018, IQ Dental appealed the District Court’s order.

On February 12, 2018, the United States Federal Trade Commission (“FTC”) filed a complaint against Benco Dental Supply Co., Henry Schein, Inc. and Patterson Companies, Inc. The FTC [removed: alleges,] [added: alleged,] among other things, that defendants violated U.S. antitrust laws by conspiring, and entering into an agreement, to refuse to provide discounts to or otherwise serve buying groups representing dental practitioners.

The FTC [removed: alleges] [added: alleged] that defendants conspired in violation of Section 5 of the FTC Act.

The complaint [removed: seeks] [added: sought] equitable relief only and does not seek monetary damages.

We [removed: deny] [added: denied] the allegation that we conspired to refuse to provide discounts to or otherwise serve dental buying [removed: groups and intend to defend ourselves vigorously against this action.][added: groups.]

A hearing before an administrative law judge began on October 16, 2018 and [removed: is ongoing.][added: the hearing record was closed on February 21, 2019.]

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 [removed: antitrust class action] [added: In re Dental Supplies Antitrust Litigation which Henry Schein settled] and [added: which] the [added: court dismissed in June 2019, as described in our prior filings with the SEC, 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.

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 [added: violated U.S. antitrust laws.]

Henry Schein [removed: has also] [added: had previously] received a request under 8 Del.

The complaint alleges that the defendants entered into a vertical conspiracy to force [removed: healthcare] [added: health care] 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 [removed: healthcare] [added: health care] 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.

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

[removed: Plaintiffs allege] [added: Summit County alleges] that manufacturers of prescription opioid drugs engaged in a false advertising campaign to expand the market for such drugs and their own market share and that the entities in the supply chain (including Henry Schein, Inc. and Henry Schein Medical Systems, Inc.) reaped financial rewards by refusing or otherwise failing to monitor appropriately and restrict the improper distribution of those drugs.

In addition to the [removed: Summit] County [added: of Summit] Action, Henry Schein and/or one or more of its affiliated companies have currently been named as a defendant in [removed: twenty-one (21) additional lawsuits,] [added: multiple lawsuits (currently less than one-hundred and twenty-five (125)),] which allege claims similar to those alleged in the [removed: Summit] County [added: of Summit] Action.

[removed: The complaint alleges that the alleged conspiracy overcharged California dental practices,] orthodontic practices and dental laboratories on their purchase of dental supplies, which in turn passed on some or all of such overcharges to members of the [removed: California class purchasing dental services.][added: class.]

The complaint alleges that the alleged conspiracy overcharged Illinois dental practices, [removed: orthodontic practices and dental laboratories on their purchase of dental supplies, which in turn passed on some or all of such overcharges to members of the class.]

As of December [removed: 29, 2018,] [added: 28, 2019,] 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 April 2, 2019, the District Court stayed the proceeding in the trial court pending resolution by the Fifth Circuit.

The Fifth Circuit heard oral argument on May 1, 2019 on whether the case should be arbitrated.

The Fifth Circuit issued its opinion on August 14, 2019 affirming the District Court’s order denying defendants’ motions to compel arbitration.

Defendants filed a petition for rehearing en banc before the Fifth Circuit.

The Fifth Circuit denied that petition.

On October 1, 2019, the District Court set the case for trial on February 3, 2020, which was subsequently moved to January 29, 2020.

On January 24, 2020 the Supreme Court granted our motion to stay the District Court proceedings, pending the disposition of our petition for writ of certiorari, which was filed on January 31, 2020.

On January 19,

On May 10, 2019, the U.S. Court of Appeals for the Second Circuit affirmed in part and reversed in part the District Court’s dismissal of the complaint, holding that IQ Dental lacks antitrust standing to challenge the alleged boycott of SourceOne and state dental associations, but that it has standing to challenge injury related to the alleged direct boycott of its business.

On June 29, 2019, the Second Circuit denied IQ Dental’s petition for rehearing or rehearing en banc.

On January 8, 2020, Henry Schein and IQ Dental entered into a settlement agreement, pursuant to which Henry Schein paid an amount which is not material.

Henry Schein was dismissed from the case on January 16, 2020.

On October 7, 2019, the administrative law judge issued his Initial Decision, finding in relevant part that the “evidence fails to prove a conspiracy involving Schein,” and dismissing the complaint as to Henry Schein.

The Initial Decision became the decision of the FTC on November 7, 2019 and is not subject to further appeal.

On September 27, 2019, the court issued a decision partially granting and partially denying defendants’ motion to dismiss the securities action.

The court dismissed all claims against Messrs.

Bergman and Paladino as well as the Section 10(b) claim against Henry Schein to the extent that that claim relied on the Company’s financial results and margins to allege a material misstatement or omission.

The court also dismissed the Section 10(b) claim against Henry Schein to the extent that it relied on the Company’s August 8, 2017 disclosure to allege loss causation.

The court otherwise denied the motion as to Henry Schein and Mr. Sullivan.

Henry Schein and Mr. Sullivan moved for partial reconsideration of the court’s decision.

Pursuant to all parties’ request, the court temporarily took the motion off the calendar after it was fully briefed.

The parties have agreed to a resolution of this matter, subject to various conditions, including the drafting and execution of a definitive settlement agreement and court approval.

The

contemplated settlement, if finally approved, would have no earnings impact to the Company as all payments would be covered by insurance.

The parties argued the appeal on September 27, 2019 and are currently awaiting the Seventh Circuit’s ruling.

On October 29, 2019, the Company was dismissed with prejudice from this lawsuit.

Henry Schein, working with Summit County, donated $1 million to a foundation dedicated to making grants to programs within Summit County focused on (i) educating the community on alternative pain management treatment techniques and/or avoiding addiction; ‎(ii) supporting research into alternative pain management techniques and protocols; (iii) enabling professionals to obtain the necessary certification for a Medication Assisted Treatment (MAT) Waiver; and (iv) advancing programs and services to Summit County to deliver results and solutions to the opiate and addiction crises.

