filings.toolsItem 1. Business
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Item 1. Business
Business
General
Henry Schein, Inc. is a solutions company for health care professionals powered
by a network of people and
technology.
We believe we are the world’s largest
provider of health care products and services primarily to
office-
based dental and medical practitioners, as well as alternate sites of care.
Our philosophy is grounded in our
commitment to help customers operate a more efficient and successful business so
the practitioner can provide
better clinical care.
With 93 years of experience distributing health care products, we have built a vast base of small, mid-sized
and
large customers in the dental and medical markets, serving more than one million
customers worldwide across
dental practices, laboratories,
physician practices, and ambulatory surgery centers, as well as government,
institutional health care clinics and other alternate care clinics.
We are headquartered in Melville, New York
and employ approximately 25,000 people.
Approximately 49% of
our workforce is based in the United States and 51% outside of the United States.
Our operations or affiliates are
located in 33 countries and territories.
Our broad global footprint has evolved over time through
organic growth as
well as through the contribution from our strategic acquisitions.
We stock a comprehensive selection of more than 300,000 branded products and Henry Schein corporate brand
products through our main distribution centers.
Our infrastructure, including over 5.4 million square feet of space
in 36 strategically located distribution centers and 0.5 million square
feet of space in 15 manufacturing facilities
around the world, enables us to historically provide rapid and accurate order
fulfillment, better serve our customers
and increase our operating efficiency.
This infrastructure, together with broad product and service offerings
at
competitive prices, and a strong commitment to customer service, enables
us to be a single source of supply for our
customers’ needs, which we believe is a competitive advantage.
During the fourth quarter of our fiscal year ended December 28, 2024,
we revised our reportable segments to align
with how the Chairman and Chief Executive Officer manages the business, assesses
performance and allocates
resources.
Our revised reportable segments consist of: (i) Global Distribution
and Value
-Added Services; (ii)
Global Specialty Products;
and (iii) Global Technology.
Global Distribution and Value-Added Services includes distribution to the global dental and medical markets of
national brand and corporate brand merchandise, as well as equipment and related
technical services.
This segment
also includes value-added services such as financial services, continuing
education services, consulting and other
services.
This segment also markets and sells under our own corporate brand,
a portfolio of cost-effective, high-
quality consumable merchandise.
Global Specialty Products includes manufacturing, marketing
and sales of dental
implant and biomaterial products; and endodontic, orthodontic and orthopedic
products and other health care-
related products and services.
Global Technology includes development and distribution of practice management
software, e-services, and other products, which are distributed to health
care providers.
Recent Developments
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent
Developments” herein for a discussion related to recent Company developments.
Industry
The distribution and value-added services industry, as it relates to office-based health care practitioners, is
fragmented and diverse.
The industry ranges from sole practitioners working out
of relatively small offices to mid-
sized and large group practices ranging in size from a few practitioners to several
hundred practices owned or
operated by dental support organizations (“DSOs”), medical group purchasing organizations
(“GPOs”), health
maintenance organizations (“HMOs”), hospital systems or integrated delivery networks (“IDNs”).
Due in part to the limited capacity of office-based health care practitioners
to store and manage large quantities of
supplies in their offices, the distribution of health care supplies and small equipment
to office-based health care
practitioners has been characterized by frequent, small quantity orders,
and a need for rapid, reliable and
substantially complete order fulfillment.
The purchasing decisions within an office-based health care practice
are
typically made by the practitioner, hygienist or office manager.
Supplies and small equipment are generally
purchased from more than one distributor, with one generally serving as the primary supplier.
The distribution and value-added services industry should benefit from
favorable long-term macro trends that
should help stimulate patient traffic and demand for products and services.
This includes an aging population,
increased health care awareness and the importance of preventive care,
an increasing understanding of the
connection between good oral health and overall health, improved access
to care globally, the proliferation of
medical technology and testing, new pharmacology treatments and
expanded third-party insurance coverage,
partially offset by the effects of unemployment on insurance coverage and technological
improvements, including
the advancement of software and services, prosthetic solutions and telemedicine.
In addition, the non-acute market
continues to benefit from the shift of procedures and diagnostic
testing from acute care settings to alternate-care
sites, particularly physicians’ offices and ambulatory surgery centers.
We believe that consolidation within the industry will continue to result in a number of distributors, particularly
those with limited financial, operating and marketing resources, seeking
to combine with larger companies that can
provide growth opportunities.
This consolidation also may continue to result in distributors seeking
to acquire
companies that can enhance their current product and service offerings or provide
opportunities to serve a broader
customer base.
In addition, customer consolidation will likely lead to multiple locations
under common management and the
movement of more procedures from the hospital setting to the physician
or alternate care setting, as the health care
industry is increasingly focused on efficiency and cost containment.
This trend has benefited distributors capable
of providing a broad array of products and services at low prices.
It also has accelerated the growth of HMOs,
group practices, other managed care accounts and collective buying
groups such as DSOs and GPOs, which, in
addition to their emphasis on obtaining products at competitive prices,
tend to favor distributors capable of
providing specialized management information support.
We believe that the trend towards cost containment has
the potential to favorably affect demand for technology solutions, including software,
which can enhance the
efficiency and facilitation of practice management.
Competition
The distribution and manufacture of health care supplies and equipment is
highly competitive.
Many of the health
care products we sell are available to our customers from a number of suppliers.
In addition, our competitors could
obtain exclusive rights from manufacturers to market particular products.
Manufacturers also could seek to sell
directly to end-users, and thereby eliminate or reduce our role and
that of other distributors.
In certain parts of the
dental end market, such as those related to dental specialty products, and
medical end market manufacturers already
sell directly to end customers.
In North America, we compete with other distributors, as well as several
manufacturers, of dental and medical
products, primarily on the basis of price, breadth of product line, e-commerce
capabilities, customer service and
value-added products and services.
In the dental distribution market, our primary competitors in the U.S. are
the
Patterson Dental division of Patterson Companies, Inc. and Benco Dental Supply
Company.
In addition, we
compete against a number of other distributors that operate on a national,
regional and local level.
Our primary
competitors in the U.S. medical distribution market, which accounts
for the large majority of our global medical
sales, are McKesson Corporation and Medline Industries, Inc., which are national
distributors.
We also compete
with a number of regional and local medical distributors, as well as a number
of manufacturers that sell directly to
physicians and patients in their homes.
Outside of the U.S., we believe we are the only global distributor of supplies
and equipment to dental practices and
our competitors are primarily local and regional companies.
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, Proclinic SA, Lifco AB, Nuent Group AB, Planmeca Oy and Billericay
Dental Supply Co. Ltd., as
well as a large number of other dental and medical product distributors and
manufacturers in international countries
and territories we serve.
Within Global Specialty Products,
our primary competitors include Straumann, Envista, Zimvie,
and Dentsply
Sirona.
With regard to our dental software, we compete against numerous companies, including the Eaglesoft
division of
Patterson Companies, Inc., Carestream Dental LLC, Centaur Software Development
Co Pty Ltd. (d.b.a.
dental4windows, dental4web), Open Dental Software, Inc., PlanetDDS
LLC, Good Methods Global Inc. (d.b.a.
CareStack), Curve Dental, LLC., the NextGen division of Quality Systems,
Inc., eClinicalWorks and Epic Systems
Corporation. In other software end markets, including revenue cycle
management, patient relationship management
and patient demand generation, we compete with companies such as Vyne Medical, Weave Communications, Inc.,
and Solutionreach, Inc.
Many of these competitors connect to our software platforms
through our API program.
Manufacturing and Raw Materials
We manufacture certain of our products for our specialty businesses (oral surgery solutions including dental
implants, endodontics, and orthopedics) at our 15 company manufacturing
sites.
We also outsource certain
manufacturing to third parties.
We purchase our raw materials from various third-party suppliers.
No single
supplier is material; however, raw materials may be sourced from a single supplier or a limited number
of suppliers
for reasons of quality assurance, regulatory requirements, cost, and availability.
We believe that we have a readily available supply of raw materials and components sourced from various
suppliers, for our significant products.
We may experience shortages of raw materials or purchased components.
In recent periods, we have experienced
increased costs and shortages of purchased components, which
had a negative impact on our profit margins and on
our sales for certain product categories, due to our inability to fully satisfy
demand.
Competitive Strengths
We have 93 years of experience in distributing products to health care practitioners resulting in strong awareness of
the Henry Schein
®
brand.
Our competitive strengths include:
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 end markets we
serve and that reflect the technology-driven
products and services best suited for their practice needs.
We are committed to continuing to enhance these
offerings through organic investment in our products and our teams, as well as through the acquisition
of new
products and services that may help us better serve our customers.
Direct sales and marketing expertise.
Our sales and marketing efforts are designed to establish and solidify
customer relationships through personal or virtual 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,
particularly through our e-commerce platforms.
The key elements of our direct
sales and marketing efforts are:
Field sales consultants.
Our 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.
Marketing.
We market to existing and prospective office-based health care providers through a
combination of owned, earned and paid digital channels, tradeshows, as well
as through catalogs, flyers,
direct mail and other promotional materials.
Our strategies include an emphasis on educational content
through webinars and content marketing initiatives.
We continue to enhance our marketing technology to
improve our targeting capability and the relevance of messaging and offers.
Telesales.
