Item 1A. Risk Factors

Our business operations could be affected by factors that are not presently known

to us or that we currently

consider not to be material to our operations, so you should not consider

the risks disclosed in this section to

necessarily represent a complete statement of all risks and uncertainties.

The Company believes that the following

risks could have a material adverse impact on our business, reputation, financial

results, financial condition and/or

the trading price of our common stock.

The order in which these factors appear does not necessarily reflect

their

relative importance or priority.

COMPANY RISKS

Our business, results of operations, cash flows, financial condition and

liquidity may be negatively impacted by

the effects of disease outbreaks, epidemics, pandemics, or similar wide-spread public

health concerns and other

natural disasters

.

The COVID-19 pandemic and the responses of governments

to it had, and may again have, a

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

result in a material

adverse effect on our financial condition and liquidity.

Our business, results of operations, cash flows, financial condition and

liquidity may be negatively impacted by the

effects of disease outbreaks, epidemics, pandemics, similar wide-spread public health concerns,

and other natural

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

an unprecedented impact on society, worldwide

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

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

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

material adverse effect on

our financial condition and liquidity. In March and April 2020, the dental market was severely impacted by

COVID-19, with many, if not a majority, of practices being closed or open on a limited basis only. Although dental

practice openings and patient volume recovery in the United States and

many other countries have rebounded faster

than originally anticipated, patient volumes have remained below pre-COVID-19

levels.

Material uncertainty

remains and the potential for additional significant resurgences of COVID-19

could cause a significant reduction in

dental practice openings and patient volume recovery, or further delay the return to normal operations. Even

after

COVID-19 has subsided, we may again experience material adverse

impacts to our business, results of operations

and cash flows as a result of, among other things, its global economic

impact, including any recession that may

occur in the future, or a prolonged period of economic slowdown or the

reluctance of patients to return for elective

dental or medical care. The impacts and potential impacts from

the COVID-19 pandemic include, but are not

limited to:

Significant reductions in demand or significant volatility in demand for certain of our products.

For example, in

March and April 2020, many dental offices in the United States performed only emergency procedures,

and

rescheduled wellness exams and elective procedures. Dental offices in other countries

also experienced closures or

restricted operations, as did medical offices around the world. Such closures and restrictions

impacted our

customers’ spending with us and had, and if reinstated may again have, a material

adverse effect on our business,

results of operations and cash flows. Although dental practice openings and

patient volume recovery have

rebounded faster than originally anticipated, capacity constraints

in offices and demand-side factors may again lead

to reductions in demand or significant volatility in demand for our products. Additionally, significant reduction in

demand for certain of our products or customers’ decisions to delay

the purchase of large equipment may result in

us having increased inventory;

Shortage of Certain Personal Protective Equipment (PPE

). Supply chain disruptions for PPE and an increased

demand for these products has resulted, and may continue to result,

in backorders of certain PPE and a potential

scarcity in raw materials to make certain PPE. Prices for certain PPE have been

volatile. Although we believe that

most practices currently are able to access adequate supply, with some exceptions in certain markets depending on

a number of factors, including the progress of the virus and efforts to combat it, we

still may be unable to supply

our customers with the quantity of certain PPE products they demand,

which may lead to our customers seeking

alternative sources of supply. Furthermore, healthcare professionals’ inability to obtain a sufficient quantity of

certain PPE would

adversely impact our business, results of operations and cash flows,

and could materially

adversely affect our financial condition and liquidity. Conversely, we recorded significant charges throughout the

year beginning in the second quarter for PPE inventory due to volatility

of pricing for PPE, and, depending upon

the course of the pandemic, if PPE pricing or demand decreases, our

margins and the value of certain our PPE

inventory could be further negatively impacted in future periods, which

could result in a material adverse impact on

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

and liquidity;

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

Restrictions recommended by several public health

organizations, and implemented by many local governments, to slow and limit the transmission

of COVID-19

(including business closures and restrictions, stay-at-home and similar measures)

were implemented and then lifted

or partially lifted in some locations and reinstituted in others. Ongoing

social distancing ordinances and similar

restrictions, and the actual and potential for additional resurgences of COVID-19

has in some locations and may in

other locations result in the re-imposition or tightening of governmental

social distancing and other restrictions,

and/or cause people to be less willing to go to elective medical and dental

appointments, which could again

materially adversely affect demand for our products. A lengthened period of materially

suppressed demand could

again cause material adverse impacts on our business, results of operations

and cash flows and could materially

adversely affect our financial condition and liquidity;

Potential delays in customer payments, or defaults on our customer credit arrangements.

We generally sell

products to customers with payment terms. If customers’ cash

flows or operating and financial performance

deteriorate due to the impact of COVID-19, or if they are unable to make scheduled

payments or obtain credit, they

may not be able to pay, or may delay payment to us. Likewise, for similar reasons, suppliers may restrict credit or

impose more stringent payment terms. The inability of current and/or

potential customers to pay us for our products

and/or services or any demands by suppliers for more stringent payment terms

may materially adversely affect our

business, results of operations, cash flows, financial condition and

liquidity and may limit the amounts we can

borrow under our trade accounts receivable securitization;

Impact on third parties’ ability to meet their obligations to us; impact on our ability to meet obligations

to third

parties.