Henry Schein paid $250,000 of Summit County’s expenses.

At this time, the only case set for trial is the action filed by Tuscon Medical Center, which is currently scheduled for a 30-day trial beginning on March 16, 2021.

Of Henry Schein’s 2018 revenue of $9.4 billion from continuing operations, sales of opioids represented less than one-tenth of 1 percent.

Opioids represent a negligible part of our business.

On February 13, 2020, the court granted our motion to dismiss for lack of standing, and dismissed the action with prejudice.

On September 30, 2019, City of Hollywood Police Officers Retirement System, 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., Covetrus, Inc., and Benjamin Shaw and Christine Komola (Covetrus’s then Chief Executive Officer and Chief Financial Officer, respectively) in the U.S. District Court for the Eastern District of New York, Case No. 2:19-cv-05530-FB-RLM.

The complaint seeks to certify a class consisting of all persons and entities who, subject to certain exclusions, purchased or otherwise acquired Covetrus common stock from February 8, 2019 through August 12, 2019.

The case relates to the Animal Health Spin-off and Merger of the Henry Schein Animal Health Business with Vets First Choice in February 2019.

The complaint alleges violations of Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5 and asserts that defendants’ statements in the offering documents and after the transaction were materially false and misleading because they purportedly overstated Covetrus’s capabilities as to inventory management and supply-chain services, understated the costs of integrating the Henry Schein Animal Health Business and Vets First Choice, understated Covetrus’s separation costs from Henry Schein, and understated the impact on earnings from online competition and alternative distribution channels and from the loss of an allegedly large customer in North America just before the Separation and Merger.

The complaint seeks unspecified monetary damages and a jury trial.

Pursuant to the provisions of the PSLRA, the court appointed lead plaintiff and lead counsel on December 23, 2019.

On November 15, 2019, Frank Finazzo filed a putative shareholder derivative action on behalf of Henry Schein, Inc. against various present and former directors and officers of Henry Schein in the U.S. District Court for the Eastern District of New York, Case No. 1:19-cv-6485-LDH-JO.

The named defendants in the action are Stanley M.

Beginning in January 2016, purported class action complaints were filed against Patterson Companies, Inc. (“Patterson”), Benco Dental Supply Co. (“Benco”) and Henry Schein, Inc. Although there were factual and legal variations among these complaints, each of these complaints 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.

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 February 12, 2018, defendants filed an Application for Stay of Proceedings in the District Court in the Supreme Court of the United States, seeking to stay proceedings in the District Court pending a decision on defendants’ forthcoming petition for writ of certiorari.

We intend to defend ourselves vigorously against this action.

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

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.

We believe this matter will not have a material adverse effect on our consolidated financial position, liquidity or results of operations.

violated U.S. antitrust laws.

Plaintiffs assert the following claims for relief against Henry Schein, Inc. and Henry Schein Medical Systems, Inc.: statutory public nuisance; common law absolute public nuisance; negligence; injury through criminal acts (R.C. 2307.60); unjust enrichment; and civil conspiracy.

This case has been designated “Track 1” and is currently set for trial on October 21, 2019.

None of these other cases have been set for trial.

Sales of opioids in North America from October 2017 through October 2018 were less than 1% of all North American sales.

On October 9, 2018, a purported class action complaint entitled Kramer v.

Henry Schein, Inc., Patterson Co., Inc., Benco Dental Supply Co., and Unnamed Co-Conspirators, was filed in the U.S. District Court for the Northern District of California.

The complaint alleges that members of the proposed class, comprised of purchasers of dental services from dental practices in California, suffered antitrust injury due to an unlawful boycott, price-fixing or otherwise anticompetitive conspiracy among Henry Schein, Patterson and Benco.

Subject to certain exclusions, the complaint defines the class as “all persons residing in California purchasing and/or reimbursing for dental services from California dental practices on or after August 31, 2012.” The complaint alleges violations of California antitrust laws, including the Cartwright Act (Cal.

Bus.

and Prof.

Code § 16720) and the Unfair Competition Act (Cal.

Code § 17200), and seeks a

permanent injunction, actual damages to be determined at trial, trebled, reasonable attorneys’ fees and costs, and pre- and post-judgment interest.

On December 7, 2018, an amended complaint was filed asserting the same claims against the same parties.

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: WASHINGTON,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

[removed: X] [added: ☒] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December [removed: 29, 2018][added: 28, 2019]

[removed: __] [added: ☐] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

[removed: Commission] [added: Commission] file [removed: number 0-27078][added: number 0-27078]

[removed: (Exact] [added: (Exact] name of registrant as specified in its [removed: charter)][added: charter)]

[removed: | DELAWARE | 135] [added: 135] Duryea [removed: Road |][added: Road]

[removed: | (State or other jurisdiction of | Melville, New York |][added: Melville, New York]

[removed: | incorporation or organization) | (Address] [added: (Address] of principal executive [removed: offices) |][added: offices)]

[removed: | 11-3136595 | 11747 |][added: 11747]

| [removed: (I.R.S.] [added: (State or other jurisdiction of | (I.R.S.] Employer Identification [removed: No.) | (Zip Code)] [added: No.)] |

[removed: (631) 843-5500][added: (631) 843-5500]

[removed: (Registrant’s] [added: (Registrant’s] telephone number, including area [removed: code)][added: code)]

[removed: Securities] [added: Securities] registered pursuant to Section 12(b) of the [removed: Act:][added: Act:]

| Title of each class | [added: Trading Symbol(s) |] Name of each exchange on which registered |

| Common Stock, par value $.01 per share | [added: HSIC |] The Nasdaq Global Select Market |

[removed: Securities] [added: Securities] registered pursuant to Section 12(g) of the Act: [added: None]

YES: [removed: X] [added: ☒] NO: [removed: __][added: ☐]

YES: [removed: __] [added: ☐] NO: [removed: X][added: ☒]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting [removed: company] [added: company,] or [added: an] emerging growth company.