We support our direct marketing effort with inbound and outbound telesales representatives,
who facilitate order processing, generate new sales through direct and frequent
contact with customers and
stay abreast of market developments and the hundreds of new products,
services and technologies
introduced each year to educate practice personnel.
Electronic commerce solutions.
We provide our customers and sales teams with innovative and
competitive e-commerce solutions.
We continue to invest in our e-commerce platform to offer enhanced
content management so customers can more easily find the products
they need and to enable an engaging
purchase experience, supported by excellent customer service.
Social media.
Our operating entities and employees engage our customers and
supplier partners through
various social media platforms, which are an important element of our
communications and marketing
efforts.
We continue to expand our social media presence to raise awareness about issues, engage
customers beyond a sale and deliver services and solutions to specialized
audiences.
Cost-effective purchasing
.
We believe that cost-effective purchasing is a key element to maintaining and enhancing
our position as a competitively priced provider of health care products.
We continuously evaluate our purchase
requirements and suppliers’ offerings and prices in order to obtain products at the
lowest possible cost.
In 2024,
our top 10 Global Distribution and Value-Added Services suppliers and our single largest supplier accounted for
approximately 25% and 4%, respectively, of our aggregate purchases.
Efficient distribution
.
We distribute our products from our 36 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 for order fulfillment.
Broad product and service offerings at competitive prices.
We offer
a broad range of products and services to our
customers, at competitive prices, in the following categories:
Global Distribution and Value-Added Services
Consumable merchandise and equipment.
We distribute consumable products, small equipment, laboratory
products, large equipment, equipment repair services, branded and generic pharmaceuticals,
vaccines,
dental specialty products, diagnostic tests, infection-control products and vitamins.
We stock a
comprehensive selection of more than 300,000 branded products and Henry
Schein corporate brand
products through our main distribution centers.
We also market and sell our own corporate brand portfolio
of cost-effective, high-quality consumable merchandise products.
Home health business.
We distribute homecare medical products, including incontinence, urology, ostomy,
enteral nutrition, advanced wound, and diabetes supplies, as well as
continuous glucose monitoring devices.
These products are delivered directly to patients in their homes, providing
convenience and accessibility
while supporting patient care and adherence to treatment plans.
Value
-added products and services.
We offer a broad range of value-added solutions, including continuing
education programs for practitioners, and consulting services.
Our suite of technology-driven tools and
expert advisory services helps health care professionals enhance practice efficiency and improve
patient
outcomes.
Repair services.
We have 129 equipment sales and service centers worldwide that provide a variety of
repair, installation and technical services for our health care customers.
Our technicians provide
installation and repair services for dental handpieces,
dental and medical small equipment,
table-top
sterilizers and large dental equipment.
Financial service
s.
We offer our customers solutions in operating their practices more efficiently by
providing access to a number of financial services and products
provided by third party suppliers (including
non-recourse financing for equipment, technology and software
products, non-recourse practice financing
for leasehold improvements, business debt consolidation and commercial
real estate, non-recourse patient
financing and credit card processing) at rates that we believe are generally
lower than what our customers
would be able to secure independently.
We also provide staffing services, dental practice valuation and
brokerage services.
Global Specialty Products
Dental implants and digital solutions.
We develop, manufacture, market and distribute a broad portfolio of
dental implants, prosthetic components, instruments and digital workflow
solutions for implant-based tooth
restorations.
With research and development and manufacturing facilities in the United States,
Switzerland, Germany, Brazil and France, we serve customers with various global and regional implant
brands across a wide range of price segments.
Supported by our specialized sales force, we market our
products and solutions in approximately 90 countries, directly to dental practices
and surgical specialists
via our sales subsidiaries and our network of international third-party and
Henry Schein distribution
partners.
Biomaterials.
We market and distribute a broad portfolio of biomaterials for dental tissue
regeneration.
The product portfolio primarily consists of a broad range of
privately branded allograft,
xenograft, and synthetic biomaterials.
Our dedicated biomaterial specialists support our direct implant
sales force and Henry Schein oral surgery-focused distribution channels.
Orthodontics.
We develop, manufacture, and distribute a comprehensive range of orthodontic products,
including brackets, braces, aligners, and accessories.
In collaboration with leading clinicians, our research
and development teams drive innovation to enhance patient care.
With manufacturing facilities in the
Unted States, Mexico, and France, we serve dental practices in over
70 countries through our specialized
sales force, international partners, and the Henry Schein distribution
network.
Endodontics
.
We develop, manufacture, market and distribute a complete portfolio of endodontic products
across multiple brands catering to both endodontic specialists and general
practitioners.
This includes
stainless steel and NiTi shaping files, irrigation solutions, endodontic power equipment, sealers,
and root
repair materials.
Leveraging our research and development and manufacturing facilities
in the United
States, Switzerland, and Brazil we focus on delivering meaningful
innovation to help advance endodontic
care, provide advanced training and education through a network of training
centers and digital services,
and serve our customers through multiple brands and multiple channels
addressing all segments of the
market.
By investing in dedicated endo-specific competencies and resources
to support our different sales
channels, we are successfully marketing our products and brands
in over 90 countries.
Orthopedics
.
We develop, manufacture and distribute innovative implants and instruments that are
designed to treat injuries, diseases and disorders of the limbs, joints
and related tissues in the upper and
lower extremities.
We also provide surgical accessories, including blades, burs, drills, a variety of pins and
wires to support orthopedic surgical procedures, and a portfolio of specialized instruments
designed to
simplify implant removal and preserve patient bone-stock during
revision arthroplasty procedures.
We
employ an extensive global network of independent sales agencies
and direct sales specialists, and we
partner closely with IDNs and GPOs.
The majority of our revenue is generated in the United States market,
with the remaining revenue coming from Canada and countries in Latin America,
Europe and Asia Pacific
region.
Other.
We also source or manufacture other medical and dental health care products and services that are
sold to customers, including handpiece and small equipment, rotary, hand instruments, and repair services,
restoratives and preventives, as well as certain other health care-related
consumable merchandise products
and services.
Global Technology
We sell practice management, business analytics, patient engagement and patient demand creation software
solutions to our dental customers.
Our practice management solutions provide practitioners with electronic
medical records, patient treatment history, analytics, billing, accounts receivable analyses and management,
appointment calendars, electronic claims processing and word processing
programs, network and hardware
services, e-commerce and electronic marketing services, e-Prescribe medications
and prescription
solutions, sourcing third party patient payment plans, and transition services
and training and education
programs for practitioners.
We have technical representatives supporting customers using our practice
management solutions and services.
As of December 28, 2024, we had an active user base of approximately 100,000
practices and 321,000
consumers, including users of AxiUm®, Dentally®, Dentrix Ascend®,
DentalVision®, Dentrix® Dental
Systems, EXACT®, Gesden®, Jarvis Analytics®, Julie® Software, Oasis,
Officite™, OrisLine®, PBS
Endo®, Power Practice® Px and subscriptions for Demandforce®,
Sesame, and Lighthouse 360® for
dental practices and DentalPlans.com® for dental patients.
Commitment to superior customer service
.
We maintain a strong commitment to providing superior customer
service.
We frequently monitor our customer service through customer surveys, focus groups and statistical
reports.
Our customer service policy primarily focuses on:
Exceptional order fulfillment.
We ship an average of approximately 142,000 cartons daily.
Comprehensive ordering process.
Customers may place orders 24 hours a day, 7 days a week via e-
commerce solutions, telephone, fax, e-mail and mail.
Integrated management information systems
.
Certain of our information systems generally allow for centralized
management of key functions, including accounts receivable, inventory, accounts payable, payroll, purchasing,
sales, order fulfillment and financial and operational reporting.
These systems allow us to manage our growth,
deliver superior customer service, properly target customers, manage financial
performance and monitor daily
operational statistics.
Products and Services
The following table sets forth the percentage of consolidated net sales
by principal categories of products and
services offered through our Global Distribution and Value-Added Services,
Global Specialty Products, and Global
Technology reportable segments:
December 28,
December 30,
December 31,
2024
2023
2022
Global Distribution and Value
-Added Services:
Dental merchandise
(1)
37.3
%
38.8
%
37.7
%
Dental equipment
(2)
13.6
13.5
13.5
Value
-added services
(3)
1.8
1.6
1.2
Total
Dental
52.7
53.9
52.4
Medical
(4)
32.2
31.7
34.4
Total
Global Distribution and Value
-Added Services:
84.9
85.6
86.8
Global Specialty Products
(5)
11.4
10.8
10.1
Global Technology
(6)
5.0
4.9
4.3
Eliminations
(1.3)
(1.3)
(1.2)
Total
100.0
%
100.0
%
100.0
%
(1)
Includes infection-control products, handpieces, preventatives, impression materials, composites, anesthetics, teeth, dental
implants, gypsum, acrylics, articulators, abrasives, PPE products,
and our own corporate brand of consumable merchandise.
(2)
Includes dental chairs, delivery units and lights, digital dental laboratories, X-ray supplies and equipment, equipment repair and
high-tech and digital restoration equipment.
(3)
Consists of financial services on a non-recourse basis, continuing education services for practitioners, consulting and other services.
(4)
Includes branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products, X-ray
products, equipment, PPE products and vitamins.
(5)
Includes manufacturing, marketing and sales of dental implant and biomaterial products; and endodontic, orthodontic and
orthopedic products and other health care-related products and services.
