Item 8. Financial Statements and Supplementary Data

Note 12 – Concentrations of Risk

Note 16 – Plans of Restructuring and Related Costs

Note 14 – Debt

Note 15 – Income Taxes

Note 17 – Commitments and Contingencies

Note 18 – Stock-Based Compensation

Note 19 – Employee Benefit Plans

Note 20 – Redeemable Noncontrolling Interests

Note 21 – Comprehensive Income

Note 22 – Earnings Per Share

Note 23 – Supplemental Cash Flow Information

Note 24 – Related Party Transactions

Note 25 – KKR Investment and Accelerated Share Repurchase Program

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

Henry Schein, Inc.

Melville, New York

Opinion on the Consolidated Financial Statements

have

audited

the

accompanying

consolidated

balance

sheets

Henry

Schein,

Inc.

(the

“Company”)

December

27,

2025

and

December

28,

2024,

the

consolidated

statements

income

and

comprehensive

income, changes in

stockholders’ equity,

and cash

flows for

each of

the three

years in

the period

ended December

27, 2025, and

the related notes

(collectively referred to

as the

“consolidated financial statements”).

In our opinion,

the consolidated financial statements present fairly, in all material respects, the financial position of the Company at

December 27, 2025 and December 28, 2024, and the results of its operations and its cash flows for each of the three

years in

the period

ended December

27, 2025,

in conformity

with accounting

principles generally

accepted in

the

United States of America.

also

have

audited,

accordance

with

the

standards

the

Public

Company

Accounting

Oversight

Board

(United States) (PCAOB),

the Company's internal

control over financial reporting

as of December

27, 2025, based

on criteria

established in

Internal Control

– Integrated

Framework (2013)

issued by

the Committee

of Sponsoring

Organizations

the

Treadway

Commission

(COSO)

and

our

report

dated

February

24,

2026

expressed

unqualified opinion thereon.

Basis for Opinion

These consolidated financial statements are

the responsibility of the

Company’s management. Our

responsibility is

express

opinion

the

Company’s

consolidated

financial

statements

based

our

audits.

are

public

accounting

firm

registered with

the

Public

Company Accounting

Oversight Board

(United

States)

(PCAOB)

and

are required to be independent with

respect to the Company in accordance

with the U.S. federal securities laws and

the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and

perform

the

audit

obtain

reasonable

assurance

about

whether

the

consolidated

financial

statements

are

free

material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial

statements, whether

due to

error or

fraud, and

performing procedures

that respond

to those

risks. Such

procedures

included examining,

on a

test basis,

evidence regarding

the amounts

and disclosures

in the

consolidated financial

statements.

Our audits

also included

evaluating the

accounting principles

used

and significant

estimates made

management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that

our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical

audit matter

communicated below is

a matter

arising from

the current period

audit of

the consolidated

financial statements

that was

communicated or

required to

be communicated to

the Audit

Committee and that:

(1)

relates

accounts

disclosures

that

are

material

the

consolidated

financial

statements

and

(2)

involved

our

especially challenging, subjective,

or complex

judgments. The

communication of the

critical audit

matter does

not

alter

any

way

our

opinion

the

consolidated

financial

statements,

taken

whole,

and

are

not,

communicating the

critical audit

matter below,

providing a

separate opinion

on the

critical audit

matter or

on the

accounts or disclosures to which it relates.

Business Acquisition - Valuation of Acquired Intangible Assets

As described in Notes 1 and 5 of the consolidated financial statements,

the Company acquired entities within the

Global Distribution and Value-Added Services, Global Specialty Products and Global Technology segments during

the year ended December 27, 2025 for total consideration of $392

million.

The purchase price was allocated to the

assets acquired and liabilities assumed based on their respective

fair values on the date of acquisition.

The

Company estimated the fair value of identifiable intangible assets using

the relief-from-royalty method and the

multi-period excess earnings method which required the Company

to make significant estimates and assumptions,

including discount rates and projected revenue growth rates.

We identified the revenue growth rates for certain periods and the discount rates used in estimating the fair value of

certain trade name and customer relationships as a critical audit

matter.