Large accelerated filer: [removed: X] [added: ☒] Accelerated filer: [removed: __] [added: ☐] Non-accelerated filer: [removed: __] [added: ☐] Smaller reporting company: [removed: __] [added: ☐] Emerging growth company: [removed: __][added: ☐]

The aggregate market value of the registrant’s voting stock held by non-affiliates of the registrant, computed by reference to the closing sales price as quoted on the Nasdaq Global Select Market on June [removed: 30, 2018,] [added: 29, 2019,] was approximately [removed: $11,016,833,000.][added: $10,236,712,000.]

As of February [removed: 12, 2019,] [added: 14, 2020,] there were [removed: 151,403,703] [added: 143,390,505] shares of registrant’s Common Stock, par value $.01 per share, outstanding.

[removed: Documents] [added: Documents] Incorporated by [removed: Reference:][added: Reference:]

Portions of the Registrant’s definitive proxy statement to be filed pursuant to Regulation 14A not later than 120 days after the end of the fiscal year (December [removed: 29, 2018)] [added: 28, 2019)] are incorporated by reference in Part III hereof.

| [removed: TABLE] [added: TABLE] OF [removed: CONTENTS |] [added: CONTENTS] | | | | | | |

| | | | | | | [removed: | Page] [added: Page] |

| | | | | | | [removed: | Number] [added: Number] |

| [PART I.](#Part1) | | | | | | | [removed: |]

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

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

| | [ITEM 1B.](#Item1B) | | | [Unresolved Staff Comments](#Item1B) [removed: ...................................................................................................................................................] | | [removed: | 36] [added: 38] |

| | [ITEM 2.](#Item2) | | | [Properties](#Item2) [removed: .............................................................................................................................................................................] | | [removed: | 37] [added: 39] |

| | [ITEM 3.](#Item3) | | | [Legal Proceedings](#Item3) [removed: ..................................................................................................................................................................] | | [removed: | 38] [added: 40] |

| | [ITEM 4.](#Item4) | | | [Mine Safety Disclosures](#Item4) [removed: .........................................................................................................................................................] | | [removed: | 41] [added: 44] |

| [PART II](#Part2) | | | | | | | [removed: |]

| | [ITEM 5.](#Item5) | | | [Market for Registrant's Common Equity, Related Stockholder Matters](#Item5) | | | [removed: |]

(Mark One)

For the transition period from ____________ to ____________

HENRY SCHEIN, INC.

| Delaware | 11-3136595 |

| incorporation or organization) | |

(Zip Code)

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

YES: ☒ NO: ☐

YES: ☒ NO: ☐

YES: ☐ NO: ☒

| | | | | | | |

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

| | | | | | | |

| | | | | | | |

| | | | | | | |

| | [ITEM 9B.](#Item9B) | | | [Other Information](#Item9B) | | 150 |

| | | | | | | |

| | | | | | | |

| | | | | [Signatures](#Signatures) | | 160 |

| | | | | | | |

10-K 1 the10k_2018.htm THE 2018 ANNUAL 10-K REPORT

 HENRY SCHEIN, INC.

| --- | --- |

None

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10‑K.

| | | | | | | | |

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

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

We have no unresolved comments from the staff of the SEC that were issued 180 days or more preceding the end of our [removed: 2018] [added: 2019] fiscal year.

| | | | | [removed: Own or] [added: Own or] | | [removed: Approximate] [added: Approximate] | | [removed: Lease Expiration] [added: Lease Expiration] |

| [removed: Property] [added: Property] | | [removed: Location] [added: Location] | | [removed: Lease] [added: Lease] | | [removed: Square Footage] [added: Square Footage] | | [removed: Date] [added: Date] |

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

| Distribution Center [removed: ........................................................................................................................................................] | | 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, France, Germany, Hong Kong SAR, Ireland, Israel, Italy, Japan, Liechtenstein, Luxembourg, Malaysia, the Netherlands, New Zealand, Poland, Portugal, Singapore, [removed: Slovakia,] South Africa, Spain, [added: Sweden,] Switzerland, Thailand, United Arab Emirates and the United Kingdom.

| Office and Distribution Center | | Geer, SC | | Lease | | 102,000 | | December 2028 |

On February [removed: 12, 2019,] [added: 14, 2020,] there were approximately [removed: 324] [added: 269] holders of record of our common stock and the last reported sales price was [removed: $61.01.][added: $72.13.]

[removed: Purchases] [added: Purchases] of Equity Securities by the [removed: Issuer][added: Issuer]

Our share repurchase program, announced on [removed: June 21, 2004,] [added: March 3, 2003,] originally allowed us to repurchase up to [removed: $100] [added: two] million [removed: of] shares [added: pre-stock splits (eight million shares post-stock splits)] of our common stock, which represented approximately [removed: 3.5%] [added: 2.3%] of the shares outstanding at the commencement of the program.