(6)
Consists of practice management software, e-services, and other products, which are distributed to health care providers.
Business Strategy
Our mission is to provide innovative, integrated health care products and
services; and to be trusted advisors and
consultants to our customers - enabling them to deliver the best quality patient
care and enhance their practice
management efficiency and profitability.
Our BOLD+1 Strategic Plan consists of the following:
Build (“B”)
Complementary software, specialty, and services businesses for high growth
Operationalize (“O”)
One Distribution to deliver exceptional customer experience, increased
efficiency,
and growth
Leverage (“L”)
One Schein to broaden and deepen relationships with our customers
Drive (“D”)
Digital transformation for our customers and for Henry Schein
+1
Create Value
for our stakeholders
To accomplish this, we apply our competitive strengths in executing the following strategies:
Increase penetration of our existing customer base.
We have over one million customers worldwide and
we intend to increase sales to our existing customer base and enhance
or secure our position as their
primary supplier.
We believe our offering of a broad range of products, services and support, including
software solutions that can help drive improved workflow efficiency and patient communications
for
practices, coupled with our full-service value proposition, helps us to retain
and grow our customer base.
Increase the number of customers we serve.
This strategy includes increasing the productivity of our field
sales consultants and telesales team, 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
independent
practices, mid-market groups, and large DSOs as well as community health centers
and government sites of
care.
Leveraging our broad array of 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, occupational health and home health settings.
As
health care settings 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.
We have significant cross-selling opportunities
between our dental software users and our dental customers, and opportunities
to expand our vaccine,
injectables and other pharmaceuticals sales to health care practitioners, as
well as cross-selling EHR
systems and software when we sell our core products.
Our strategy extends to providing health systems,
integrated delivery networks and other large group and multi-site health care organizations,
including
physician clinics, these same value-added products and services.
As physicians and health systems closely
align, we have increased access to opportunities for cross-marketing
and selling our product and service
portfolios.
Pursue strategic acquisitions and joint ventures.
Our acquisition strategy is focused on investments in
companies that add new customers and sales teams, increase our geographic
footprint (whether entering a
new country, such as emerging markets, or building scale where we have already invested in businesses),
and finally, those that enable us to access new products and technologies.
Markets Served
Demographic trends indicate that our markets are growing, as an
aging U.S. population is increasingly using health
care services.
According to the U.S. Census Bureau’s International Database, between 2024 and 2034, the
population of people aged 45 and older is expected to grow by approximately
10%.
Between 2024 and 2044, this
age group is expected to grow by approximately 18%.
This compares with expected total U.S. population growth
rates of approximately 4% between 2024 and 2034 and approximately 6%
between 2024 and 2044.
In the dental industry, there is predicted to be a rise in oral health care expenditures as the 45-and-older segment of
the population increases.
There is increasing demand for new technologies that allow
dentists to increase
productivity, and this is being driven in the U.S. by lower insurance reimbursement rates.
At the same time, there is
an expected increase in dental insurance coverage.
In the medical market, there continues to be a migration of procedures from
acute-care settings to physicians’
offices and home health settings, a trend that we believe provides additional opportunities
for us.
There also is the
continuing use of vaccines, injectables and other pharmaceuticals in alternate-care
settings.
We believe we have
established a leading position as a vaccine supplier to the office-based physician
practitioner.
We support our dental and medical professionals through the many SKUs that we offer, as well as through
important value-added services, including practice management software,
electronic claims processing, financial
services and continuing education, all designed to help maximize a practitioner’s
efficiency.
Additionally, we seek to expand our dental full-service model and medical offerings in countries where
opportunities exist.
We do this through both direct sales and by partnering with local distribution and
manufacturing companies.
For information on revenues and long-lived assets by geographic area, see
Note 4 – Segment and Geographic Data
of “Notes to Consolidated Financial Statements.”
Seasonality and Other Factors Affecting Our Business and Quarterly Results
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 decline.
Our business is subject to seasonal and other quarterly fluctuations.
Sales and profitability generally have been
higher in the third and fourth quarters due to the timing of sales of seasonal
products (including influenza vaccine),
purchasing patterns of office-based health care practitioners for certain products (including
equipment and
software) and year-end promotions.
Sales and profitability may also be impacted by the timing of
certain annual
and biennial dental tradeshows where equipment promotions are offered.
In addition, some dental practices delay
equipment purchases in the U.S. until year-end due to tax incentives.
We expect our historical seasonality of sales
to continue in the foreseeable future.
Governmental Regulations
We
strive to be compliant in all material respects with the applicable
laws, regulations and guidance described
below, and believe we have effective compliance programs and other controls in place to ensure substantial
compliance.
However, compliance is not guaranteed either now or in the future, as certain laws, regulations and
guidance may be subject to varying and evolving interpretations that could
affect our ability to comply, as well as
future changes, additions and enforcement approaches, including political changes.
When we discover situations of
non-compliance we seek to remedy them and bring the affected area back into compliance.
Changes to applicable laws, regulations and guidance described below, as well as related administrative or judicial
interpretations, 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.
Government
Certain of our businesses involve the distribution, manufacturing, importation,
exportation, marketing, sale and
promotion of pharmaceuticals and/or medical devices, and in this regard, we
are subject to extensive local, state,
federal and foreign governmental laws and regulations, including as applicable
to our wholesale distribution of
pharmaceuticals and medical devices, manufacturing activities, and as part of
our specialty home medical supplies
businesses that distribute and sell medical equipment and supplies directly
to patients.
Federal, state and certain
foreign governments have also increased enforcement activity in the health care
sector, particularly in areas of fraud
and abuse, anti-bribery and anti-corruption, controlled substances handling,
medical device regulations and data
privacy and security standards.
Certain of our businesses involve pharmaceuticals and/or medical devices,
including orthopaedic, in vitro
diagnostic devices, software regulated as a medical device, and sales of
medical equipment and supplies directly to
patients, that are paid for by third parties and/or patients and must operate in
compliance with a variety of
burdensome and complex coding, billing and record-keeping requirements in
order to substantiate claims for
payment under federal, state and commercial health care reimbursement programs.
Government and private insurance programs fund a large portion of the total cost of medical care,
and there have
been efforts to limit such private and government insurance programs, including efforts, thus far
unsuccessful, to
seek repeal of the entire United States Patient Protection and Affordable Care Act,
as amended by the Health Care
and Education Reconciliation Act, each enacted in March 2010 (as amended,
the “ACA”).
Certain of our businesses are subject to various additional federal, state,
local and foreign laws and regulations,
including with respect to the sale, transportation, importation, storage, handling
and disposal of hazardous or
potentially hazardous substances; “forever chemicals” such as per-and
polyfluoroalkyl substances; amalgam bans;
pricing disclosures; supply chain transparency around labor practices; and safe working
conditions.
In addition,
activities to control medical costs, including laws and regulations lowering
reimbursement rates for
pharmaceuticals, medical devices, medical supplies and/or medical treatments
or services, are ongoing.
For
example, the Centers for Medicare & Medicaid Services’ (“CMS”) 2024 durable
medical equipment, prosthetics,
orthotics and supplies (“DMEPOS”) reimbursement schedule, which was
effective January 1, 2024, reduced the
DMEPOS reimbursement rates for non-rural suppliers, such as us, by removing
the Coronavirus Aid, Relief, and
Economic Security (“CARES”) Act relief rates in effect during the COVID-19 pandemic.
These and other laws
and regulations are subject to change and their evolving implementation
may impact our operations and our
financial performance.
Certain of our businesses also maintain contracts with governmental agencies
and are subject to certain regulatory
requirements specific to government contractors.
Our businesses are generally subject to numerous laws and regulations that could
impact our financial performance,
and failure to comply with such laws or regulations could have a material adverse
effect on our business.
Operating, Security and Licensure Standards
Certain of our businesses are subject to local, state and federal governmental
laws and regulations relating to the
manufacturing and/or distribution of pharmaceuticals and medical devices
and supplies.
Among the United States
federal laws applicable to us are the Controlled Substances Act, the Federal Food,
Drug, and Cosmetic Act, as
amended (“FDC Act”), Section 361 of the Public Health Service Act and Section
401 of the Consolidated
Appropriations Act of the Social Security Act, as well as laws regulating
the billing of and reimbursement from
government programs, such as Medicare and Medicaid, and from commercial payers.
We
are also subject to
comparable foreign regulations.
The FDC Act, the Controlled Substances Act, their implementing regulations,
and similar foreign laws generally
regulate the introduction, manufacture, advertising, marketing and promotion,
sampling, pricing and
reimbursement, labeling, packaging, storage, handling, returning or recalling,
reporting, and distribution of, and
record keeping for, pharmaceuticals and medical devices shipped in interstate commerce or internationally, and
states may similarly regulate such activities within the state.
Furthermore, Section 361 of the Public Health Service
Act, which provides authority to prevent the 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 regulates pharmaceutical
supply chain requirements and pre-
empts certain state laws.
Title II of this measure, known as the Drug Supply Chain Security Act (“DSCSA”),
establishes a national electronic, interoperable system to identify and trace
certain prescription drugs as they are
distributed in the United States that went into effect on November 27, 2023.
The law’s track and trace requirements
applicable to manufacturers, wholesalers, third-party logistics providers (e.g.,
trading partners), repackagers and
dispensers (e.g., pharmacies) of prescription drugs took effect in January 2015,
and, as stated, continues to be
implemented.