The principal considerations for our

determination were the subjective judgement required by management

in formulating the revenue growth rates and

assessing the appropriateness of the discount rates used in developing

the fair value of the applicable acquired

identifiable intangible assets. Auditing these considerations involved

especially subjective and challenging auditor

judgement due to the nature and extent of audit effort required to address these

matters, including the extent of

specialized skill or knowledge needed.

The primary procedures we performed to address

this critical audit matter included:

●

Evaluating the reasonableness of

the revenue growth rates

used in estimating the

fair value of

certain trade

name

and

customer

relationships

by:

(i)

reviewing

the

historical

performance

the

acquired

entity

utilizing its audited

financial statements, and (ii)

assessing the revenue projections against

industry metrics

for certain periods.

●

Utilizing

specialists with

skill

and

knowledge in

valuation to

evaluate the

reasonableness of

the

discount

rates

used

estimating

the

fair

value

certain

trade

name

and

customer

relationships

assessing

the

source information

underlying the

determination of

the discount

rates, developing

a range

of independent

estimates for the discount rates, and comparing those to the discount

rates selected by the Company.

/s/

BDO USA, P.C.

We have served as the Company's auditor since 1984.

New York, New York

February 24, 2026

Note 1 – Basis of Presentation and Significant Accounting Policies

See accompanying notes.

HENRY SCHEIN, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

December 27,

December 28,

2025

2024

ASSETS

Current assets:

Cash and cash equivalents

Accounts receivable, net of allowance for credit losses of $

and $

(1)

1,651

1,482

Inventories, net

2,002

1,810

Prepaid expenses and other

Total current assets

4,464

3,983

Property and equipment, net

Operating lease right-of-use assets

Goodwill

4,213

3,887

Other intangibles, net

1,018

1,023

Investments and other

Total assets

11,215

10,218

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND

STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

1,154

Bank credit lines

Current maturities of long-term debt

Operating lease liabilities

Accrued expenses:

Payroll and related

Taxes

Other

Total current liabilities

3,228

2,803

Long-term debt (1)

2,310

1,830

Deferred income taxes

Operating lease liabilities

Other liabilities

Total liabilities

6,421

5,381

Redeemable noncontrolling interests

Commitments and contingencies

(nil)

Stockholders' equity:

Preferred stock, $

0.01

par value,

1,000,000

shares authorized,

none

outstanding

Common stock, $

0.01

par value,

480,000,000

shares authorized,

115,771,149

issued and outstanding on December 27, 2025 and

124,155,884

issued and outstanding on December 28, 2024

Additional paid-in capital

Retained earnings

3,293

3,771

Accumulated other comprehensive loss

(226)

(379)

Total Henry Schein, Inc. stockholders' equity

3,245

3,393

Noncontrolling interests

Total stockholders' equity

3,899

4,031

Total liabilities, redeemable noncontrolling

interests and stockholders' equity

11,215

10,218

(1)

Amounts presented include balances held by our consolidated variable interest entity (“VIE”).

At December 27, 2025 and

December 28, 2024, includes trade accounts receivable of $

million and $

million, respectively, and long-term debt of $

million and $

million, respectively.

See

for further

information.

See accompanying notes.

HENRY SCHEIN, INC.

CONSOLIDATED STATEMENTS

OF INCOME

(in millions, except share and per share data)

Years

Ended

December 27,

December 28,

December 30,

2025

2024

2023

Net sales

13,184

12,673

12,339

Cost of sales

9,079

8,657

8,479

Gross profit

4,105

4,016

3,860

Operating expenses:

Selling, general and administrative

3,084

3,034

2,956

Depreciation and amortization

Restructuring and related costs

Operating income

Other income (expense):

Interest income

Interest expense

(150)

(131)

(87)

Other, net

(3)

(1)

(3)

Income before taxes, equity in earnings of affiliates and

noncontrolling interests

Income taxes

(126)

(128)

(120)

Equity in earnings of affiliates, net of tax

Net income

Less: Net income attributable to noncontrolling interests

(21)

(8)

(20)

Net income attributable to Henry Schein, Inc.