Failure of third parties on which we rely, including our suppliers, contract manufacturers, distributors,

contractors (including third-party shippers), banks, joint venture partners

and external business partners, to meet

their obligations to us, or significant disruptions in their ability to do

so, which may be caused by their own

financial or operational difficulties, or by travel restrictions and border closures, may materially

adversely affect

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

liquidity. Certain of our contracts with

supply partners contain minimum purchase requirements or include rebate provisions

if we satisfy certain sales or

purchasing targets that, in certain cases we have not been able to satisfy and in other

cases we may not be able to

fully satisfy, due to the impact of the COVID-19 pandemic. Rebate income recognized in fiscal 2020 is less than

rebates earned over the prior fiscal year. Our failure to satisfy such contractual provisions or renegotiate

more

favorable terms could materially adversely affect our business, results of operations

and cash flows;

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

The spread of COVID-19 caused us

to implement temporary cost reduction measures (including a payroll

cost reduction plan centered around

furloughs, reduced pay and work hours, voluntary unpaid time off, suspension of Company

contributions to certain

retirement plans and job reductions), all of which have now ended (except

for a small number of TSMs who remain

on furlough), modify our business practices (including employee

travel, employee work locations, and cancellation

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

we may take further actions as may be required

by government authorities or that we determine are in the best interests

of our employees. As the COVID-19

pandemic continues to unfold, we will continue to evaluate appropriate actions

for our business. Many of our

employees shifted abruptly to working remotely and our non-essential workers

who are able to work from home

continue to do so. An extended period of modified business practices

and remote work arrangements could have a

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

introduce operational risk (including but

not limited to cybersecurity risks), and impair our ability to efficiently operate our

business;

Significant changes in political conditions.

Significant changes in political conditions in markets in which

we

purchase and distribute our products have occurred and are expected to

continue at least during the pendency of the

pandemic, including quarantines, governmental or regulatory actions, closures

or other restrictions that limit or

close our operating facilities, restrict our employees’ ability to

travel or perform necessary business functions, or

otherwise constrain the operations of our business partners, suppliers, or

customers, which may materially

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

and liquidity;

Potential impact on our ability to meet obligations under credit facilities.

Although in fiscal 2020 we entered into

amendments to our material credit facilities to, among other things,

extend the maturity dates and temporarily

provide additional flexibility under certain covenants, an extended negative

impact of COVID-19 on our business,

results of operations, cash flows, financial condition and liquidity could

impact our ability to meet our obligations

under credit facilities or outstanding long term debt, which contain

maximum leverage ratios, and customary

representations, warranties and affirmative covenants;

Volatility

in the financial markets.

Volatility

in the financial markets may materially adversely affect the

availability and cost of credit to us;

Refocusing management resources to mitigate effects of COVID-19

. Our management is focused on mitigating the

effects of COVID-19, which has required, and may continue to require for the duration of

the pandemic, a large

investment of time and resources across the Company, and may delay certain strategic and other plans, which could

materially adversely affect our business;

Potential

increased costs associated with our self-insured medical insurance programs.

We may incur significant

employee health care costs under our self-insurance medical insurance programs

if a large number of our

employees and/or their covered family members become ill from COVID-19;

and

Reputational risk associated with response to COVID-19.

If we do not respond appropriately to the COVID-19

pandemic, or if customers do not perceive our response to be adequate, we could

suffer damage to our reputation

and our brands, which could materially adversely affect our business.

The impact of COVID-19 may also exacerbate other risks discussed below, any of which could have a material

adverse effect on us.

We are dependent upon third parties for the manufacture and supply of substantially all of our products.

We obtain substantially all of the products we distribute from third parties, with whom we generally do not have

long-term contracts. While there is typically more than one source of

supply, some key suppliers, in the aggregate,

supply a significant portion of the products we sell.

In 2020, our top 10 health care distribution suppliers and

our

single largest supplier accounted for approximately 30%

and 4%, respectively, of our aggregate purchases.

Because of our dependence upon such suppliers, our operations are

subject to the suppliers’ ability and willingness

to supply products in the quantities that we require, and the risks include delays

caused by interruption in

production based on conditions outside of our control, including

a supplier’s failure to comply with applicable

government requirements (which may result in product recalls and/or

cessation of sales) or an interruption in the

suppliers’ manufacturing capabilities. In the event of any such

interruption in supply, we would need to identify and

obtain acceptable replacement sources on a timely basis. There is no guarantee

that we would be able to obtain such

alternative sources of supply on a timely basis, if at all, and an extended interruption

in supply, particularly of a

high sales volume product, could result in a significant disruption in our sales

and operations, as well as damage to

our relationships with customers and our reputation.

Our

future

growth

(especially

for

our

technology

and

value-added

services

segment)

is

dependent

upon

our

ability

to

develop

or

acquire

and

maintain

and

protect

new

products

and

technologies

that

achieve

market

acceptance with acceptable margins.

Our future success

depends on our ability

to timely develop (or

obtain the right

to sell) competitive

and innovative

(particularly

for

our

technology

and

value-added

services

segment),

products

and

services

and

to

market

them

quickly and

cost-effectively.

Our ability

to anticipate

customer needs

and emerging

trends and

develop or

acquire

new products,

services and

technologies at

competitive prices

requires significant

resources, including

employees

with the requisite skills, experience

and expertise, particularly in our

technology segment, including dental practice

management, patient engagement and demand creation software solutions.

The failure to successfully address these

challenges

could

materially

disrupt

our

sales

and

operations.

Additionally,

our

software

and

e-services

products,

like

software

products generally,

may

contain

undetected errors

or

bugs

when introduced

or

as

new

versions

are

released. Any such defective

software may result in

increased expenses related to the

software and could adversely

affect

our

relationships

with

customers

as

well

as

our

reputation.