The DSCSA product tracing requirements replace the former FDA
drug pedigree requirements and
pre-empt certain state requirements that are inconsistent with, more stringent
than, or in addition to, the DSCSA
requirements.
Those DSCSA requirements that were scheduled to change on November
27, 2023, and include requiring trading
partners to provide, receive and maintain documentation about products and
ownership only “electronically” (and
not via paper), were subject to a one-year “stabilization period” announced by
the FDA through two guidance
documents in late August 2023.
The FDA permitted the stabilization period to accommodate an additional
year,
until November 27, 2024, to allow trading partners to implement, troubleshoot
and mature their electronic (versus
paper), interoperable systems, during which time the FDA did not intend to
take action to enforce the requirements
for the interoperable, electronic, package level product tracing.
Additionally, the FDA announced that it did not
intend to take action to enforce the portion of the FDC Act with respect
to drug product that was introduced in a
transaction into commerce by the product’s manufacturer or repackager before November 27, 2024, and for
subsequent transactions of such product through the product’s expiry.
The FDA stated this stabilization period was
intended to avoid disruption to the supply chain and ensure continued patient
access to drug products as trading
partners move towards full implementation of the DSCSA’s
enhanced drug security requirements.
The FDA again
extended the stabilization period in late 2024 as follows: (1) manufacturers and
repackagers: May 27, 2025; (2)
wholesale distributors: August 27, 2025; (3) dispensers with 26 or more pharmacists
and technicians: November 27,
2025; and (4) small dispensers: November 27, 2026.
The FDA stated that these continued exemptions apply to any
product transacted by eligible trading partners who have initiated their “systems
and processes, as described in
section 582(g)(1) of the FD&C Act,” including electronic DSCSA data connections
with immediate trading
partners by November 27, 2024.
The additional time extends to trading partners throughout the pharmaceutical
distribution supply chain who subsequently engage in a transaction including such
product.
The FDA also stated
that, for the purposes of these exemptions, eligible trading partners are those
who have initiated their systems and
processes by successfully completing data connections with their
immediate trading partners, and those trading
partners who initiated processes including documentation of efforts to establish data
connections, but were not able
to fully complete these processes.
The DSCSA also establishes certain requirements for the licensing and operation
of prescription drug wholesalers
and third-party logistics providers (“3PLs”) and includes the eventual
creation of national wholesaler and 3PL
licenses in cases where states do not license such entities.
The DSCSA requires that wholesalers and 3PLs
distribute drugs in accordance with certain standards regarding the recordkeeping,
storage and handling of
prescription drugs.
The DSCSA requires wholesalers and 3PLs to submit annual reports
to the FDA, which include
information regarding each state where the wholesaler or 3PL is licensed, the name
and address of each facility, and
contact information.
According to FDA guidance, states are pre-empted from imposing
any licensing requirements
that are inconsistent with, less stringent than, directly related to, or covered
by the standards established by federal
law in this area.
Current state licensing requirements concerning wholesalers will
remain in effect until the FDA
issues new regulations as directed by the DSCSA.
The FDA issued a proposed rule establishing wholesaler and
3PL national standards for licensing and other requirements in February 2022,
but that rule has not yet been
finalized.
In addition, with respect to our specialty home medical supplies business,
we are subject to certain state
licensure laws (including state pharmacy laws), and also certain accreditation standards,
including to qualify for
reimbursement from Medicare, Medicaid, and other third-party payers.
The Food and Drug Administration Amendments Act of 2007 and
the Food and Drug Administration Safety and
Innovation Act of 2012 amended the FDC Act to require the FDA to promulgate
regulations to implement a unique
device identification (“UDI”) system for medical devices.
The UDI rule phased in the implementation of the UDI
regulations, generally beginning with the highest-risk devices (i.e., Class
III medical devices) and ending with the
lowest-risk devices.
The UDI regulations require “labelers” to include unique device identifiers
(“UDIs”), with a
content and format prescribed by the FDA and issued under a system operated
by an FDA-accredited issuing
agency, on the labels and packages of medical devices (including, but not limited to, certain software that qualifies
as a medical device under FDA rules), and to directly mark certain devices
with UDIs.
The UDI regulations also
require labelers to submit certain information concerning UDI-labeled devices
to the FDA, much of which
information is publicly available on an FDA database, the Global Unique Device
Identification Database (GUDID).
The UDI regulations and subsequent FDA guidance regarding the UDI
requirements provide for certain exceptions,
alternatives and time extensions.
For example, the UDI regulations include a general exception
for Class I devices
exempt from the Quality System Regulation (other than record-keeping
requirements and complaint files).
Regulated labelers include entities such as device manufacturers, repackagers,
reprocessors and relabelers that
cause a device’s label to be applied or modified, with the intent that the device will be commercially distributed
without any subsequent replacement or modification of the label and include certain
of our businesses.
The FDA
also released a final rule in February 2024 to amend, effective February 2026, certain device current
good
manufacturing practice requirements in 21 CFR Part 820 (Quality System Regulation)
to align more closely with
the international consensus standard (ISO 13485) specific for device quality
management systems requirements
(QMSR) used by other countries.
As a distributor of controlled substances, we are required, under
the Controlled Substances Act, to obtain and renew
annually registrations for our facilities from the United States Drug Enforcement
Administration (“DEA”)
permitting us to handle controlled substances.
We
are also subject to other statutory and regulatory requirements
relating to the storage, sale, marketing, 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.
We
are subject to inspection by the DEA.
Certain of
our businesses are also required to register for permits and/or licenses
with, and comply with operating and security
standards of, the DEA, the FDA, the United States Department of Health
and Human Services (“HHS”), and
various state boards of pharmacy, state health departments and/or comparable state agencies as well as comparable
foreign agencies, and certain accrediting bodies, depending on the type of
operations and location of product
distribution, manufacturing or sale.
These businesses include those that distribute, manufacture, relabel, and/or
repackage prescription pharmaceuticals and/or medical devices and/or HCT/P
products, or own pharmacy
operations, or install, maintain or repair equipment.
In addition, Section 301 of the National Organ Transplant Act, and a number of comparable state laws, impose civil
and/or criminal penalties for the transfer of human organs, as defined in the regulations,
for valuable consideration,
while generally permitting payments for the reasonable costs incurred
in their procurement, processing, storage and
distribution.
We
are also subject to foreign government regulation of such products.
The DEA, the FDA and state
regulatory authorities have broad inspection and enforcement powers, including
the ability to suspend or limit the
distribution of products by our distribution centers, seize or order the
recall of products and impose significant
criminal, civil and administrative sanctions for violations of these laws and regulations.
Foreign regulations subject
us to similar foreign enforcement powers.
EU Regulation of Medicinal and Dental Products
European Union (“EU”) member states regulate their own health care systems,
as does EU law.
The latter regulates
certain matters, most notably medicinal products and medical devices.
Medicinal products are defined, broadly, as
substances or combinations of substances having certain functionalities and
may not include medical devices.
EU
“regulations” apply in all member states, whereas “directives” are implemented
by the individual laws of member
states.
On medicines for humans, we are regulated under Directive No. 2001/83/EC
of 6 November 2001, as amended by
Directive 2003/63/EC of 25 June 2003, and EU Regulation (EC) No. 726/2004
of 31 March 2004.
These rules
provide for the authorization of products, and regulate their manufacture,
importation, marketing and distribution.
It implements requirements which may be implemented without warning, as
well as a national pharmacovigilance
system under which marketing authorizations may be withdrawn, and includes
potential sanctions for breaches of
the rules, and on other bases such as harmfulness or lack of efficacy.
EU Regulation No. 1223/2009 of 30 November 2009
on cosmetic products
requires that cosmetic products (which
includes dental products) be safe for human health when used under normal
or reasonably foreseeable conditions of
use and comply with certain obligations which apply to manufacturers,
importers and distributors.
It includes
market surveillance, and non-compliance may result in the recall or withdrawal
of products, along with other
sanctions.
In the EU, the EU Medical Device Regulation No. 2017/745 of 5 April 2017
(“EU MDR”) covers a wide scope of
our activities, from dental material and medical devices to X-ray machines,
and certain software.
It was meant to
become applicable three years after publication (i.e., May 26, 2020).
However, on April 23, 2020, to allow
European Economic Area (“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 26, 2021).
The EU MDR significantly modifies and intensifies the regulatory compliance
requirements for the medical device
industry as a whole.
Among other things, the EU MDR:
strengthens the rules on placing devices on the market and reinforces surveillance
once they are available;
establishes explicit provisions on manufacturers’ responsibilities
for the follow-up of the quality,
performance and safety of devices placed on the market;
improves the traceability of medical devices throughout the supply chain to the
end-user or patient through
a unique identification number;
sets up a central database to provide patients, health care professionals and
the public with comprehensive
information on products available in the EU;
strengthens 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
identifies importers and distributors and medical device products through
registration in the EUDAMED
database,
which comprises several modules that are not yet fully functional.
In order not to hinder the
mandatory use of EUDAMED by the functional delay of a single module,
the new Regulation No.
2024/1860 of 13 June 2024 has therefore amended Article 34 of the EU
MDR to organize a gradual
commissioning of the various modules of EUDAMED, once they have been
independently audited and
declared operational by means of a Commission notice published
in the Official Journal of the European
Union. In this case, the obligations and requirements relating to the concerned
electronic modules of
EUDAMED will apply six months after the date of publication of
the notice.