Earnings per share attributable to Henry Schein, Inc.:

Basic

3.29

3.07

3.18

Diluted

3.27

3.05

3.16

Weighted-average common

shares outstanding:

Basic

120,813,977

126,788,997

130,618,990

Diluted

121,717,876

127,779,228

131,748,171

See accompanying notes.

HENRY SCHEIN, INC.

CONSOLIDATED STATEMENTS

OF COMPREHENSIVE INCOME

(in millions)

Years

Ended

December 27,

December 28,

December 30,

2025

2024

2023

Net income

Other comprehensive income, net of tax:

Foreign currency translation gain (loss)

(207)

Unrealized gain (loss) from hedging activities

(24)

(18)

Pension adjustment gain (loss)

(3)

Other comprehensive income (loss), net of tax

(197)

Comprehensive income

Comprehensive income attributable to noncontrolling interests:

Net income

(21)

(8)

(20)

Foreign currency translation loss (gain)

(32)

(5)

Comprehensive loss (income) attributable to noncontrolling interests

(53)

(25)

Comprehensive income attributable to Henry Schein, Inc.

See accompanying notes.

HENRY SCHEIN, INC.

CONSOLIDATED STATEMENTS

OF CHANGES IN STOCKHOLDERS' EQUITY

(in millions, except share data)

Accumulated

Common Stock

Additional

Other

Total

$.01 Par Value

Paid-in

Retained

Comprehensive

Noncontrolling

Stockholders'

Amount

Capital

Earnings

Income (Loss)

Interests

Equity

Balance, December 31, 2022

131,792,817

3,678

(233)

4,095

Net income (excluding $

attributable to Redeemable

noncontrolling interests)

Foreign currency translation gain (excluding gain of $

attributable to Redeemable noncontrolling interests)

Unrealized loss from hedging activities,

including tax benefit of $

(18)

Pension adjustment loss, including tax benefit of $

(3)

Distributions to noncontrolling shareholders

(27)

Change in fair value of redeemable securities

Noncontrolling interests and adjustments related to

business acquisitions

(2)

Repurchase and retirement of common stock

(3,214,136)

(33)

(219)

(252)

Stock issued upon exercise of stock options

21,068

Stock-based compensation expense

1,065,319

Shares withheld for payroll taxes

(416,605)

(34)

Settlement of stock-based compensation awards

(698)

Transfer of charges in excess of

capital

(15)

Balance, December 30, 2023

129,247,765

3,860

(206)

4,289

Net income (excluding loss of $

attributable to Redeemable

noncontrolling interests)

Foreign currency translation loss (excluding loss of $

attributable to Redeemable noncontrolling interests)

(183)

Unrealized gain from hedging activities,

including tax of $

Pension adjustment loss, including tax benefit of $

(3)

Distributions to noncontrolling shareholders

(6)

Purchase of noncontrolling interests

(7)

(1)

(8)

Change in fair value of redeemable securities

(119)

Noncontrolling interests and adjustments related to

business acquisitions

(1)

Repurchase and retirement of common stock

(5,419,649)

(52)

(336)

(388)

Stock issued upon exercise of stock options

98,755

Stock-based compensation expense

340,722

Shares withheld for payroll taxes

(111,815)

(9)

Settlement of stock-based compensation awards

Transfer of charges in excess of

capital

(143)

Balance, December 28, 2024

124,155,884

3,771

(379)

4,031

Net income (excluding loss of $

attributable to Redeemable

noncontrolling interests)

Foreign currency translation gain (excluding gain of $

attributable to Redeemable noncontrolling interests)

Unrealized loss from hedging activities,

including tax benefit of $

(24)

Pension adjustment gain, net of tax of $

Net distributions to noncontrolling shareholders

(11)

Purchase of noncontrolling interests

(1)

(2)

Change in fair value of redeemable securities

(72)

Noncontrolling interests and adjustments related to

business acquisitions and contingent consideration

(46)

Issuance of common stock

3,285,151

Repurchase and retirement of common stock

(12,062,174)

(94)

(762)

(856)

Stock issued upon exercise of stock options

24,172

Stock-based compensation expense

578,536

Shares withheld for payroll taxes

(203,951)

(15)

Settlement of stock-based compensation awards

(6,469)

Transfer of charges in excess of

capital

(114)

Balance, December 27, 2025

115,771,149

3,293

(226)

3,899

See accompanying notes.