While

certain

software

and

e-services

that

we

develop are protected

under patent law,

we rely primarily

upon copyright, trademark

and trade secret

laws, as well

as contractual and

common law protections and

confidentiality obligations. We

cannot provide assurance that

such

legal protections will be

available, adequate or enforceable in

a timely manner to protect

our software or e-services

products.

Our expansion through acquisitions and joint ventures involves

risks and may not result in the benefits and

revenue growth we expect.

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

international markets in part through

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

and enter into joint ventures in the

future. Such transactions require significant management attention,

may place significant demands on our

operations, information systems and financial resources, and there

is risk that one or more may not succeed. We

cannot be sure, for example, that we will achieve the benefits of revenue

growth that we expect from these

acquisitions or joint ventures or that we will avoid unforeseen additional

costs or expenses.

Our ability to

successfully implement our acquisition and joint venture strategy depends

upon, among other things, the following:

the availability of suitable acquisition or joint venture candidates at

acceptable prices;

our ability to consummate such transactions, which could potentially

be prohibited due to U.S. or

foreign antitrust regulations;

the liquidity of our investments and the availability of financing on

acceptable terms;

our ability to retain customers or product lines of the acquired businesses or

joint ventures;

our ability to retain, recruit and incentivize the management of the companies

we acquire; and

our ability to successfully integrate these companies’ operations, services,

products and personnel with

our culture, management policies, internal procedures, working capital

management, financial and

operational controls and strategies.

Furthermore, some of our acquisitions and future acquisitions may give

rise to an obligation to make contingent

payments or to satisfy certain repurchase obligations, which payments

could have material adverse impacts on our

financial results individually or in the aggregate.

Certain provisions in our governing documents and other documents to

which we are a party may discourage

third parties from seeking to acquire us that might otherwise result in

our stockholders receiving a premium

over the market price of their shares.

The provisions of our certificate of incorporation and by-laws may

make it more difficult for a third-party to

acquire us, may discourage acquisition bids and may impact the price

that certain investors might be willing to pay

in the future for shares of our common stock.

These provisions, among other things require:

the affirmative vote of the holders of at least 60% of the shares of common stock

entitled to vote to

approve a merger, consolidation, or a sale, lease, transfer or exchange of all or substantially all of our

assets; and

the affirmative vote of the holders of at least 66 2/3% of our common stock entitled

to vote to (i)

remove a director; and (ii) to amend or repeal our by-laws, with certain limited

exceptions.

In addition, certain of our employee incentive plans provide for accelerated

vesting of stock options and other

awards upon termination without cause within two years following a change

in control, or grant the plan committee

discretion to accelerate awards upon a change of control.

Further, certain agreements between us and our executive

officers provide for increased severance payments and certain benefits if those

executive officers are terminated

without cause by us or if they terminate for good reason, in each case within

two years following a change in

control or within ninety days prior to the effective date of the change in control

or after the first public

announcement of the pendency of the change in control.

INDUSTRY RISKS

The health care products distribution industry is highly competitive

(including, without limitation, competition

from third-party online commerce sites) and consolidating, and we may not

be able to compete successfully.

We compete with numerous companies, including several major manufacturers and distributors. Some of our

competitors have greater financial and other resources than we do, which

could allow them to compete more

successfully. Most of our products are available from several sources and our customers tend to have relationships

with several distributors. Competitors could obtain exclusive rights

to market particular products, which we would

then be unable to market. Manufacturers also could increase their

efforts to sell directly to end-users and thereby

eliminate or reduce our role in distribution. Industry consolidation among health

care product distributors and

manufacturers, price competition, product unavailability, whether due to our inability to gain access to products or

to interruptions in manufacturing supply, or the emergence of new competitors, also could increase competition.

Consolidation has also increased among manufacturers of health care

products, which could have a material

adverse effect on our margins and product availability. We

could be subject to charges and financial losses in the

event we fail to satisfy minimum purchase commitments contained

in some of our contracts. Additionally,

traditional health care supply and distribution relationships are being challenged

by electronic online commerce

solutions. The continued advancement of online commerce by third

parties will require us to cost-effectively adapt

to changing technologies, to enhance existing services and to differentiate our business

(including with additional

value-added services) to address changing demands of consumers and

our customers on a timely basis. The

emergence of such potential competition and our inability to anticipate and

effectively respond to changes on a

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

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

could materially adversely

affect our business.

The U.S. Patient Protection and Affordable Care Act, as amended by the Health Care and

Education Reconciliation

Act, each enacted in March 2010, as amended (the “ACA”), greatly expanded

health insurance coverage in the

United States and has been the target of litigation and Congressional reform efforts since its adoption.

The U.S.

Supreme Court, in upholding the constitutionality of the ACA and its

individual mandate provision in 2012,

simultaneously limited ACA provisions requiring Medicaid expansion,

making such expansion a state-by-state

decision.

In 2017, the U.S. Congress effectively repealed the ACA’s

individual mandate provision by eliminating

the financial penalty for non-compliance.

In the most recent ACA litigation, a federal appeals court found

the

individual mandate to be unconstitutional, and returned the case to a lower federal

court for consideration of

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

mandate.

This decision was

appealed to the U.S. Supreme Court, and a decision is expected soon.

Any outcome of this case that changes the

ACA, in addition to future legislation, regulation, guidance and/or Executive

Orders that do the same, could have a

significant impact on the U.S. healthcare industry and our operations.