These changes came into
force on July 9, 2024; and
as amended by the above-mentioned Regulation No. 2024/1860,
contains specific provisions in the event of
interruption or discontinuation of supply of a device.
In particular, the EU MDR imposes strict 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.
Regulation 2023/607 of the European Parliament and of the Council of
March 15, 2023
amending Regulations (EU)
2017/745 and (EU) 2017/746 as regards the transitional provisions for certain medical devices and in vitro
diagnostic medical devices
has, notably, extended the EU MDR transitional periods applicable to certain medical
devices that have been assessed and/or certified under the Directive No.
93/42/EEC of 1993
concerning medical
devices
(“EU Medical Device Directive”).
Subject to certain conditions, medical devices that (i) obtained a
certificate under the EU Medical Device Directive from May 25, 2017,
(ii) which was still valid on May 26, 2021,
and (iii) has not been subsequently withdrawn may, for the moment, continue to be placed on the market or put into
service until December 31, 2027 for higher risk devices or December 31, 2028
for medium and lower risk devices.
Nevertheless, EU MDR 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
(i.e., since May 26, 2021).
Other EU regulations that may apply under appropriate circumstances
include EU Regulation No. 1907/2006 of 18
December 2006
concerning the Registration, Evaluation, Authorisation and
Restriction of Chemicals
, which
requires importers to register substances or mixtures that they import
in the EU beyond certain quantities, and the
EU Regulation No. 1272/2008 of 16 December 2008
on classification, labelling and packaging of substances and
mixtures
(recently amended by Regulation No. 2024/2865 of October 23,
2024, whose provisions come into force
on different dates), which sets various obligations with respect to the labelling and
packaging of concerned
substances and mixtures.
Furthermore, compliance with legal requirements has required and may in the future
require us to delay product
release, sale or distribution, or institute voluntary recalls of, or other corrective
action with respect to products we
sell, each of which could result in regulatory and enforcement actions, financial
losses and potential reputational
harm.
Our customers are also subject to significant federal, state, local
and foreign governmental regulations,
which may affect our interactions with customers, including the design and functionality
of our products.
Antitrust and Consumer Protection
The federal government of the United States, most U.S. states and many
foreign countries have antitrust laws that
prohibit certain types of conduct deemed to be anti-competitive, as well as consumer
protection laws that seek to
protect consumers from improper business practices.
At the U.S. federal level, the Federal Trade Commission
oversees enforcement of these types of laws, and states have similar government
agencies.
Violations of antitrust
or consumer protection laws may result in various sanctions, including criminal
and civil penalties.
Private
plaintiffs may also bring civil lawsuits against us in the United States for alleged antitrust
law violations, including
claims for treble damages.
EU law also regulates competition and provides for detailed rules protecting
consumers.
Health Care Fraud
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 care 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.
Violations of the federal Anti-Kickback Statute or
the Stark Law may be enforced as violations of the federal False Claims
Act.
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, including treble damages and substantial civil penalties under
the federal False Claims Act, as well as
potential loss of licenses and the ability to participate in federal and state
health care programs, criminal penalties,
or imposition of a corporate integrity agreement or corporate compliance
monitoring which 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, manufacturers and distributors on
the one hand and physicians, dentists
and other health care professionals on the other.
As a result, we regularly review and revise our marketing practices
as necessary to facilitate compliance.
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.
While we believe that we are substantially compliant with applicable fraud and
abuse laws and regulations, and
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, or failure
to comply with applicable law, could have
a material adverse effect on our business.
Affordable Care Act (ACA) and Other Insurance Reform
The ACA increased federal oversight of private health insurance plans and
included a number of provisions
designed to reduce Medicare expenditures and the cost of health care generally, to reduce fraud and abuse, and to
provide access to increased health coverage.
The ACA also materially expanded the number of individuals
in the
United States with health insurance.
The ACA remains subject to ongoing legal and political challenges
that
contribute to create uncertainty, and any outcomes of those challenges could have a significant impact on the
U.S.
health care industry.
The federal Physician Payments Sunshine Act or Open Payments Program
(the “Sunshine Act”) imposes annual
reporting and disclosure requirements for drug and device manufacturers and
distributors with regard to payments
or other transfers of value made to certain covered recipients (including physicians,
dentists, teaching hospitals,
physician assistants, nurse practitioners, clinical nurse specialists, certified
registered nurse anesthetists, and
certified nurse midwives), and for such manufacturers and distributors
and for group purchasing organizations, with
regard to certain ownership interests held by covered recipients in
the reporting entity.
CMS publishes information
from these reports on a publicly available website, including amounts transferred
and physician, dentist, teaching
hospital, and non-physician practitioner identities.
The Sunshine Act pre-empts similar state reporting laws,
although we or our subsidiaries may be required to report under certain
state transparency laws that address
circumstances not covered by the Sunshine Act, and some of these state laws,
as well as the federal law, can be
unclear.
We
are also subject to foreign regulations requiring transparency of certain
interactions between suppliers
and their customers.
In the United States, federal and state government actions to seek to increase
health-related price transparency may
also affect our business.
For example, CMS requires hospitals to publish online a
list of their standard charges for
all items and services, including discounted cash prices and payer-specific and de-identified negotiated
charges, in a
publicly accessible online file, and payers to disclose in-network negotiated
rates, including with device suppliers
and manufacturers, and historical out-of-network allowed amounts for all
covered items and services, including
prescription drugs. Hospitals are also required to publish a consumer-friendly
list of standard charges for certain
“shoppable” services (i.e., services that can be scheduled by a patient in
advance) and associated ancillary services
or, alternatively, maintain an online price estimator tool.
These requirements went into effect in three stages from
2022 to 2024.
CMS may impose civil monetary penalties for noncompliance with
these price transparency
requirements.
In addition to a variety of transparency measures being enacted
at the state level, the federal No
Surprises Act (“NSA”) imposes additional price transparency requirements.
The NSA is intended to reduce the
number of “out-of-network” patients.
This will result in fewer out-of-network payments to physicians and
other
providers, which may cause financial stress to those providers who
are dependent on higher out-of-network fees.
The Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”),
enacted on April 16, 2015, established
the Quality Payment Program, which modifies certain Medicare Part B payments
to “eligible clinicians,” including
physicians, dentists and other practitioners.
Under MACRA, certain eligible clinicians are required to participate
in
Medicare through the Merit-Based Incentive Payment System (“MIPS”) or Advanced
Alternative Payment Models,
through which Medicare Part B is adjusted up or down based on reported
data related to quality, promoting
interoperability, cost and improvement activities.
MIPS eligible clinicians must report performance year data by
March 31 of the following calendar year.
Payment adjustments, based on submitted data, are applied to Medicare
Part B claims during the performance year following data submission.
MACRA provides substantial financial
incentives for physicians to participate in risk contracts, and to increase physician
information technology and
reporting obligations.
MACRA continues to evolve and its implications depend on future regulatory
activity and
physician activity in the marketplace.
New state-level payment and delivery system reform programs,
including
those modeled after such federal programs, are also increasingly being rolled
out through Medicaid administrators,
as well as through the private sector, which may further alter the marketplace and impact our business.
Recently, 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
(including relabelers and repackagers) 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, section 1927 of the Social Security Act sets forth Average Sales Price (ASP) reporting
requirements for manufacturers (including repackagers and relabelers) and
requires that manufacturers provide
CMS with pricing information for their Part B-covered drugs no later than
30 days after the close of the previous
quarter.
Also 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.
Also, at the federal level, the
Inflation Reduction Act of 2022, among other things, requires drug manufacturers
that raise certain of their drug
prices faster than the rate of inflation to pay rebates to Medicare, and over time will authorize
the federal
government to negotiate directly with drug manufacturers to lower the
prices of certain brand-name drugs covered
by Medicare.
These various evolving efforts create uncertainty and may adversely affect our business.
As a result of political, economic and regulatory influences, the health care distribution
industry in the United
States is under intense scrutiny and subject to fundamental changes.
We
cannot predict what further reform
proposals, if any, will be adopted, when they may be adopted, or what impact they may have on us.
EU Directive on the pricing and reimbursement of medicinal products
EU law provides for the regulation of the pricing of medicinal products which are
implemented by EU member
states (Directive No. 89/105/EC of 21 December 1988
relating to the transparency of measures regulating the
pricing of medicinal products for human use and their inclusion in the scope of national health insurance
systems
).
Member states may, subject notably to transparency conditions and to the statement of reasons based upon
objective and verifiable criteria, regulate the price charged (or its increases) for authorized
medicines and their level
of reimbursement, or they may freeze prices, place controls on the profitability
of persons responsible for placing
medicinal products on the market, and include or exclude the medicine on
the list of products covered by national
health insurance systems.
EU law does not expressly include provisions like those of the Sunshine Act in
the United States, but a growing
number of EU member states (such as France in 2011 and Italy in 2022) have enacted laws to increase
the
transparency of relationships in the health care sector.
The scope of these laws varies from one member state to
another and may, for example, include the relations between health care industry players and physicians or their
associations, students preparing for medical professions or their associations,
teachers, health establishments or
publishers of prescription and dispensing assistance software.