HENRY SCHEIN, INC.

CONSOLIDATED STATEMENTS

OF CASH FLOWS

(in millions)

Years Ended

December 27,

December 28,

December 30,

2025

2024

2023

Cash flows from operating activities:

Net income

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Impairment charge on intangible assets

Impairment of capitalized software

Non-cash restructuring and related charges

Stock-based compensation expense

Provision for losses on trade and other accounts receivable

Provision for (benefit from) deferred income taxes

(61)

(20)

Equity in earnings of affiliates

(12)

(13)

(14)

Distributions from equity affiliates

Changes in unrecognized tax benefits

Other

(57)

(27)

(3)

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

(124)

(327)

Inventories

(95)

(59)

Other current assets

(45)

(138)

Accounts payable and accrued expenses

(163)

(56)

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of property and equipment

(139)

(148)

(147)

Payments related to equity investments and business acquisitions,

net of cash acquired

(199)

(230)

(955)

Proceeds from loan to affiliate

Settlements for net investment hedges

Capitalized software costs

(52)

(39)

(40)

Other

(13)

(17)

(21)

Net cash used in investing activities

(400)

(430)

(1,135)

Cash flows from financing activities:

Net change in bank credit lines

Proceeds from issuance of long-term debt

1,368

Principal payments for long-term debt

(44)

(318)

(468)

Debt issuance costs

(2)

(3)

Issuance of common stock

Proceeds from issuance of stock upon exercise of stock options

Payments for repurchases and retirement of common stock

(850)

(385)

(250)

Payments for taxes related to shares withheld for employee taxes

(15)

(9)

(34)

Distributions to noncontrolling shareholders

(30)

(54)

(47)

Payments for contingent consideration

(19)

(2)

Acquisitions of noncontrolling interests in subsidiaries

(77)

(255)

(19)

Net cash provided by (used in) financing activities

(188)

(510)

Effect of exchange rate changes on cash and cash equivalents

(90)

(12)

Net change in cash and cash equivalents

(49)

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 1 – Basis of Presentation and Significant Accounting Policies

Nature of Operations

We distribute health care products and value-added services primarily to office-based dental and medical

practitioners, across dental practices, laboratories, physician practices,

and ambulatory surgery centers, as well as

government, institutional health care clinics, home health providers, and alternate

care clinics.

We also provide

software and technology services to health care practitioners.

Our dental businesses serve office-based dental

practitioners, dental laboratories, schools, government and other institutions.

Our medical businesses serve

physician offices, urgent care centers, ambulatory care sites, emergency medical technicians, dialysis centers,

home

health, federal and state governments and large enterprises, such as group practices

and integrated delivery

networks, among other providers across a wide range of specialties.

We have significant operations in the United States, Germany, France, Canada, and Brazil.

We also have

meaningful market presence in several other European countries and the Asia-Pacific

region.

Basis of Presentation

Our consolidated financial statements include the accounts of Henry

Schein, Inc. and all of our controlled

subsidiaries and VIE.

All intercompany accounts and transactions are eliminated

in consolidation.

Investments in

unconsolidated affiliates for which we have the ability to influence the operating or

financial decisions are

accounted for under the equity method.

Certain prior period amounts have been reclassified to conform

to the

current period presentation.

These reclassifications, individually and in the aggregate, did not

have a material

impact on our consolidated financial condition, results of operations

or cash flows.

The primary beneficiary of a VIE is required to consolidate the assets and

liabilities of the VIE.

We are deemed to

be the primary beneficiary of the VIE when we have the power to direct activities

that most significantly affect its

economic performance and have the obligation to absorb the majority

of its losses or the right to receive benefits

that could potentially be significant to the VIE.

In determining whether we are the primary beneficiary, we

consider factors such as ownership interest, debt investments, management

representation, authority to control

decisions, and contractual and substantive participating rights of each party.

For this VIE, related to our U.S. trade

accounts receivable securitization as discussed in

Note 14 – Debt

the trade accounts receivable transferred to the

VIE are pledged as collateral to the related debt.