The health care industry is experiencing changes due to political, economic and

regulatory influences that could

materially adversely affect our business.

The health care industry is highly regulated and subject to changing

political, economic and regulatory influences.

In recent years, the health care industry has undergone, and is in the process of undergoing, significant

changes

driven by various efforts to reduce costs, including, among other factors: trends

toward managed care; collective

purchasing arrangements and consolidation among office-based health care practitioners; and

changes in

reimbursements to customers, including increased attention to value-based payment

arrangements, as well as

growing enforcement activities (and related monetary recoveries) by governmental

officials. Both our profitability

and the profitability of our customers may be materially adversely affected by laws

and regulations reducing

reimbursement rates for pharmaceuticals, medical supplies and devices,

and/or medical treatments or services, or

changes to the methodology by which reimbursement levels are determined.

If we are unable to react effectively to

these and other changes in the health care industry, our business could be materially adversely affected.

Expansion of group purchasing organizations (“GPO”) or provider networks

and the multi-tiered costing

structure may place us at a competitive disadvantage.

The medical products industry is subject to a multi-tiered costing structure,

which can vary by manufacturer and/or

product. Under this structure, certain institutions can obtain more

favorable prices for medical products than we are

able to obtain. The multi-tiered costing structure continues to expand

as many large integrated health care providers

and others with significant purchasing power, such as GPOs, demand more favorable pricing terms.

Additionally,

the formation of provider networks and GPOs may shift purchasing decisions

to entities or persons with whom we

do not have a historical relationship and may threaten our ability to compete

effectively, which could in turn

negatively impact our financial results. Although we are seeking to obtain similar

terms from manufacturers to

access lower prices demanded by GPO contracts or other contracts, and to

develop relationships with existing and

emerging provider networks and GPOs, we cannot guarantee that such terms will

be obtained or contracts executed.

Increases in shipping costs or service issues with our third-party shippers

could harm our business.

Shipping is a significant expense in the operation of our business. We ship almost all of our orders through third-

party delivery services, and typically bear the cost of shipment. Accordingly, any significant increase in shipping

rates could have a material adverse effect on our business, financial condition or operating

results. Similarly, strikes

or other service interruptions by those shippers could cause our operating

expenses to rise and materially adversely

affect our ability to deliver products on a timely basis.

MACRO ECONOMIC AND POLITICAL RISKS

Uncertain global macro-economic and political conditions could

materially adversely affect our results of

operations and financial condition.

Uncertain global macro-economic and political conditions that affect the economy

and the economic outlook of the

United States, Europe, Asia and other parts of the world could materially adversely

affect our results of operations

and financial condition. These uncertainties, include, among other things:

election results;

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

limitation, the United States-

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

2020, and other international trade agreements);

greater restrictions on imports and exports;

supply chain disruptions due to social issues;

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

tariffs and sanctions;

changes to the relationship between the United States and China;

sovereign debt levels;

the inability of political institutions to effectively resolve actual or perceived

economic, currency or

budgetary crises or issues;

consumer confidence;

unemployment levels (and a corresponding increase in the uninsured

and underinsured population);

changes in regulatory and tax regulations;

increases in interest rates;

availability of capital;

increases in fuel and energy costs;

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

prices over time;

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

increases in health care costs;

the threat or outbreak of war, terrorism or public unrest; and

changes in laws and policies governing manufacturing, development and

investment in territories and

countries where we do business.

Additionally, changes in government, government debt and/or budget crises may lead to reductions in government

spending in certain countries, which could reduce overall health care spending,

and/or higher income or corporate

taxes, which could depress spending overall. Recessionary conditions and depressed

levels of consumer and

commercial spending may also cause customers to reduce, modify, delay or cancel plans to purchase our products

and may cause suppliers to reduce their output or change their terms of sale.

We generally sell products to

customers with payment terms. If customers’ cash flow or operating and

financial performance deteriorate, or if

they are unable to make scheduled payments or obtain credit, they may not

be able to, or may delay, payment to us.

Likewise, for similar reasons suppliers may restrict credit or impose different payment

terms.

REGULATORY

AND LITIGATION RISKS

Failure to comply with existing and future regulatory requirements

could materially adversely affect our

business.

The laws and regulations that govern our business and operations are

subject to varying and evolving

interpretations, future changes, additions, and enforcement approaches

(including in light of political changes, such

as with respect to the new administration of President Biden) that

affect our ability to comply.

For example,

President Biden’s administration has authorized and encouraged a freeze on certain federal regulations

that have

been published but are not yet effective, as well as a review of all federal regulations

issued during President

Trump’s administration.

Changes with respect to the applicable laws and regulations may

require us to update or

revise our operations, services, marketing practices, and compliance programs

and controls, and may impose

additional and unforeseen costs on us, pose new or previously immaterial

risks to us, or may otherwise have a

material adverse effect on our business.

There can be no assurance that current and future government

regulations

will not adversely affect our business, and we cannot predict new regulatory priorities,

the form, content or timing

of regulatory actions, and their impact on the health care industry and on

our business and operations.

Global efforts toward healthcare cost containment continue to exert pressure on

product pricing.

In the United

States, in addition to other government efforts to control health care costs, there has been

increased scrutiny on drug

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

executive branch agencies

and various states. At the state level, several states have adopted

laws that require drug manufacturers to provide

advance notice of certain price increases and to report information

relating to those price increases, while others

have taken legislative or administrative action to establish prescription drug

affordability boards or multi-payer

purchasing pools to reduce the cost of prescription drugs.