As summarized in the table below, subsequent additional increases totaling [removed: $3.2] [added: $3.7] billion, authorized by our Board of Directors, to the repurchase program provide for a total of [removed: $3.3] [added: $3.8] billion of shares of our common stock to be repurchased under this program.

| | [removed: Date of] [added: Date of] | | [removed: Amount] [added: Amount] of [removed: Additional] [added: Additional] | | |

| | [removed: Authorization] [added: Authorization] | | [removed: Repurchases Authorized] [added: Repurchases Authorized] | | |

| | October 31, 2005 | | [removed: $] | 100,000,000 | |

As of December [removed: 29, 2018,] [added: 28, 2019,] we had repurchased approximately [removed: $2.9] [added: $3.5] billion of common stock [removed: (58,189,377] [added: (74,363,289] shares) under these initiatives, with [removed: $400.0] [added: $275.0] 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: 29, 2018:][added: 28, 2019:]

| | | | | | | | | [removed: Total Number] [added: Total Number] | | [removed: Maximum Number] [added: Maximum Number] |

| | | | [removed: Total] [added: Total] | | | | | [removed: of Shares] [added: of Shares] | | [removed: of Shares] [added: of Shares] |

| | | | [removed: Number] [added: Number] | | [removed: Average] [added: Average] | | | [removed: Purchased] [added: Purchased] as [removed: Part] [added: Part] | | [removed: that] [added: that] May [removed: Yet] [added: Yet] |

| | | | [removed: of Shares] [added: of Shares] | | [removed: Price Paid] [added: Price Paid] | | | [removed: of] [added: of] Our [removed: Publicly] [added: Publicly] | | [removed: Be] [added: Be] Purchased [removed: Under] [added: Under] |

| [removed: Fiscal Month] [added: Fiscal Month] | | | [removed: Purchased (1)] [added: Purchased (1)] | | [removed: Per Share] [added: Per Share] | | | [removed: Announced Program] [added: Announced Program] | | [removed: Our] [added: Our] Program [removed: (2)] [added: (2)] |

| (1) | All repurchases were executed in the open market under our existing publicly announced authorized program. [added: This table excludes shares withheld from employees to satisfy minimum tax withholding requirements for equity-based transactions.] | | | | | | | | | |

[removed: Dividend Policy][added: Dividend Policy]

We have not declared any cash or stock dividends on our common stock during fiscal years [removed: 2018] [added: 2019] or [removed: 2017.][added: 2018.]

[removed: Stock] [added: Stock] Performance [removed: Graph][added: Graph]

The graph below compares the cumulative total stockholder return on $100 invested, assuming the reinvestment of all dividends, on December [removed: 28, 2013,] [added: 27, 2014,] the last trading day before the beginning of our [removed: 2014] [added: 2015] fiscal year, through the end of our [removed: 2018] [added: 2019] fiscal year with the cumulative total return on $100 invested for the same period in the Dow Jones U.S. Health Care Index and the Nasdaq Stock Market Composite Index.

[removed: COMPARISON] [added: COMPARISON] OF 5-YEAR CUMULATIVE TOTAL [removed: RETURN][added: RETURN]

[removed: ][added: ]

| [removed: ASSUMES] [added: ASSUMES] $100 INVESTED ON DECEMBER [removed: 28, 2013] [added: 27, 2014] | | | | | | | | | | | | | | | | | | |

| [removed: ASSUMES] [added: ASSUMES] DIVIDENDS [removed: REINVESTED] [added: REINVESTED] | | | | | | | | | | | | | | | | | | |

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

| | | [removed: 2013] [added: 2014] | | | [removed: 2014] [added: 2015] | | | [removed: 2015] [added: 2016] | | | [removed: 2016] [added: 2017] | | | [removed: 2017] [added: 2018] | | | [removed: 2018] [added: 2019] | |

| | June 21, 2004 | | $ | 100,000,000 | |

| | October 30, 2019 | | | 400,000,000 | |

| 9/29/19 through 11/02/19 | | | \- | | $ | \- | | | | 7,503,954 |

| 11/03/19 through 11/30/19 | | | 795,000 | | | 69.40 | | 795,000 | | 6,093,247 |

| 12/01/19 through 12/28/19 | | | 2,101,656 | | | 68.91 | | 2,101,656 | | 4,130,374 |

| | | | 2,896,656 | | | | | 2,896,656 | | |

| Henry Schein, Inc. | | $ | 100.00 | | $ | 114.34 | | $ | 110.43 | | $ | 101.73 | | $ | 113.43 | | $ | 125.14 |

| Care Index | | | 100.00 | | | 105.95 | | | 102.82 | | | 126.30 | | | 132.27 | | | 163.32 |

| Composite Index | | | 100.00 | | | 106.25 | | | 114.75 | | | 148.76 | | | 143.41 | | | 198.30 |

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.

On October 2, 2007, our common stock became a component of the Nasdaq -100 stock market index.

| 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 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: 29, 2018,] [added: 28, 2019,] 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.

| | [removed: | Years ended] [added: Years ended] | | | | | | | | | | | | | |

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

| | [removed: | 2018] [added: 2019] | | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | | | [removed: 2014] [added: 2015] | |

| | [removed: | (in] [added: (in] thousands, except per share [removed: data)] [added: data)] | | | | | | | | | | | | | |

| [removed: Income] [added: Income] Statement [removed: Data: |] [added: Data:] | | | | | | | | | | | | | | |

| Litigation [removed: settlements................................................................................................................................................................. |] [added: settlements] | | [removed: 38,488] [added: \-] | | | [removed: 5,325] [added: 38,488] | | | [removed: \-] [added: 5,325] | | | \- | | | \- |

| Income [added: from continuing operations] before [removed: taxes and] [added: taxes,] equity [removed: in earnings] | | | | | | | | | | | | | | | [removed: |]

| Net income [removed: ...............................................................................................................................................................................] | | [added: 719,138] | [added: | |] 562,126 | | | 459,293 | | | 556,395 | | | 523,427 | [removed: | | 505,436 |]

| Less: Net [removed: income] [added: (income) loss] attributable to [removed: |] [added: noncontrolling] | | | | | | | | | | | | | | |

| Net income attributable to Henry Schein, Inc. [removed: ........................................................................................................................................] | [added: $] | [added: 694,734 | |] $ | 535,881 | | $ | 406,299 | | $ | 506,778 | | $ | 479,058 | [removed: | $ | 466,077 |]

| [removed: Earnings] [added: Earnings (loss)] per share attributable [removed: to |] [added: to] | | | | | | | | | | | | | | |