Regulated Software; Electronic Health Records; Privacy
The FDA has become increasingly active in addressing the regulation of
computer software and digital health
products intended for use in health care settings, including, for
example, most recently, with respect to artificial
intelligence and machine learning-enabled medical devices, and the
cybersecurity of medical devices.
Certain of
our businesses involve the development and sale of software and related
products, including 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 a medical device, which could subject us
or one or more of our businesses to
substantial additional requirements with respect to these products.
In addition, our businesses that involve physician and dental practice management
products, our specialty home
medical supplies business, and our self-insured health plans 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.
For
example, 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 federal Health Insurance
Portability and Accountability Act of 1996, as amended, and implementing
regulations (“HIPAA”) under which
parts of our business are covered entities or business associates, the Controlling
the Assault of Non-Solicited
Pornography and Marketing Act (“CAN-SPAM”), the Telephone
Consumer Protection Act of 1991 (“TCPA”),
Section 5 of the Federal Trade Commission Act (“FTC Act”), the California Privacy Act (“CCPA”), various other
state comprehensive and health data-specific privacy laws that have or will soon
come into effect, and several
privacy bills have been proposed both at the federal and state level that may
result in additional legal requirements
that impact our business.
Laws and regulations relating to privacy and data protection are
continually evolving and
subject to potentially differing interpretations, including those relating to artificial
intelligence, the proliferation of
which may result in additional regulation.
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.
In addition, cybersecurity laws such as the federal Cyber Incident
Reporting for Critical Infrastructure
Act of 2022, proposed Federal Acquisition Regulations, and amendments
to SEC reporting requirements may
require us to provide notifications about cybersecurity incidents in limited
timeframes and before investigations are
complete.
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.
Also, the European Parliament and the Council of the EU adopted the pan-European
General Data Protection
Regulation (“GDPR”), effective from May 25, 2018, which increased privacy rights
for individuals (“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 are either established in
the EU and process personal data of Data
Subjects (regardless the Data Subject location), or that are not established
in the EU but that offer goods or services
to Data Subjects in the EU or monitor their behavior in the EU. Noncompliance
can result in penalties of up to the
greater of EUR 20 million, or 4% of global company revenues (sanction
that may be public), and Data Subjects
may seek damages.
Member states may individually impose additional requirements
and penalties regarding
certain limited matters (for which the GDPR left some room of flexibility),
such as employee personal data.
With
respect to the personal data it protects, the GDPR requires, among other things,
controller accountability, consents
from Data Subjects or another acceptable legal basis to process the personal
data, notification within 72 hours of a
personal data breach where required, data integrity and security, and fairness and transparency regarding the
storage, use or other processing of the personal data.
The GDPR also provides rights to Data Subjects relating
notably to information, access, rectification, erasure of the personal data and
the right to object to the processing.
Despite the UK’s exit from the EU, the UK still also has laws equivalent to the GDPR/EU data protection laws (UK
GDPR).
Uncertainty about compliance with the GDPR and EU data protection
laws remains, with the possibility
that data protection authorities located in different EU Member States may interpret GDPR
differently, or
requirements of national laws may vary between the EU Member States, or guidance
on GDPR and compliance
practices may be often updated or otherwise revised.
Any of these events will increase the complexity and costs of
processing personal data in the UK or European Economic Area or concerning
individuals located in the UK or
European Economic Area.
On August 20, 2021, China promulgated the PRC Personal Information Protection
Law (“PIPL”), which took effect
on November 1, 2021.
The PIPL imposes specific rules for processing personal information
and it also specifies
that the law shall also apply to personal information activities carried out
outside China but for the purpose of
providing products or services to PRC citizens.
Any non-compliance with these laws and regulations may subject
us to fines, orders to rectify or terminate any actions that are deemed
illegal by regulatory authorities, other
penalties, as well as reputational damage or legal proceedings against us, which
may affect our business, financial
condition or results of operations.
The PIPL carries maximum penalties of CNY50 million or 5% of
the annual
revenue of entities that process personal data.
Data protection laws in other countries outside of the United States
are also quickly evolving, with many countries having updated, or are in the
process of updating, their laws to bring
them more in line with the model created by GDPR.
In the United States, the CCPA, which increases the privacy protections afforded California residents, became
effective January 1, 2020.
The CCPA establishes a privacy framework for covered businesses such as ours by,
among other things, creating an expanded definition of personal information,
establishing new data privacy rights
for California residents and creating a new and potentially severe statutory damages
framework for violations of the
CCPA, as well as potentially severe statutory damages and private a right of action against businesses that suffer a
data security breach due to their violation of a duty to implement reasonable
security procedures and practices. This
private right of action may increase the likelihood of, and risks associated
with, data breach litigation.
In addition,
in November 2020, California voters adopted the CPRA, which became effective
January 1, 2023 and enhances and
strengthens regulatory requirements and individual protections that currently
exist under the CCPA. Other states
have enacted or are considering enacting similar privacy laws, which may subject
us to additional requirements and
restrictions that could have an impact on our business.
Comprehensive privacy laws in Colorado, Connecticut,
Virginia, Utah, Oregon, Delaware, Montana, Texas,
Iowa, Maryland, New Jersey, New Hampshire, and Nebraska
are now in effect, and similarly enacted broad state laws relating to privacy, data protection, and information
security will come into effect later in 2025 and 2026, further complicating our privacy
compliance obligations
through the introduction of increasingly disparate requirements across the
various U.S. jurisdictions in which we
operate. Additionally, Washington
state and Nevada have enacted specific health data privacy laws, and
other states
are considering similar legislation.
Additional states are expected to pass their own versions of data privacy
laws in
the future.
Congress is considering legislation that may preempt some
or all of such U.S. state privacy laws, but
which may also provide a more expansive private right of action for privacy
claims than exists under current state
laws.
The evolving complexity of privacy and data security legislation in the United
States may complicate our
compliance efforts and further increase our risk of regulatory enforcement, penalties,
and litigation.
While we
believe we have substantially compliant programs and controls in place to comply
with the US state and federal
privacy laws and applicable international privacy laws such as GDPR and PIPL,
our compliance with data privacy
and cybersecurity laws 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.
Further, countries are applying their data and consumer protection laws to AI, particularly generative
AI, and are
considering and implementing specific legal frameworks with respect
to AI, for example the EU AI Act 2024
(which as with the GDPR, will have extra-territorial effect).
Any failure or perceived failure by us to comply with
such requirements could have an adverse impact on our business.
Anticipated further evolution of regulations and
legislation on this topic may substantially increase the penalties to which we
could be subject in the event of any
non-compliance.
Compliance with these laws is challenging, constantly evolving,
and time consuming and federal
regulators, state attorneys general and plaintiff’s attorneys have been and will likely
continue to be active in this
space.
We
may incur substantial expense in complying with legal obligations to
be imposed by new regulations
and we may be required to make significant changes to our solutions and expanding
business operations, all of
which may materially adversely affect our operations.
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, and our products may also 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 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.
Various
federal initiatives involve the adoption and use by health care
providers of certain EHR systems and
processes.
The initiatives include, among others, programs that incentivize
physicians and dentists, through MIPS,
to use EHR technology in accordance with certain evolving requirements,
including regarding quality, promoting
interoperability, cost and improvement activities.
Qualification for the MIPS incentive payments requires the use
of EHRs that are certified as having certain capabilities designated
in evolving standards adopted by CMS and the
Office of the National Coordinator for Health Information Technology of HHS (“ONC”).
Certain of our businesses
involve the manufacture and sale of such certified EHR systems and other products
linked to government supported
incentive programs.
In order to maintain certification of our EHR products, we
must satisfy these 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.
Additionally, effective September 1, 2023, the Office of
the Inspector General (“OIG”) for HHS issued a final rule implementing
civil money penalties for information
blocking as established by the Cures Act.
OIG incorporated regulations published by ONC as the basis for
enforcing information blocking penalties.
Each information blocking violation carries up to a $1 million penalty.
Moreover, in order to satisfy our customers, and comply with evolving legal requirements, our products may
need
to incorporate increasingly complex functionality, such as with respect to reporting and information blocking.
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.
Other health information standards, such as regulations under HIPAA, establish standards regarding electronic
health data transmissions and transaction code set rules for specific electronic
transactions, such as transactions
involving claims submissions to third party payers.
Failure to abide by these and other electronic health data
transmission standards could expose us to breach of contract claims,
substantial fines, penalties, and other liabilities
and expenses, costs for remediation and harm to our reputation.
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.
There may be additional legislative or regulatory initiatives in the future impacting
health care.
E-Commerce
Electronic commerce solutions have become an integral part of traditional health
care supply and distribution
relationships.
Our distribution business is characterized by rapid technological
developments and intense
competition.
The continuing advancement of online commerce requires
us to cost-effectively adapt to changing
technologies, to enhance existing services and to develop and introduce a
variety of new services to address the
changing demands of consumers and our customers on a timely basis, particularly
in response to competitive
offerings.
Through our proprietary, technologically-based suite of products, we offer customers a variety of competitive
alternatives.
We
believe that our tradition of reliable service, our name recognition
and large customer base built
on solid customer relationships, position us well to participate in
this significant aspect of the distribution business.
We
continually explore ways and means to improve and expand our
online presence and capabilities, including in
our online commerce offerings and our use of various social media outlets.
International Transactions
United States and foreign import and export laws and regulations require us to
abide by certain standards relating to
the importation and exportation of products.