At the federal level, several related bills have been

introduced and regulations proposed which, if enacted or finalized,

respectively, would impact drug pricing and

related costs.

Under the Physician Payment Sunshine Act, we are required to collect

and report detailed information regarding

certain financial relationships we have with covered recipients, such as

physicians, dentists and teaching hospitals.

We or our subsidiaries may be required to report information under certain state transparency laws that address

circumstances not covered by the Physician Payment Sunshine Act, and

some of these state laws, as well as the

federal law, can be ambiguous.

We are also subject to foreign regulations requiring transparency of certain

interactions between suppliers and their customers.

While we believe we have substantially compliant programs

and controls in place satisfying the above laws and requirements,

such compliance imposes additional costs on us

and the requirements are sometimes ambiguous.

In the United States, government actions to seek to increase

health-related price transparency may also affect our business.

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

federal and international laws and

regulations applicable to the sale and distribution of, and third-party

payment for, pharmaceuticals and medical

devices, human cells, tissue and cellular and tissue-based products (“HCT/P products”).

Among the federal laws

with which we must comply are the Controlled Substances Act,

the U.S. Food, Drug, and Cosmetic Act, as

amended (“FDC Act”), the Federal Drug Quality and Security Act, including

Drug Supply Chain Security Act

(“DSCSA”), and Section 361 of the Public Health Services Act. Among

other things, such laws, and the regulations

promulgated thereunder:

regulate the storage and distribution, labeling, packaging, handling, reporting,

record keeping,

introduction, manufacturing and marketing of drugs, HCT/P products

and medical devices, including

requirements with respect to unique medical device identifiers;

subject us to inspection by the U.S. Food and Drug Administration (“FDA”)

and the U.S. Drug

Enforcement Administration (“DEA”), and similar state authorities;

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

that are considered

hazardous materials;

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

with applicable FDA

requirements;

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

require record keeping and documentation of transactions involving drug products;

require us to design and operate a system to identify and report suspicious

orders of controlled

substances to the DEA;

require us to manage returns of products that have been recalled and subject

us to inspection of our

recall procedures and activities;

impose on us reporting requirements if a pharmaceutical, HCT/P product or

medical device causes

serious illness, injury or death;

require manufacturers, wholesalers, repackagers and dispensers of prescription

drugs to identify and

trace certain prescription drugs as they are distributed;

require the licensing of prescription drug wholesalers and third-party

logistics providers; and

mandate compliance with standards for the recordkeeping, storage

and handling of prescription drugs,

and associated reporting requirements.

The FDA has become increasingly active in addressing the regulation of

computer software and digital health

products intended for use in health care settings.

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

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

to exclude certain software from

FDA regulation, including certain clinical decision support software.

Certain of our businesses involve the

development and sale of software and related products to support physician

and dental practice management, and it

is possible that the FDA or foreign government authorities could determine

that one or more of our products is

subject to regulation as a medical device, which could subject us or one

or more of our businesses to substantial

additional requirements, costs, and potential enforcement actions or liabilities

for noncompliance with respect to

these products.

Applicable federal, state, local and foreign laws and regulations also may require

us to meet various standards

relating to, among other things, licensure or registration, program eligibility, procurement, third-party

reimbursement, sales and marketing practices, product integrity and

supply tracking to product manufacturers,

product labeling, personnel, privacy and security of health or other personal

information, installation, maintenance

and repair of equipment and the importation and exportation of products.

The FDA and DEA, as well as CMS

(including with respect to complex Medicare reimbursement requirements

applicable to our specialty home medical

supplies business), have recently increased their regulatory and enforcement

activities and, in particular, the DEA

has heightened enforcement activities due to the opioid crisis in the United States.

Our business is also subject to

requirements of similar and other foreign governmental laws and regulations

affecting our operations abroad.

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

interpretations of existing laws and

regulations, or the imposition of any additional laws and regulations,

could materially adversely affect our business.

The costs to us associated with complying with the various applicable

statutes and regulations, as they now exist

and as they may be modified, could be material.

Allegations by a governmental body that we have not complied

with these laws could have a material adverse effect on our businesses.

While we believe that we are substantially

compliant with applicable laws and regulations, and believe we have adequate

compliance programs and controls in

place to ensure substantial compliance, if it is determined that we have

not complied with these laws, we are

potentially subject to penalties, including warning letters, substantial civil and

criminal penalties, mandatory recall

of product, seizure of product and injunction, consent decrees and suspension

or limitation of product sale and

distribution.

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

we could be required

to make settlement payments or be subject to civil and criminal penalties, including

fines and the loss of licenses.

Non-compliance with government requirements could also adversely affect our ability

to participate in important

federal and state government health care programs, such as Medicare

and Medicaid, and damage our reputation.

The EU Medical Device Regulation may adversely affect our business.

The EU Medical Device Regulation No. 2017/745 (“EU MDR”) was meant

to become applicable three years after

publication (in May 2020). However, on April 23, 2020, to allow EEA national authorities, notified bodies,

manufacturers and other actors to focus fully on urgent priorities related to the COVID-19

pandemic, the European

Council and Parliament adopted Regulation 2020/561, postponing the date

of application of the EU MDR by one

year (to May 2021).

The EU MDR significantly modifies and intensifies the regulatory

compliance requirements

for the medical device industry as a whole.