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

| Basic [removed: ...................................................................................................................................................................................] | [added: $] | [added: 4.70 | |] $ | 3.51 | | $ | 2.59 | | $ | 3.14 | | $ | 2.89 | [removed: | $ | 2.77 |]

| Diluted [removed: .................................................................................................................................................................................] | | [added: 4.65] | [added: | |] 3.49 | | | 2.57 | | | 3.10 | | | 2.85 | [removed: | | 2.72 |]

| Weighted-average common shares outstanding: | | | | | | | | | | | | | | | [removed: |]

| Basic [removed: ...................................................................................................................................................................................] | | [added: 147,817] | [added: | |] 152,656 | | | 156,787 | | | 161,641 | | | 165,687 | [removed: | | 168,531 |]

| Diluted [removed: .................................................................................................................................................................................] | | [added: 149,257] | [added: | |] 153,707 | | | 158,208 | | | 163,723 | | | 168,250 | [removed: | | 171,480 |]

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

| | | [removed: (in thousands)] [added: (in thousands)] | | | | | | | | | | | | | |

| [removed: Net] [added: Net] Sales by Market [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | |

| Health care distribution [removed: (5):] [added: (4):] | | | | | | | | | | | | | | | |

| Medical [removed: ................................................................................................................................................................................] | [removed: .......................................................................................................................................................................................................] | | [added: 2,973,586 | | |] 2,661,166 | | | 2,497,994 | | | 2,337,661 | | | 2,072,915 | [removed: | | 1,742,685 |]

| | | | [removed: (in thousands)] [added: (in thousands)] | | | | | | | | | | | | |

| [removed: Balance] [added: Balance] Sheet [removed: data:] [added: Data:] | | | | | | | | | | | | | | | |

| Total assets [removed: ..............................................................................................................................................................................] | [removed: .......................................................................................................................................................................................................] | $ | [removed: 8,500,527] [added: 7,151,101] | | $ | [removed: 7,863,995] [added: 8,500,527] | | $ | [removed: 6,811,763] [added: 7,863,995] | | $ | [removed: 6,580,775] [added: 6,811,763] | | $ | [removed: 6,184,320] [added: 6,580,775] |

| Stockholders' equity [removed: ....................................................................................................................................................................] | [removed: .......................................................................................................................................................................................................] | | [added: 3,630,137 | | |] 3,541,788 | | | 2,824,410 | | | 2,800,804 | | | 2,886,814 | [removed: | | 2,816,445 |]

| (1) | Restructuring costs for the year ended December [added: 28, 2019 consist primarily of severance costs, including severance pay and benefits of $13.8 million and facility closing costs of $0.9 million. Restructuring costs for the year ended December] 29, 2018 consist primarily of severance costs, including severance pay and benefits of [removed: $58.2] [added: $50.2] million, facility closing costs of [removed: $3.6] [added: $3.2] million and other costs of [removed: $1.1] [added: $1.0] million. Restructuring costs for the year ended December 31, 2016 consist primarily of severance costs, including severance pay and benefits of [removed: $40.7] [added: $33.8] million, facility closing costs of [removed: $3.6] [added: $3.2] 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 [removed: $26.7] [added: $20.3] million, facility closing costs of [removed: $5.7] [added: $4.9] million and other costs of [removed: $2.5] [added: $1.4] 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: (5)] [added: (4)] | 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: (6)] [added: (5)] | 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. |

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

| Net sales | $ | 9,985,803 | | $ | 9,417,603 | | $ | 8,883,438 | | $ | 8,218,885 | | $ | 7,650,755 |

| Gross profit | | 3,090,886 | | | 2,910,747 | | | 2,746,662 | | | 2,605,907 | | | 2,476,068 |

| Selling, general and administrative expenses | | 2,357,920 | | | 2,217,273 | | | 2,071,576 | | | 1,975,445 | | | 1,869,351 |

| Restructuring costs (1) | | 14,705 | | | 54,367 | | | \- | | | 38,621 | | | 26,587 |

| Operating income | | 718,261 | | | 600,619 | | | 669,761 | | | 591,841 | | | 580,130 |

| Other expense, net | | (37,954) | | | (63,783) | | | (39,967) | | | (18,705) | | | (17,904) |

| in earnings of affiliates and noncontrolling interests | | 680,307 | | | 536,836 | | | 629,794 | | | 573,136 | | | 562,226 |

| Income taxes (2) | | (159,515) | | | (107,432) | | | (308,975) | | | (169,311) | | | (170,113) |

| Equity in earnings of affiliates | | 17,900 | | | 21,037 | | | 15,293 | | | 17,110 | | | 13,300 |

| Net gain (loss) on sale of equity investments (3) | | 186,769 | | | \- | | | (17,636) | | | \- | | | \- |

| Net income from continuing operations | | 725,461 | | | 450,441 | | | 318,476 | | | 420,935 | | | 405,413 |

| Income (loss) from discontinued operations | | (6,323) | | | 111,685 | | | 140,817 | | | 135,460 | | | 118,014 |

| Less: Net income attributable to noncontrolling interests | | (24,770) | | | (19,724) | | | (25,304) | | | (19,651) | | | (19,705) |

| interests from discontinued operations | | 366 | | | (6,521) | | | (27,690) | | | (29,966) | | | (24,664) |

| Amounts attributable to Henry Schein, Inc.: | | | | | | | | | | | | | | |

| Continuing operations | | 700,691 | | | 430,717 | | | 293,172 | | | 401,284 | | | 385,708 |

| Discontinued operations | | (5,957) | | | 105,164 | | | 113,127 | | | 105,494 | | | 93,350 |

| Net income attributable to Henry Schein, Inc. | $ | 694,734 | | $ | 535,881 | | $ | 406,299 | | $ | 506,778 | | $ | 479,058 |