We
also are subject to certain 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, as well as other types of foreign requirements similar to those
imposed in the United States.
While we believe that we are substantially compliant with the foregoing laws
and regulations promulgated
thereunder and possess all material permits and licenses required for the conduct
of our business, there can be no
assurance that laws and regulations that impact our business or laws and
regulations as they apply to our customers’
practices will not have a material adverse effect on our business.
See “
” for a discussion of additional burdens, risks and regulatory developments
that may
affect our results of operations and financial condition.
Proprietary Rights
We hold trademarks relating to the “Henry Schein
®
” name and logo, as well as certain other trademarks.
Additionally, certain of our manufacturing businesses hold patents on certain of our products.
We intend to protect
our trademarks and patents to the fullest extent practicable.
Employees and Human Capital
At Henry Schein, we understand that our long-term growth is enhanced
by creating shared value for our business
and the communities we serve, while engaging our key stakeholders that
make up our Mosaic of Success - Team
Schein Members (TSMs), customers, suppliers, stockholders, and society.
Rooted in our long, rich history of
sustainability and corporate citizenship, we build relationships to foster
trust, strengthen resilience and catalyze
innovative solutions to make the world healthier, together.
We
do this by building environmental, social, and
economic value for the Company’s sustained growth and continued success as a trusted partner and leader
in health
care.
Overseen by the Nominating and Governance Committee of our Board of
Directors (“Board”) with the
Compensation Committee also playing a role in environmental, social, and governance
matters related to human
capital engagement and executive compensation, some key 2024 highlights
related to human capital matters
include:
continuing to evaluate our pay equity for the majority of the U.S. workforce, which
reviews compensation
for equity and fairness;
expanding our Inclusive Culture learning journey by educating TSMs on
how to create and sustain a
meaningful, inclusive and learning oriented culture; and
continuing to drive a culture of wellness and engagement for our TSMs by
fostering an environment where
they can feel a sense of belonging and purpose.
At Henry Schein, our employees continue to be one of our greatest assets.
We employ approximately 25,000
people, with approximately 49% of our workforce based in the United States
and approximately 51% based outside
of the United States.
We have approximately 13% of our employees that are subject to collective bargaining
agreements.
We believe that our relations with our employees are excellent.
Our TSMs are the cornerstone of the Company.
We provide a connected and caring community that invests in the
career journey of our TSMs and encourages their contribution to
our mission of making the world healthier.
Our
TSM experience strategy is centered around our Team Schein Values
under the pillars of Community, Caring, and
Career.
We know our business success is built on the engagement and commitment of our team, which is dedicated
to meeting the needs of their fellow TSMs, our customers, supplier partners,
stockholders and society.
We recognize the changes in how and where we work, and that a continued connection to our long-standing values
is important for our team members as we evolve our culture.
Throughout 2024, we rolled out a continuous listening
program that used various vehicles, including The Pulse Global Culture
Survey and TSM roundtables, to garner
feedback from our TSMs on their employee experience.
We believe that a great employee experience also drives a
great customer experience.
We want all of our TSMs to pursue their ambitions, deliver within our values driven
culture, and enjoy a rewarding career enabled by great people leaders.
The Pulse Global Culture Survey was
redesigned in 2023 to measure scores aligned to our Team Schein Values.
Our recent annual Pulse survey indicates
that although there are heightened stress levels caused by the 2023 cyber incident
and restructuring initiatives,
TSMs generally remain satisfied with their work experience, feel connected
to their colleagues and intend to stay
with Henry Schein.
This year, data suggests continued opportunities to improve how we cascade communications
to all levels of the organization, continue to reduce burnout and stress and provide
more transparency around
opportunities for career development.
Throughout the year, we also administer quarterly employee listening
surveys as a way to continuously understand and respond to our TSMs’ feelings.
This feedback is shared with our
Executive Management Committee and Board, both of whom are committed
to addressing identified opportunities.
As part of this commitment, some highlights from 2024 included:
Community:
Provide opportunities for TSMs to have fun while contributing to an inclusive team
that
respects and supports one another.
Continued focus on creating an inclusive environment where TSMs
feel a sense of belonging; notably,
in 2024 for the third time, our top strength identified in The Pulse Global
Culture Survey was our
Company’s inclusive culture.
To deepen our commitment to Inclusion across the Company, Global
Directors and Vice Presidents and U.S. Managers are responsible for attending educational training
focused on developing our culture.
We continue to expand our learning journey, educating TSMs on
key topics that help us develop a culture of inclusion and understanding.
We continue to publish our
United States Equal Employment Opportunity Commission (“EEOC”) EEO-1
data for the U.S.
Completed our first year of Henry Schein Games, a global virtual platform
that drives community and
engagement and offers field-day type in-person events at various global locations that brought
TSMs
together through friendly competition by earning points for their team
by engaging in cultural-related
activities and posting photos.
Expanded the number of Connection Days throughout the globe at Henry Schein
facilities, which were
designed to boost team morale by bringing TSMs together to participate
in team building activities at
least once per quarter.
Continued focus on our Employee Resource Groups (“ERGs”), a vehicle
for all TSMs to share,
connect, learn and develop both personally and professionally.
In 2024, we launched our seventh ERG,
ADAPT (Abled and Disabled Allies Partnering Together).
Each of our ERGs has a sponsor from our
Executive Management Committee and our Board.
Our CEO engages directly in many of our ERG
programs.
Certified over 200 TSMs through our Culture Ambassador Program, which
educates TSMs on our
culture and certifies TSMs as mentors
to new hires during their first 90 days to ensure new TSMs
understand how we live our values day to day, and how they can engage in the Team Schein Culture.
Caring:
Build a world we want to live in by supporting each other and
the communities in which we live
and work.
Continued to offer a variety of opportunities to volunteer to drive purpose and engage
in local
communities in which TSMs live and work, such as through Carry the Load,
the We Care Global
Challenge, Back to School and Holiday Cheer.
Continued to strengthen our strategic partnerships with industry associations,
customers and suppliers
that support access to quality health care through various key programs and
initiatives (e.g., Gives Kids
A Smile, Cares Package Program, Global Student Outreach Program,
and Prepare to Care).
Expanded our global and highly rated Steps for Suicide Prevention
campaign, which brings TSMs
together to walk for a cause and provide education, partnering with the
American Foundation for
Suicide Prevention, Suicide Awareness and Remembrance (for Veterans)
and other local organizations.
We also understand the importance of driving a culture of wellness for our own team members through
our Mental Wellness Committee, which is supported by our CEO, Executive Management Committee
and Board.
In 2024, we rolled out a ‘Banish Burnout’ campaign, partnering with
an external wellness
professional to create individualized tips and programming based on the
burnout tendencies each TSM
faces.
Career:
Provide opportunities for TSMs to develop personally and professionally with an emphasis on
embodying our values to achieve our collective goals with excellence
and integrity.
Continued investment in our employees by providing both formal and
informal learning opportunities
focused on growing and enhancing knowledge, skills and abilities
through a broad suite of professional
development training programs for current and future roles.
In 2024, we saw an increase in
participation in our workshops, with TSMs reporting a high utilization
of skills learned.
Continued expansion of our Leadership Development programs, with formal
mentorship and coaching
programs.
Continued roll-out of talent planning efforts designed to ensure a strong leadership
pipeline across the
organization by strategically identifying and developing talent through targeted development
opportunities and intentional succession plans.
Information derived from talent planning efforts
informs curriculum design and content to help focus on the right
capabilities and help ensure alignment
of career development efforts with the future needs of the organization.
Our Board is provided with
periodic updates regarding our talent and succession planning efforts and participates
in professional
development activities with our TSMs.
Announced the creation of the Core Leadership Capabilities (CLCs),
a skills-based model for all TSMs
that highlights the leadership capabilities that all TSMs are expected
to demonstrate for career success.
The CLCs are a common language and foundational step to developing and
refining the tools,
processes and programs which support the evolution of a TSM’s career including enhancing skills and
career development, leading to enhanced
career pathing and internal mobility.
Enhanced company-wide recognitions, including our Teddy Philson Team Schein Award,
which was
redesigned in 2023 to provide more visibility and meaningful
recognition to TSMs who exemplify our
Team Schein Values,
as well as other programs including service awards which highlight TSMs
who
exemplify our Team Schein Values
.
In 2024, we recognized 15 award winners around the world at
our
Global Directors and Vice Presidents Management Meeting.
Available Information
We make available free of charge through our website, www.henryschein.com,
our annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, statements
of beneficial ownership of securities on
Forms 3, 4 and 5 and amendments to these reports and statements filed or furnished
pursuant to Section 13(a) and
Section 16 of the Securities Exchange Act of 1934 as soon as reasonably
practicable after such materials are
electronically filed with, or furnished to, the United States Securities and
Exchange Commission, or SEC.
Our
principal executive offices are located at 135 Duryea Road, Melville, New York 11747, and our telephone number
is (631) 843-5500.
Unless the context specifically requires otherwise, the terms
the “Company,” “Henry Schein,”
“we,” “us” and “our” mean Henry Schein, Inc., a Delaware corporation,
and its consolidated subsidiaries.
Information about our Executive Officers
The following table sets forth certain information regarding our executive
officers as of February 25, 2025:
Name
Age
Position
Stanley M. Bergman
Chairman, Chief Executive Officer, Director
Andrea Albertini
Chief Executive Officer, Global Distribution and Technology
James P.