Once applicable, the EU MDR will among other things:

Strengthen the rules on placing devices on the market and reinforce surveillance

once they are

available;

Establish explicit provisions on manufacturers’

responsibilities for the follow-up of the quality,

performance and safety of devices placed on the market;

Improve the traceability of medical devices throughout the supply chain

to the end-user or patient

through a unique identification number;

Set up a central database to provide patients, healthcare professionals and

the public with

comprehensive information on products available in the EU;

Strengthen rules for the assessment of certain high-risk devices, such as

implants, which may have to

undergo an additional check by experts before they are placed on the market; and

Identify importers and distributors and medical device products through

registration in a database

(EudaMed not due until 2022 and after).

In particular, the EU MDR imposes stricter requirements for the confirmation that a product meets the regulatory

requirements, including regarding a product’s clinical evaluation and a company’s quality systems, and for the

distribution, marketing and sale of medical devices, including post-market surveillance.

Medical devices that have

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

continue to be placed on the market

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

however, requirements regarding the

distribution, marketing and sale including quality systems and post-market surveillance

have to be observed by

manufacturers, importers and distributors as of the application date.

The modifications created by the EU MDR may have an impact on the

way we design and manufacture products

and the way we conduct our business in the European Economic Area.

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

fraud or other laws and regulations, we

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

which could materially

adversely affect our business.

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

foreign) health care fraud and abuse, referral

and reimbursement laws and regulations with respect to their operations.

Some of these laws, referred to as “false

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

claims for reimbursement to

federal, state and other health care payers and programs.

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

soliciting, offering, receiving or paying remuneration in order to induce the referral

of a patient or ordering,

purchasing, leasing or arranging for, or recommending ordering, purchasing or leasing of, items or services

that are

paid for by federal, state and other health care payers and programs.

Certain additional state and federal laws, such

as the federal Physician Self-Referral Law, commonly known as the “Stark Law,” prohibit physicians and other

health professionals from referring a patient to an entity with which the physician

(or family member) has a

financial relationship, for the furnishing of certain designated health services

(for example, durable medical

equipment and medical supplies), unless an exception applies.

The fraud and abuse laws and regulations have been subject to heightened

enforcement activity over the past few

years, and significant enforcement activity has been the result of “relators” who

serve as whistleblowers by filing

complaints in the name of the United States (and if applicable, particular states)

under applicable false claims laws,

and who may receive up to 30% of total government recoveries.

Penalties under fraud and abuse laws may be

severe, and could result in significant civil and criminal penalties and costs,

including the loss of licenses and the

ability to participate in federal and state health care programs, and could

have a material adverse effect on our

business.

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

regulatory or judicial authority in

a manner that could require us to make changes in our operations or incur substantial

defense and settlement

expenses.

Even unsuccessful challenges by regulatory authorities or private

relators could result in reputational

harm and the incurring of substantial costs.

Most states have adopted similar state false claims laws, and these

state

laws have their own penalties which may be in addition to federal False Claims

Act penalties, as well as other fraud

and abuse laws.

With respect to measures of this type, the United States government (among others) has expressed concerns

about

financial relationships between suppliers on the one hand and physicians,

dentists and other health care providers,

on the other.

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

as necessary to facilitate

compliance.

In the EU, the Directive No. 2019/1937 of 23 October 2019

on the protection of persons who report breaches of

Union law

which organizes the legal protection of whistleblowers must be implemented by EU

member states by

December 17, 2021. This Directive covers whistleblowers reporting breaches

of certain EU laws, in particular as

regards public health, the above-mentioned Directive No. 2001/83, Regulation

No. 726/2004 or, as regards data

protection, the GDPR. The Directive protects a wide range of people and

includes former employees.

All private

companies with 50 or more employees are required to create effective internal reporting

channels.

We also are subject to certain United States and foreign laws and regulations concerning the conduct of our foreign

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

Act, German anti-corruption laws

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

books and records, which have been

the focus of increasing enforcement activity globally in recent years.

Our businesses are generally subject to

numerous other laws and regulations that could impact our financial

results, including, without limitation,

securities, antitrust, consumer protection, and marketing laws and regulations.

In the EU, both active and passive bribery are criminalized. The EU Council

Framework Decision 2003/568/JHA

of 22 July 2003

on combating corruption in the private sector

establishes more detailed rules on the liability of

legal persons and deterrent sanctions. However, the liability of legal persons is regulated at a national

level.

Failure to comply with fraud and abuse laws and regulations, and other

laws and regulations, could result in

significant civil and criminal penalties and costs, including the loss of

licenses and the ability to participate in

federal and state health care programs, and could have a material adverse

effect on our business.

We may

determine to enter into settlements, make payments, agree to consent decrees

or enter into other arrangements to

resolve such matters.

Intentional or unintentional failure to comply with consent decrees could

materially adversely

affect our business.

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

abuse and other laws and

regulations, and believe we have adequate compliance programs and controls

in place to ensure substantial

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

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

interpretation of laws, could have a

material adverse effect on our business.

If we fail to comply with laws and regulations relating to the confidentiality

of sensitive personal information or

standards in electronic health records or transmissions, we could

be required to make significant changes to our

products, or incur substantial fines, penalties or other liabilities.

Our businesses that involve physician and dental practice management

products, and our specialty home medical

supply business, include electronic information technology systems that

store and process personal health, clinical,

financial and other sensitive information of individuals.

These information technology systems may be vulnerable

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

could require us to expend

significant resources to eliminate these problems and address related security

concerns, and could involve claims

against us by private parties and/or governmental agencies.