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

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

| From continuing operations: | | | | | | | | | | | | | | |

| Basic | $ | 4.74 | | $ | 2.82 | | $ | 1.87 | | $ | 2.48 | | $ | 2.33 |

| Diluted | | 4.69 | | | 2.80 | | | 1.85 | | | 2.45 | | | 2.29 |

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

| From discontinued operations: | | | | | | | | | | | | | | |

| Basic | $ | (0.04) | | $ | 0.69 | | $ | 0.72 | | $ | 0.65 | | $ | 0.56 |

| Diluted | | (0.04) | | | 0.68 | | | 0.72 | | | 0.64 | | | 0.55 |

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

| Earnings per share attributable to Henry Schein, Inc.: | | | | | | | | | | | | | | |

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

| | | December 28, | | | December 29, | | | December 30, | | | December 31, | | | December 26, | |

| | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | |

| Dental | | $ | 6,415,865 | | $ | 6,347,998 | | $ | 6,047,811 | | $ | 5,554,296 | | $ | 5,275,405 |

| Total health care distribution | | | 9,389,451 | | | 9,009,164 | | | 8,545,805 | | | 7,891,957 | | | 7,348,320 |

| Technology and value-added services (5) | | | 515,085 | | | 408,439 | | | 337,633 | | | 326,928 | | | 302,435 |

| Total excluding Corporate TSA revenues | | | 9,904,536 | | | 9,417,603 | | | 8,883,438 | | | 8,218,885 | | | 7,650,755 |

| Corporate TSA revenues (6) | | | 81,267 | | | \- | | | \- | | | \- | | | \- |

| Total | | $ | 9,985,803 | | $ | 9,417,603 | | $ | 8,883,438 | | $ | 8,218,885 | | $ | 7,650,755 |

| | | As of | | | | | | | | | | | | | |

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

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

| Net sales .................................................................................................................................................................................. | | $ | 13,201,995 | | $ | 12,461,543 | | $ | 11,571,668 | | $ | 10,629,719 | | $ | 10,371,390 |

| Gross profit .............................................................................................................................................................................. | | | 3,595,084 | | | 3,399,103 | | | 3,226,473 | | | 3,006,954 | | | 2,910,820 |

| Selling, general and administrative expenses.......................................................................................................................................... | | | 2,701,876 | | | 2,534,409 | | | 2,409,008 | | | 2,238,051 | | | 2,195,678 |

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

| Restructuring costs (1) .................................................................................................................................................................. | | | 62,912 | | | \- | | | 45,891 | | | 34,931 | | | \- |

| Operating income ........................................................................................................................................................................ | | | 753,052 | | | 859,369 | | | 771,574 | | | 733,972 | | | 715,142 |

| Other expense, net....................................................................................................................................................................... | | | (57,704) | | | (36,521) | | | (15,739) | | | (13,214) | | | (5,830) |

| of affiliates ........................................................................................................................................................................... | | | 695,348 | | | 822,848 | | | 755,835 | | | 720,758 | | | 709,312 |

| Income taxes (2) ......................................................................................................................................................................... | | | (155,492) | | | (362,506) | | | (217,958) | | | (211,391) | | | (215,610) |

| Equity in earnings of affiliates ......................................................................................................................................................... | | | 22,270 | | | 16,587 | | | 18,518 | | | 14,060 | | | 11,734 |

| Loss on sale of equity investment (3) ................................................................................................................................................. | | | \- | | | (17,636) | | | \- | | | \- | | | \- |

| noncontrolling interests .............................................................................................................................................................. | | | (26,245) | | | (52,994) | | | (49,617) | | | (44,369) | | | (39,359) |

| Dental .................................................................................................................................................................................. | ....................................................................................................................................................................................................... | $ | 6,348,945 | | $ | 6,048,813 | | $ | 5,555,299 | | $ | 5,276,407 | | $ | 5,381,215 |

| Animal health ......................................................................................................................................................................... | ....................................................................................................................................................................................................... | | 3,682,639 | | | 3,476,635 | | | 3,253,095 | | | 2,921,624 | | | 2,898,612 |

| Total health care distribution ...................................................................................................................................................... | ....................................................................................................................................................................................................... | | 12,692,750 | | | 12,023,442 | | | 11,146,055 | | | 10,270,946 | | | 10,022,512 |

| Technology and value-added services (6) ............................................................................................................................................ | ....................................................................................................................................................................................................... | | 509,245 | | | 438,101 | | | 425,613 | | | 358,773 | | | 348,878 |

| Total ................................................................................................................................................................................. | ....................................................................................................................................................................................................... | $ | 13,201,995 | | $ | 12,461,543 | | $ | 11,571,668 | | $ | 10,629,719 | | $ | 10,371,390 |

| | | As of | | | | | | | | | | | | | |

| Long-term debt .......................................................................................................................................................................... | ....................................................................................................................................................................................................... | | 1,003,873 | | | 907,756 | | | 715,457 | | | 463,752 | | | 542,776 |

| Redeemable noncontrolling interests .................................................................................................................................................. | ....................................................................................................................................................................................................... | | 312,156 | | | 832,138 | | | 607,636 | | | 542,194 | | | 564,527 |

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

| (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: Evaluation] [added: Evaluation] of Disclosure Controls and [removed: Procedures][added: Procedures]

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: 29, 2018] [added: 28, 2019] 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.

[removed: Changes] [added: Changes] in Internal Control over Financial [removed: Reporting][added: Reporting]

During the quarter ended December [removed: 29, 2018,] [added: 28, 2019,] post-acquisition integration related activities continued for our global [removed: dental,] [added: dental and North American] technology and [removed: animal health] [added: medical] businesses acquired during prior quarters, representing aggregate annual revenues of approximately [removed: $362] [added: $539] million.

Also, during the quarter ended December [removed: 29, 2018,] [added: 28, 2019,] post-implementation [removed: systems] [added: system] improvement activities continued for a new equipment system implemented during prior quarters for our U.S. dental business representing approximate aggregate annual revenues of [removed: $453] [added: $912 million, as well as an upgrade of an existing ERP system at a dental business in North America having approximate aggregate annual revenues of $58] million.