The VIE’s creditors have recourse to us for losses on these trade

accounts receivable.

At December 27, 2025 and December 28, 2024, certain trade

accounts receivable that can

only be used to settle obligations of this VIE were $

million and $

million, respectively, and the liabilities of

this VIE where the creditors have recourse to us were $

million and $

million, respectively.

Fair Value

Measurements

Fair value is defined as the price that would be received to sell an asset or

paid to transfer a liability in an orderly

transaction between market participants at the measurement date.

The fair value hierarchy distinguishes between

(1) market participant assumptions developed based on market data obtained

from independent sources (observable

inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best

information available in the circumstances (unobservable inputs).

The fair value hierarchy consists of three broad levels, which gives the

highest priority to unadjusted quoted prices

in active markets for identical assets or liabilities (Level 1) and the lowest priority

to unobservable inputs (Level 3).

The three levels of the fair value hierarchy are described as follows:

Level 1— Unadjusted quoted prices in active markets for identical assets

or liabilities that are accessible at the

measurement date.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Level 2— Inputs other than quoted prices included within Level 1 that are

observable for the asset or liability,

either directly or indirectly.

Level 2 inputs include: quoted prices for similar assets or liabilities

in active markets;

quoted prices for identical or similar assets or liabilities in markets

that are not active; inputs other than quoted

prices that are observable for the asset or liability; and inputs that are

derived principally from or corroborated by

observable market data by correlation or other means.

Level 3— Inputs that are unobservable for the asset or liability.

See

for additional information.

Use of Estimates

The preparation of consolidated financial statements in conformity with

accounting principles generally accepted in

the United States requires us to make estimates and assumptions that

affect the reported amounts of assets and

liabilities and disclosure of contingent assets and liabilities at the date of

the financial statements and the reported

amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

Our consolidated financial statements reflect estimates and assumptions

made by us that affect, among other things,

our goodwill, long-lived asset and definite-lived intangible asset valuation;

inventory valuation; equity investment

valuation; assessment of the annual effective tax rate; valuation of deferred income

taxes and income tax

contingencies; the allowance for credit losses; fair value of contingent

consideration; hedging activity; supplier

rebates; measurement of compensation cost for certain share-based

performance awards and cash bonus plans; and

pension plan assumptions.

Fiscal Year

We report our results of operations and cash flows on a

weeks per fiscal year basis ending on the last

Saturday of December.

The years ended December 27, 2025, December 28, 2024 and December

30, 2023

consisted of

weeks.

Revenue Recognition

Revenue is recognized when a customer obtains control of promised goods

or services in an amount that reflects the

consideration that we expect to receive for those goods or services.

To recognize revenue, we:

identify the contract(s) with a customer;

identify the performance obligations in the contract;

determine the transaction price;

allocate the transaction price to the performance obligations in the contract;

and

recognize revenue when, or as, we satisfy a performance obligation.

We generate revenue from the sale of dental and medical consumable products, equipment, and services such as

equipment repair and financial services (Global Distribution and Value-Added Services revenues), company-

manufactured specialty products (Global Specialty Products revenue), and software

products and related services

(Global Technology revenues).

Provisions for discounts, rebates to customers, customer

returns and other contra

revenue adjustments are included in the transaction price at contract

inception by estimating the most likely amount

based upon historical data and estimates and are provided for in the

period in which the related sales are

recognized.

Note 3 – Net Sales from Contracts with Customers

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Revenue derived from the sale of consumable products and company-manufactured

specialty products is

recognized at the point in time when control transfers to the customer, (e.g. when legal title and risks and

rewards

of ownership transfer to the customer, we have no post-shipment obligations, and we have an enforceable

right to

payment).

Sales of consumable products typically entail high-volume, low-dollar

orders shipped using third-party

common carriers.

Revenue derived from the sale of equipment is recognized when control

transfers to the customer.

This occurs

when the equipment is delivered.

Such sales typically entail scheduled deliveries of large equipment primarily

equipment service technicians.

Most equipment requires minimal installation, which is

typically completed at the

time of delivery.