We are directly or indirectly subject to numerous and evolving federal, state, local and foreign laws and regulations

that protect the privacy and security of personal information, such as the

HIPAA, the Controlling the Assault of

Non-Solicited Pornography and Marketing Act, the Telephone Protection and Electronic Protection Act of 1991,

Section 5 of the Federal Trade Commission Act, the CCPA, and the CPRA that becomes effective on January 1,

Laws and regulations relating to privacy and data protection are continually

evolving and subject to

potentially differing interpretations. These requirements may not be harmonized,

may be interpreted and applied in

a manner that is inconsistent from one jurisdiction to another or may conflict

with other rules or our practices.

Our

businesses’ failure to comply with these laws and regulations could expose us

to breach of contract claims,

substantial fines, penalties and other liabilities and expenses, costs for remediation

and harm to our reputation.

Also, evolving laws and regulations in this area could restrict the ability

of our customers to obtain, use or

disseminate patient information, or could require us to incur significant

additional costs to re-design our products to

reflect these legal requirements, which could have a material adverse

effect on our operations.

In addition, the European Parliament and the Council of the European Union

have adopted the GDPR, which

increases privacy rights for individuals in Europe, or “Data Subjects”,

including individuals who are our customers,

suppliers and employees.

The GDPR extended the scope of responsibilities for data controllers

and data processors

and generally imposes increased requirements and potential penalties

on companies, such as us, that offer goods or

services to Data Subjects or monitor their behavior (including by

companies based outside of Europe).

Noncompliance can result in penalties of up to the greater of EUR 20

million, or 4% of global company revenues.

Data Subjects also have the right to seek compensation for damages.

EU member states may individually impose

additional requirements and penalties regarding certain matters,

such as employee personal data.

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

effective January 1, 2020.

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

regarding the collection, use and disclosure of certain personal information

of California residents.

Compliance

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

them, and because the CCPA is relatively new,

and its implementing regulations were released in August of

2020,

there remains some uncertainty about how the CCPA will be interpreted by the courts and enforced by the

regulators. If we fail to comply with the CCPA or if regulators assert that we have failed to comply with the CCPA,

we may be subject to certain fines or other penalties and litigation,

any of which may negatively impact our

reputation, require us to expend significant resources, and harm our business.

Furthermore, California voters

approved the CPRA on November 3, 2020, which will amend and

expand the CCPA, including by providing

consumers with additional rights with respect to their personal information,

and creating a new state agency to

enforce CCPA and CPRA.

The CPRA will come into effect on January 1, 2023, applying to information collected

by businesses on or after January 1, 2022.

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

considered the adoption of similarly expansive

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

While we believe we have

substantially compliant programs and controls in place to comply with

the GDPR, CCPA and CPRA requirements,

our compliance with these measures is likely to impose additional costs

on us, and we cannot predict whether the

interpretations of the requirements, or changes in our practices in response

to new requirements or interpretations of

the requirements, could have a material adverse effect on our business.

We also sell products and services that health care providers, such as physicians and dentists, use to store and

manage patient medical or dental records.

These customers and we are subject to laws, regulations and

industry

standards, such as HIPAA and the Payment Card Industry Data Security Standards, which require the protection of

the privacy and security of those records. Our products or services

may be used as part of these customers’

comprehensive data security programs, including in connection with their

efforts to comply with applicable data

privacy and security laws and contractual requirements.

Perceived or actual security vulnerabilities in our products

or services, or the perceived or actual failure by us or our customers who

use our products or services to comply

with applicable legal or contractual data privacy and security requirements,

may not only cause us significant

reputational harm, but may also lead to claims against us by our customers

and/or governmental agencies and

involve substantial fines, penalties and other liabilities and expenses

and costs for remediation.

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

and benefit from specific protections.

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

Certain of our businesses involve the manufacture and sale of electronic

health record (“EHR”) systems and other

products linked to government supported incentive programs, where

the EHR systems must be certified as having

certain capabilities designated in evolving standards, such as those adopted

by CMS and by the Office of the

National Coordinator for Health Information

Technology of HHS (“ONC”).

In order to maintain certification of

our EHR products, we must satisfy the changing governmental standards.

If any of our EHR systems do not meet

these standards, yet have been relied upon by health care providers to receive

federal incentive payments, we may

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

including the False Claims Act.

While

we believe we are substantially in compliance with such certifications

and with applicable fraud and abuse laws and

regulations and that we have adequate compliance programs and controls

in place to ensure substantial compliance,

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

have a material adverse effect on our business.

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

reporting

functionality.

Although we believe we are positioned to accomplish this, the effort may involve

increased costs,

and our failure to implement product modifications, or otherwise satisfy

applicable standards, could have a material

adverse effect on our business.

Additionally, as electronic medical devices are increasingly connected to each other and to other technology, the

ability of these connected systems to safely and effectively exchange and use exchanged

information becomes

increasingly important.

As a medical device manufacturer, we must manage risks including those associated with

an electronic interface that is incorporated into a medical device.

Tax legislation could materially adversely affect our financial results and tax liabilities.

We are subject to the tax laws and regulations of the United States federal, state and local governments, as well as

foreign jurisdictions. From time to time, various legislative initiatives

may be proposed that could materially

adversely affect our tax positions. There can be no assurance that our effective tax rate will not

be materially

adversely affected by legislation resulting from these initiatives. In addition, tax

laws and regulations are extremely

complex and subject to varying interpretations. Although we believe that our

historical tax positions are sound and

consistent with applicable laws, regulations and existing precedent,

there can be no assurance that our tax positions

will not be challenged by relevant tax authorities or that we would be

successful in any such challenge.