Breslawski
President
Brad Connett
Chief Executive Officer, North America Distribution Group
Michael S. Ettinger
Executive Vice President and Chief Operating Officer
Mark E. Mlotek
Executive Vice President, Chief Strategic Officer, Director
Tom Popeck
Chief Executive Officer, Henry Schein Products
Walter Siegel
Senior Vice President and Chief Legal Officer
Ronald N. South
Senior Vice President, Chief Financial Officer
Stanley M. Bergman
has been our Chairman and Chief Executive Officer since 1989 and a director
since 1982.
Mr. Bergman held the position of President from 1989 to 2005.
Mr. Bergman held the position of Executive Vice
President from 1985 to 1989 and Vice President of Finance and Administration from 1980 to 1985.
Mr. Bergman
is a South African Chartered Accountant and a Certified Public Accountant.
Andrea Albertini
has been Chief Executive Officer, Global Distribution Group and Technology Group since
January 2025.
In this role, Mr. Albertini is responsible for our Global Distribution and Value-Added Services
segment and our Global Technology segment.
Mr. Albertini joined us in 2013 and has held several positions within
the organization including Chief Executive Officer, International Distribution Group, President, International
Distribution Group, President of our EMEA Dental Distribution Group,
and Vice-President of International Dental
Equipment.
Prior to joining Henry Schein, Mr. Albertini held leadership positions at Cefla Dental Group and
Castellini.
James P. Breslawski
has been our President since 2005 and was our Vice Chairman from 2018 to May 2024 and a
director from 1992 to May 2024.
Mr. Breslawski was the Chief Executive Officer of our Henry Schein Global
Dental Group from 2005 to 2018.
Mr. Breslawski held the position of Executive Vice President and President of
U.S. Dental from 1990 to 2005, with primary responsibility for the North American
Dental Group.
Between 1980
and 1990, Mr. Breslawski held various positions with us, including Chief Financial Officer, Vice President of
Finance and Administration and Corporate Controller.
Brad Connett
has been our Chief Executive Officer, North American Distribution Group since 2021.
Previously
Mr. Connett was the President of our U.S. Medical Group from 2018 to 2021.
Mr. Connett joined us in 1997 and
has held a number of roles of increasing responsibility at the Company.
Throughout his career, he has received
numerous industry honors, including the John F. Sasen Leadership Award from the Health Industry Distributors
Association (HIDA), in recognition of his service to the industry, and induction into the Medical Distribution Hall
of Fame by Repertoire Magazine.
Michael S. Ettinger
has been our Executive Vice President and Chief Operating Officer since 2022.
Prior to his
current position, Mr. Ettinger served as Senior Vice President, Corporate & Legal Affairs, Chief of Staff and
Secretary from 2015 to 2022, Senior Vice President, Corporate & Legal Affairs and Secretary from 2013 to 2015,
Corporate Senior Vice President, General Counsel & Secretary from 2006 to 2013, Vice President, General
Counsel and Secretary from 2000 to 2006, Vice President and Associate General Counsel from 1998 to 2000
and
Associate General Counsel from 1994 to 1998.
Before joining us, Mr. Ettinger served as a senior associate with
Bower & Gardner and as a member of the Tax Department at Arthur Andersen.
Mark E. Mlotek
has been our Executive Vice President and Chief Strategic Officer since 2012.
Mr. Mlotek was
Senior Vice President and subsequently Executive Vice President of the Corporate Business Development Group
between 2000 and 2012.
Prior to that, Mr. Mlotek was Vice President, General Counsel and Secretary from 1994 to
1999 and became a director in 1995.
Prior to joining us, Mr. Mlotek was a partner in the law firm of Proskauer
Rose LLP,
counsel to us, specializing in mergers and acquisitions, corporate reorganizations and tax law from
1989
to 1994.
Tom
Popeck
has been our Chief Executive Officer, Henry Schein Products Group since January 2025.
In this role,
Mr. Popeck is responsible for our Global Specialty Products segment.
Since joining us in 2019, Mr. Popeck has
held several key positions including Chief Executive Officer, Healthcare Specialties Group, and President of our
Healthcare Specialties Group.
Prior to joining Henry Schein, Mr. Popeck held various sales leadership and general
management executive positions at Stryker.
Walter Siegel
has been our Senior Vice President and Chief Legal Officer since 2021.
Previously, Mr.
Siegel was
our Senior Vice President and General Counsel from 2013 until 2021.
Prior to joining us, Mr. Siegel was employed
with Standard Microsystems Corporation, a publicly traded global
semiconductor company from 2005 to 2012,
holding positions of increasing responsibility, most recently as Senior Vice President, General Counsel and
Secretary.
Ronald N. South
has been our Senior Vice President
and Chief Financial Officer (and principal financial officer
and principal accounting officer) since 2022.
Prior to holding his current position, Mr. South was our Vice
President Corporate Finance since 2008, and Chief Accounting Officer from 2013 until 2022.
Prior to joining us in
2008 as our Vice President, Corporate Finance, Mr. South held leadership roles at Bristol-Myers Squibb, where he
served as Vice President, Finance, for the Cardiovascular and Metabolic business lines, as well as Vice President,
Controller, for its U.S. Pharmaceutical Division, and Vice President, Corporate General Auditor.
Prior to Bristol-
Myers Squibb, he served as North American Director of Corporate Audit
at PepsiCo, and held several roles of
increasing responsibility with PricewaterhouseCoopers LLP, where he advised clients located in the United States,
Europe, and Latin America.
Mr. South is a Certified Public Accountant.
Other Executive Management
The following table sets forth certain information regarding other Executive
Management as of February 25, 2025:
Name
Age
Position
R. Steven Boggan
Co-Chief Executive Officer, Global Oral Reconstruction Group
Trinh Clark
Senior Vice President and Chief Global Customer Experience Officer
James Mullins
Senior Vice President, Global Supply Chain
Kelly Murphy
Senior Vice President and General Counsel
Christopher Pendergast
Senior Vice President and Chief Technology Officer
Christine Sheehy
Senior Vice President, Chief Human Resources
Bianka Wilson
Co-Chief Executive Officer, Global Oral Reconstruction Group
R. Steven Boggan
has been our Co-Chief Executive Officer, Global Oral Reconstruction Group since April 2024.
As Co-CEO of our Global Oral Reconstruction Group, which is part
of our Specialty Products and Other segment,
Mr. Boggan leads commercial operations in the Americas, the Middle East, and Africa, as well as global
marketing
and R&D.
Mr. Boggan joined Henry Schein, as the President and CEO of BioHorizons, which we acquired
in
Mr. Boggan joined BioHorizons in 1995 and was promoted to President and CEO in 2000.
Prior to
BioHorizons, Mr. Boggan was employed at Dow Corning Wright and Wright Medical Technology from 1989 until
Trinh Clark
has been our Senior Vice President and Chief Global Customer Experience Officer since 2022.
Ms.
Clark joined us in 2007 and has served as Vice President, Technology Enablement, North American Distribution
Group.
Prior to joining Henry Schein, Ms. Clark held various positions of
increasing responsibility at eSurg.
James Mullins
has been our Senior Vice President of Global Supply Chain since 2018.
Mr. Mullins joined us in
1988 and has held a number of key positions with increasing responsibility, including Global Chief Customer
Service Officer.
Kelly Murphy
has been our Senior Vice President and General Counsel since 2021.
Since joining us in 2011, Ms.
Murphy has held several key positions of increasing responsibility within
the legal function, most recently serving
as Deputy General Counsel.
Christopher Pendergast
has been our Senior Vice President and Chief Technology Officer since 2018.
Prior to
joining us, Mr. Pendergast was employed by VSP Global from 2008 to 2018, most recently as the Chief
Technology Officer and Chief Information Officer.
Prior to VSP Global, Mr. Pendergast served in roles of
increasing responsibility at Natural Organics, Inc., from 2006 to 2008, IdeaSphere Inc./Twinlab Corporation from
2000 to 2006, IBM Corporation from 1987 to 1994 and 1998 to 2000
and Rohm and Haas from 1994 to 1998.
Christine Sheehy
has been our Senior Vice President, Chief Human Resources Officer since November 2024.
Ms.
Sheehy joined us in 2019 and has held several key positions with increasing
responsibility, including Vice
President
of the Human Resources Business Partner function for our North America
Distribution Group, Healthcare
Specialties Group, several Global Oral Reconstruction businesses, and our
Corporate Functions.
Prior to joining
Henry Schein, Ms. Sheehy held various leadership positions at Standard Chartered
Bank and Banco Real.
Bianka Wilson
has been our Co-Chief Executive Officer, Global Oral Reconstruction Group since April 2024.
As
Co-CEO of our Global Oral Reconstruction Group, which is part of
our Specialty Products and Other segment, Ms.
Wilson leads the group's business, including strategic partnerships, in Europe and APAC, as well as Global Oral
Reconstruction Group strategy, finance, and human resources.
Ms. Wilson joined Henry Schein in 2018 as Chief
Financial Officer of the Global Oral Reconstruction Group.
Prior to joining Henry Schein, Ms. Wilson was CFO of
a public Swiss medical communication technology company and
before that an Advisory Partner in KPMG's
consulting practice, following her initial career in public accounting.
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