Our merchandise and equipment products generally carry standard warranty

terms provided by the manufacturer;

however, in instances where we provide a warranty on company-manufactured products or labor services,

the

warranty costs are accrued in accordance with Accounting Standards Codification

(“ASC”) Topic 460 Guarantees.

At December 27, 2025 and December 28, 2024, we had accrued approximately

million and $

million,

respectively, for warranty costs.

Revenue derived from the sale of software products is recognized when

products are delivered to customers or

made available electronically.

Such software is generally installed by customers and does

not require extensive

training.

Revenue derived from post-contract customer support for software,

including annual support and/or

training, is generally recognized over time using time elapsed as the input method

that best depicts the transfer of

control to the customer.

Revenue derived from software sold on a Software-as-a-Service

basis is recognized ratably

over the subscription period as control is transferred to the customer.

Revenue derived from other sources, including freight charges, equipment repairs

and financial services, is

recognized when the related product revenue is recognized or when

the services are provided.

We apply the

practical expedient to treat shipping and handling activities performed after

the customer obtains control as

fulfillment activities, rather than a separate performance obligation in the

contract.

Sales, value-add and other taxes we collect concurrent with revenue-producing

activities are excluded from

revenue.

Some of our revenue is derived from bundled arrangements that include

multiple distinct performance obligations,

which are accounted for separately.

When we sell software products together with related services (i.e.,

training

and technical support), we allocate the transaction price to each

distinct performance obligation based on the

estimated standalone selling price for each performance obligation.

Bundled arrangements that include elements

that are not considered software consist primarily of equipment and the related

installation service.

We allocate

revenue for such arrangements based on the relative selling prices of the goods

or services.

If an observable selling

price is not available (i.e., because we or others do not sell the goods or

services separately), we use one of the

following techniques to estimate the standalone selling price: adjusted

market approach; cost-plus-margin

approach; or the residual method.

There is no specific hierarchy for the use of these methods, but

the estimated

selling price reflects our best estimate of what the selling prices of each deliverable

would be if it were sold

regularly on a standalone basis taking into consideration the cost structure

of our business, technical skill required,

customer location and other market conditions.

See

for additional disclosures of disaggregated net sales and

Note 4 – Segment and Geographic Data

for disclosures of net sales by segment and geographic data.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Sales Returns

Sales returns are recognized as a reduction of revenue by the amount

of expected returns and are recorded as refund

liability within accrued expenses-other within our consolidated balance sheets.

We estimate the sales return

liability based on historical data for specific products, adjusted as necessary

for new products.

The allowance for

returns is presented gross as a refund liability and we record a right of

return asset (and a corresponding adjustment

to cost of sales) for any products that we expect to be returned and resaleable.

Cost of Sales

The primary components of cost of sales include the cost of the product

(net of purchase discounts, supplier

chargebacks and rebates) and inbound and outbound freight charges.

Costs related to purchasing, receiving, inspections, warehousing,

internal inventory transfers and other costs of our

distribution network are included in selling, general and administrative

expenses along with other operating costs.

Total distribution network costs were $

million, $

million and $

million for the years ended December

27, 2025, December 28, 2024 and December 30, 2023, respectively.

Supplier Rebates

Supplier rebates are included as a reduction of cost of sales and are recognized

over the period they are earned.

The

factors we consider in estimating supplier rebate accruals include forecasted

inventory purchases,

sales, supplier

rebate contract terms, which generally provide for increasing rebates based

on either increased purchase or sales

volumes.

Direct Shipping and Handling Costs

Freight and other direct shipping costs are included in cost of sales.

Direct handling costs, which represent

primarily direct compensation costs of employees who pick, pack and otherwise

prepare, if necessary, merchandise

for shipment to our customers are reflected in selling, general and administrative

expenses.

Direct handling costs

were $

million, $

million and $

million for the years ended December 27, 2025, December 28, 2024

and

December 30, 2023, respectively.

Advertising and Promotional Costs

We expense advertising and promotional costs as incurred.

Total advertising and promotional expenses were $

million, $

million and $

million for the years ended December 27, 2025, December 28, 2024 and

December

30, 2023, respectively.