We face inherent risk of exposure to product liability, intellectual property infringement and other claims in the

event that the use of the products we sell results in injury.

Our business involves a risk of product liability, intellectual property infringement and other claims in the ordinary

course of business, and from time to time we are named as a defendant

in cases as a result of our distribution of

products. Additionally, we own interests in companies that manufacture certain dental products. As a result, we

could be subject to the potential risk of product liability, intellectual property infringement or other claims relating

to the manufacture and distribution of products by those entities. In addition,

as our private-label business continues

to grow, purchasers of such products may increasingly seek recourse directly from us, rather than the ultimate

product manufacturer, for product-related claims. Another potential risk we face in the distribution of our products

is liability resulting from counterfeit or tainted products infiltrating the supply

chain.

In addition, some of the

products that we transport and sell are considered hazardous

materials. The improper handling of such materials or

accidents involving the transportation of such materials could subject us

to liability or at least legal action that

could harm our reputation.

GENERAL RISKS

Security risks generally associated with our information systems and our

technology products and services could

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

materially adversely affected if

such products, services or systems (or third-party systems we rely on) are interrupted,

damaged by unforeseen

events, are subject to cyberattacks or fail for any extended period of

time.

We rely on information systems (IS) in our business to obtain, rapidly process, analyze, manage and store customer,

product, supplier and employee data to, among other things:

maintain and manage worldwide systems to facilitate the purchase and

distribution of thousands of

inventory items from numerous distribution centers;

receive, process and ship orders on a timely basis;

manage the accurate billing and collections for thousands of

customers;

process payments to suppliers; and

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

medical or dental

records (including protected health information of their patients).

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

cyberattack that bypasses our IS security

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

may lead to a material disruption

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

the loss of business information, as

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

fines and penalties, costs

for remediation, and substantial defense and settlement expenses. In addition,

we develop products and provide

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

that bypasses the IS security systems of our

products or services causing a security breach and/or perceived security

vulnerabilities in our products or services

could also cause significant loss of business and reputational harm, and actual

or perceived vulnerabilities may lead

to claims against us by our customers and/or governmental agencies.

In particular, certain of our practice

management products and services purchased by health care providers, such

as physicians and dentists, are used to

store and manage patient medical or dental records.

These customers are subject to laws and regulations which

require that they protect the privacy and security of those records, and our

products may be used as part of these

customers’ comprehensive data security programs, including in connection

with their efforts to comply with

applicable privacy and security laws. Perceived or actual security vulnerabilities

in our products or services, or the

perceived or actual failure by us or our customers who use our products

to comply with applicable legal

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

but may also lead to claims against us by

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

penalties, costs for remediation, and

substantial defense and settlement expenses. In addition, a cyberattack

on a third-party that we use to manage a

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

Additionally, legislative or regulatory action

related to cybersecurity may increase our costs to develop or implement

new technology products and services.

Furthermore, procedures and safeguards must continually evolve to meet new

IS challenges, and enhancing

protections, and conducting investigations and remediation, may impose additional

costs on us.

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

as

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

our products.

Our global operations are subject to inherent risks that could materially

adversely affect our business.

Our global operations are subject to risks that may materially adversely affect our business. The

risks that our

global operations are subject to include, among other things:

difficulties and costs relating to staffing and managing foreign operations;

difficulties and delays inherent in sourcing products, establishing channels of distribution and

contract

manufacturing in foreign markets;

fluctuations in the value of foreign currencies (including, without limitation,

in connection with

Brexit);

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

for example potential implementation problems such as border delays, as

well as potential changes to

the U.K. regulatory scheme to replace EU requirements;

longer payment cycles of foreign customers and difficulty of collecting receivables

in foreign

jurisdictions;

repatriation of cash from our foreign operations to the United States;

regulatory requirements, including without limitation, anti-bribery, anti-corruption and laws pertaining

to the accuracy of our internal books and records;

unexpected difficulties in importing or exporting our products and import/export

tariffs, quotas,

sanctions or penalties;

limitations on our ability under local laws to protect our intellectual

property;

unexpected regulatory, legal, economic and political changes in foreign markets;

changes in tax regulations that influence purchases of capital equipment;

civil disturbances, geopolitical turmoil, including terrorism, war or political

or military coups; and

public health emergencies, including COVID-19.

Our future success is substantially dependent upon our senior

management, and our revenues and profitability

depend on our relationships with capable sales personnel as well as

customers, suppliers and manufacturers of

the products that we distribute.

Our future success is substantially dependent upon the efforts and abilities of

members of our existing senior

management, particularly Stanley M. Bergman, Chairman and Chief Executive Officer. The loss of the services of

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

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

senior management is intense and we may not be successful in attracting

and retaining key personnel. Additionally,

our future revenues and profitability depend on our ability to

maintain satisfactory relationships with qualified sales

personnel as well as customers, suppliers and manufacturers. If we

fail to maintain our existing relationships with

such persons or fail to acquire relationships with such key persons in the

future, our business may be materially

adversely affected.

Disruptions in the financial markets may materially adversely

affect the availability and cost of credit to us.

Our ability to make scheduled payments or refinance our obligations with

respect to indebtedness will depend on

our operating and financial performance, which in turn is subject to prevailing

economic conditions and financial,

business and other factors beyond our control. Disruptions in the financial

markets may materially adversely affect

the availability and cost of credit to us.