All [added: continued] 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.

[removed: Management’s] [added: Management’s] Report on Internal Control over Financial [removed: Reporting][added: 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: 29, 2018.][added: 28, 2019.]

The effectiveness of our internal control over financial reporting as of December [removed: 29, 2018] [added: 28, 2019] has been independently audited by BDO USA, LLP, an independent registered public accounting firm, and their attestation is included herein.

[removed: Limitations] [added: Limitations] of the Effectiveness of Internal [removed: Control][added: Control]

[removed: REPORT] [added: REPORT] OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING [removed: FIRM][added: FIRM]

[removed: Opinion] [added: Opinion] on Internal Control over Financial [removed: Reporting][added: Reporting]

We have audited Henry [removed: Schein] [added: Schein,] Inc.’s (the “Company’s”) internal control over financial reporting as of December [removed: 29, 2018,] [added: 28, 2019,] based on criteria established in [removed: _Internal] [added: *Internal] Control – Integrated Framework [removed: (2013)_] [added: (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: 29, 2018,] [added: 28, 2019,] based on the COSO [removed: criteria_._][added: 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: 29, 2018] [added: 28, 2019] and December [removed: 30, 2017,] [added: 29, 2018,] the related consolidated statements of income, comprehensive income, [added: changes in] stockholders’ equity, and cash flows for each of the three years in the period ended December [removed: 29, 2018,] [added: 28, 2019,] and the related notes and schedule and our report dated February 20, [removed: 2019] [added: 2020] expressed an unqualified opinion thereon.

[removed: Basis] [added: Basis] for [removed: Opinion][added: Opinion]

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Item 9A, Management’s Report on Internal Control over Financial [removed: Reporting.” Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.][added: Reporting”.]

[removed: Definition] [added: Definition] and Limitations of Internal Control over Financial [removed: Reporting][added: Reporting]

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

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that

February 20, 2020

February 20, 2019

PART III

Not applicable.

PART III

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: 2019] [added: 2020] Proxy Statement to be filed pursuant to Regulation 14A and to the Section entitled [removed: “Executive Officers of the Registrant”] [added: “Information about our Executive Officers”] in Part I of this report, with respect to executive officers.

There have been no changes to the procedures by which stockholders may recommend nominees to our Board of Directors since our last disclosure of such procedures, which appeared in our definitive [removed: 2018] [added: 2019] Proxy Statement filed pursuant to Regulation 14A on April [removed: 12, 2018.][added: 9, 2019.]

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 [removed: “Section] [added: “Delinquent Section] 16(a) [removed: Beneficial Ownership Reporting Compliance”] [added: Reports”] in our definitive [removed: 2019] [added: 2020] Proxy Statement to be filed pursuant to Regulation [removed: 14A.][added: 14A, to the extent responsive disclosure is required.]

We make available free of charge through our Internet website, [removed: www.henryschein.com,] [added: [www.henryschein.com](https://www.sec.gov/Archives/edgar/data/1000228/000100022820000018/www.henryschein.com),] under the “About Henry Schein--Corporate Governance” caption, our Code of Ethics.

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: 2019] [added: 2020] Proxy Statement to be filed pursuant to Regulation 14A.

The following table summarizes information relating to these plans as of December [removed: 29, 2018:][added: 28, 2019:]

| | | | [removed: Number of Common] | [removed: |] [added: Weighted- Average] | | | [added: Number of Common] |

| | | | [removed: Exercise of Outstanding] | [removed: | Exercise] [added: Exercise] Price [removed: of] [added: of] | | | [removed: Shares] [added: Shares] Available [removed: for] [added: for] |

| [removed: Plan Category |] [added: Plan Category] | | [removed: Options and Rights] | | [removed: Outstanding Options] [added: Outstanding Options] | | | [removed: Future Issuances] [added: Future Issuances] |

| Plans Not Approved by Stockholders [removed: ..................................................................................................................................................] | | | [removed: \-] | | [removed: |] \- | | \- |

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: 2019] [added: 2020] Proxy Statement to be filed pursuant to Regulation 14A.

| | | | | | | | |

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

| Plans Approved by Stockholders | | | | $ | \- | | 6,407,767 |

| | Total | | | $ | \- | | 6,407,767 |

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

| | | | Shares to be Issued Upon | | Weighted- Average | | | Number of Common |

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

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

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: 2019] [added: 2020] 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: 2019] [added: 2020] Proxy Statement to be filed pursuant to Regulation 14A.

[removed: (b) Exhibits][added: (b) Exhibits]

[removed: [2.3](https://www.sec.gov/Archives/edgar/data/1000228/000100022819000015/exhibit2_3.htm)] [added: [2.4](http://www.sec.gov/Archives/edgar/data/1000228/000100022819000015/exhibit2_4.htm)] [Letter [removed: Agreement, Amendment No. 1 to Contribution and Distribution] Agreement and Amendment No. [removed: 1] [added: 2] to [removed: Agreement] [added: Contribution] and [removed: Plan of Merger,] [added: Distribution Agreement,] dated as of [removed: September 14,] [added: November 30,] 2018, by and among us, HS Spinco, Inc., [removed: HS Merger Sub, Inc.,] Direct Vet Marketing, Inc. and Shareholder Representative Services [removed: LLC.+](https://www.sec.gov/Archives/edgar/data/1000228/000100022819000015/exhibit2_3.htm)][added: LLC.]