Stock-Based Compensation Costs

measure stock-based compensation at the grant date, based on the estimated

fair value of the award, and

recognize the cost (net of estimated forfeitures) as compensation expense on

a straight-line basis over the requisite

service period for certain time-based restricted stock units with cliff vesting and on a accelerated

basis for the

option awards and certain time-based restricted stock units with graded

vesting.

For performance-based awards, at

each reporting date, we reassess whether achievement of the performance condition

is probable and accrue

compensation expense when achievement of the performance condition is

probable.

Our stock-based compensation

expense is reflected in selling, general and administrative expenses.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Employment Benefit Plans and other Postretirement Benefit Plans

Some of our employees in our international markets participate

in various noncontributory defined benefit plans.

We recognize the funded status, measured as the difference between the fair value of plan assets and the projected

benefit obligation.

Each unfunded plan is recognized as a liability and each funded

plan is recognized as either an

asset or liability based on its funded status.

We measure our plan assets and liabilities at the end of our fiscal year.

Net periodic pension costs and valuations are dependent on assumptions

used by third-party actuaries in calculating

those amounts.

These assumptions include discount rates, expected return on plan

assets, rate of future

compensation levels, retirement rates, mortality rates, and other factors.

We record the service cost component of

net pension cost in selling, general and administrative expenses within

our consolidated statements of income.

Gains and losses that result from changes in actuarial assumptions or

from actual experience that differs from

actuarial assumptions are recognized in and then amortized from accumulated

other comprehensive income (loss).

Cash and Cash Equivalents

We consider all highly liquid short-term investments with an original maturity of three months or less to be cash

equivalents.

Due to the short-term maturity of such investments,

the carrying amounts are a reasonable estimate of

fair value.

Outstanding checks in excess of funds on deposit of $

million and $

million, primarily related to

payments for inventory, were classified as accounts payable as of December 27, 2025 and December 28, 2024.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable are generally recognized when revenues are recognized.

In accordance with the “expected

credit loss” model, the carrying amount of accounts receivable is reduced

by a valuation allowance that reflects our

best estimate of the amounts that we do not expect to collect.

In addition to reviewing delinquent accounts

receivable, we consider many factors in estimating our reserve, including

types of customers and their credit

worthiness, experience and historical data adjusted for current conditions

and reasonable supportable forecasts.

record allowances for credit losses based upon a specific review of all

significant outstanding invoices.

For

those invoices not specifically reviewed, provisions are provided at differing rates,

based upon the age of the

receivable, the collection history associated with the geographic region

that the receivable was recorded in, current

economic trends and reasonable supportable forecasts.

write off accounts receivable and charge it against its

recorded allowance when we deem it uncollectible.

Our net accounts receivable balance was $

1,651

million, $

1,482

million, and $

1,863

million, at December 27, 2025,

December 28, 2024 and December 30, 2023, respectively.

The following table presents our allowances for credit losses:

As of

Description

December 27,

2025

December 28,

2024

December 30,

2023

Balance at beginning of year

Provision for credit losses

Adjustments to existing allowances for late fees, foreign currency

exchange rates, and write-offs

(8)

(19)

Balance at end of year

Note 7 – Property and Equipment, Net

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Contract Assets

Contract assets include amounts related to any conditional right to consideration

for work completed but not billed

as of the reporting date.

Contract assets are transferred to accounts receivable when the

right becomes

unconditional.

The contract assets primarily relate to our bundled arrangements for the

sale of equipment and

consumables and sales of term software licenses.

Current contract assets are included in prepaid expenses and

other and the non-current contract assets are included in investments and other

within our consolidated balance

sheets.

Current and non-current contract asset balances as of December 27,

2025 and December 28, 2024 were not

material.

Contract Liabilities

Contract liabilities are comprised of advance payments and upfront payments

for service arrangements provided

over time that are accounted for as deferred revenue amounts.

Contract liabilities are transferred to revenue once

the performance obligation has been satisfied.

Current contract liabilities are included in accrued expenses: other

and the non-current contract liabilities are included in other liabilities

within our consolidated balance sheets.