[removed: [2.4](https://www.sec.gov/Archives/edgar/data/1000228/000100022819000015/exhibit2_4.htm)] [added: [2.6](http://www.sec.gov/Archives/edgar/data/1000228/000100022819000015/exhibit2_6.htm)] [Letter Agreement and Amendment No. [removed: 2] [added: 4] to Contribution and Distribution Agreement, dated as of [removed: November 30, 2018,] [added: January 15, 2019,] by and among us, HS Spinco, Inc., Direct Vet Marketing, Inc. and Shareholder Representative Services [removed: LLC.][added: LLC.(Incorporated by reference to Exhibit 2.6 to our Annual Report on Form 10-K for the fiscal year ended December 29, 2018 filed on February 20, 2019.)](http://www.sec.gov/Archives/edgar/data/1000228/000100022819000015/exhibit2_6.htm)]

[removed: +](https://www.sec.gov/Archives/edgar/data/1000228/000100022819000015/exhibit2_4.htm)][added: [4.4](https://www.sec.gov/Archives/edgar/data/1000228/000100022820000018/d848607dex44.htm) [Description of Securities.+](https://www.sec.gov/Archives/edgar/data/1000228/000100022820000018/d848607dex44.htm)]

[removed: [2.5](https://www.sec.gov/Archives/edgar/data/1000228/000100022819000015/exhibit2_5.htm)] [added: [2.5](http://www.sec.gov/Archives/edgar/data/1000228/000100022819000015/exhibit2_5.htm)] [Letter Agreement and Amendment No. 3 to Contribution and Distribution Agreement and Amendment No. 2 to Agreement and Plan of Merger, dated as of December 25, 2018, by and among us, HS Spinco, Inc., HS Merger Sub, Inc., Direct Vet Marketing, Inc. and Shareholder Representative Services [removed: LLC.+](https://www.sec.gov/Archives/edgar/data/1000228/000100022819000015/exhibit2_5.htm)][added: LLC.(Incorporated by reference to Exhibit 2.5 to our Annual Report on Form 10-K for the fiscal year ended December 29, 2018 filed on February 20, 2019.)](http://www.sec.gov/Archives/edgar/data/1000228/000100022819000015/exhibit2_5.htm)]

[removed: [2.6](https://www.sec.gov/Archives/edgar/data/1000228/000100022819000015/exhibit2_6.htm)] [added: [2.3](http://www.sec.gov/Archives/edgar/data/1000228/000100022819000015/exhibit2_3.htm)] [Letter [removed: Agreement and] [added: Agreement,] Amendment No. [removed: 4] [added: 1] to Contribution and Distribution [removed: Agreement,] [added: Agreement and Amendment No. 1 to Agreement and Plan of Merger,] dated as of [removed: January 15, 2019,] [added: September 14, 2018,] by and among us, HS Spinco, Inc., [added: HS Merger Sub, Inc.,] Direct Vet Marketing, Inc. and Shareholder Representative Services [removed: LLC.+](https://www.sec.gov/Archives/edgar/data/1000228/000100022819000015/exhibit2_6.htm)][added: LLC.( Incorporated by reference to Exhibit 2.3 to our Annual Report on Form 10-K for the fiscal year ended December 29, 2018 filed on February 20, 2019.)](http://www.sec.gov/Archives/edgar/data/1000228/000100022819000015/exhibit2_3.htm)]

[removed: [10.1](http://www.sec.gov/Archives/edgar/data/1000228/000095012307005242/y33040def14a.htm) [Henry] [added: [10.1](http://www.sec.gov/Archives/edgar/data/1000228/000100022817000025/exhibit103.htm)0 [Form of 2017 Restricted Stock Unit Agreement for performance-based restricted stock awards pursuant to the Henry] Schein, Inc. [removed: 1994] [added: 2013] Stock Incentive [removed: Plan, as] [added: Plan (as] amended and restated effective as of [removed: March 27, 2007.][added: May 14, 2013).]

[removed: [10.2](http://www.sec.gov/Archives/edgar/data/1000228/000100022809000011/exhibit10_22008.htm)] [added: [10.21](http://www.sec.gov/Archives/edgar/data/1000228/000100022809000011/exhibit10_82008.htm)] [Amendment Number [removed: One] [added: Two] to the Henry Schein, Inc. [removed: 1994 Stock Incentive] [added: Section 162(m) Cash Bonus] Plan, effective as of January 1, [removed: 2005.][added: 2007.]

(Incorporated by reference to Exhibit [removed: 10.2] [added: 2.4] to our Annual Report on Form 10-K for the fiscal year ended December [removed: 27, 2008] [added: 29, 2018] filed on February [removed: 24, 2009.)](http://www.sec.gov/Archives/edgar/data/1000228/000100022809000011/exhibit10_22008.htm)][added: 20, 2019.)](http://www.sec.gov/Archives/edgar/data/1000228/000100022819000015/exhibit2_4.htm)]

[removed: [10.3](http://www.sec.gov/Archives/edgar/data/1000228/000100022809000030/exhibit10_12q09.htm)] [added: [10.22](http://www.sec.gov/Archives/edgar/data/1000228/000100022809000030/exhibit10_22q09.htm)] [Amendment Number [removed: Two] [added: Three] to the Henry Schein, Inc. [removed: 1994 Stock Incentive Plan,] [added: Section 162(m) Cash Bonus Plan] effective as of [removed: May 28,] [added: December 31,] 2009.

(Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June [removed: 27, 2009] [added: 29, 2019] filed on August [removed: 4, 2009.)](http://www.sec.gov/Archives/edgar/data/1000228/000100022809000030/exhibit10_12q09.htm)][added: 6, 2019.)](http://www.sec.gov/Archives/edgar/data/1000228/000100022819000048/d778189dex101.htm)]

[removed: [10.4](http://www.sec.gov/Archives/edgar/data/1000228/000100022810000021/exhibit10_1.htm)] [added: [10.3](http://www.sec.gov/Archives/edgar/data/1000228/000100022814000010/exhibit10_214q13.htm)0] [Amendment Number Three to the Henry Schein, Inc. [removed: 1994 Stock Incentive Plan, effective as of February 23, 2010.][added: Deferred Compensation Plan.]