During the years ended December 27, 2025, December 28, 2024, and December

30, 2023, we recognized

substantially all of the current contract liability amounts that were previously

deferred at the beginning of each

year.

The following table presents our contract liabilities:

As of

Description

December 27,

2025

December 28,

2024

December 30,

2023

Current contract liabilities

Non-current contract liabilities

Total contract

liabilities

Inventories and Reserves

Inventories consist primarily of finished goods, raw materials and

work-in-process and are stated at the lower of

cost or net realizable value.

Cost is determined by the weighted average method for merchandise

and actual cost

for large equipment, high-technology equipment and drop-shipments.

Inventory costs for manufactured products

include direct materials, labor, and an allocation of related fixed and variable overhead.

The determination of

inventory carrying values requires management to make significant

estimates and judgments.

In assessing the need

for inventory reserves and evaluating net realizable value, we consider

multiple factors, including inventory

condition, on-hand quantities, historical and forecasted sales, product

life cycles, and prevailing market and

economic conditions.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation or

amortization.

Depreciation is

computed under the straight-line method using estimated useful lives

(See

for estimated useful lives).

Amortization of leasehold improvements is computed using the straight-line

method

over the lesser of the useful life of the assets or the remaining lease term.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Capitalized Software Development Costs

Capitalized software costs consist of costs to purchase and develop

software for internal use and for sale or use by

customers.

For software to be used solely to meet internal needs, we capitalize

costs incurred during the

application development stage and include such costs within property

and equipment, net within our consolidated

balance sheets.

For software to be sold, leased, or marketed to external users, we capitalize

software development

costs when technological feasibility is reached, and for cloud-based applications

used to deliver our services we

capitalize costs incurred during the application development stage,

and include such costs within investments and

other within our consolidated balance sheets.

Leases

determine if an arrangement contains a lease at inception.

An arrangement contains a lease if it implicitly or

explicitly identifies an asset to be used and conveys the right to control

the use of the identified asset in exchange

for consideration.

As a lessee, we include operating leases in operating lease right-of-use

(“ROU”) assets,

operating lease liabilities, and non-current operating lease liabilities in

our consolidated balance sheets.

Finance

leases are included in property and equipment, current maturities of

long-term debt, and long-term debt in our

consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease

term and lease liabilities represent our

obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized

upon commencement of the lease based on the present value of the lease payments

over the lease term.

As most of

our leases do not provide an implicit interest rate, we generally use our incremental

borrowing rate based on the

estimated rate of interest for fully collateralized and fully amortizing borrowings

over a similar term of the lease

payments at commencement date to determine the present value of

lease payments.

When readily determinable, we

use the implicit rate.

Our lease terms may include options to extend or terminate the lease when it is reasonably

certain that we will exercise that option.

Lease expense for lease payments is recognized on a straight-line basis

over the lease term.

Expenses associated with operating leases and finance leases

are included in selling, general

and administrative and interest expense, respectively within our consolidated

statement of income.

Short-term

leases with a term of 12 months or less are not capitalized.

have lease agreements with lease and non-lease components, which are

generally accounted for as a single

lease component, except non-lease components for leases of vehicles, which

are accounted for separately.

When a

vehicle lease contains both lease and non-lease components, we allocate the

transaction price based on the relative

standalone selling price.

Business Acquisitions

We account for business acquisitions under the acquisition method of accounting, under which the net assets of

acquired businesses are recorded at their fair value at the acquisition

date and our consolidated financial statements

include the acquired businesses’ results of operations from that date.

Certain prior owners of acquired subsidiaries are eligible to receive additional

purchase price cash consideration, or

we may be entitled to recoup a portion of purchase price cash consideration

if certain financial targets or negotiated

goals are met.

We have accrued liabilities for the estimated fair value of additional purchase price consideration at

the time of the acquisition, using the income approach, including a probability-weighted

discounted cash flow

method or an option pricing method, where applicable.

Any adjustments to these accrual amounts are recorded in

selling, general and administrative within our consolidated statements of

income.

While we use our best estimates and assumptions to accurately value

consideration transferred, assets acquired and

liabilities assumed at the acquisition date, our estimates are inherently uncertain

and subject to refinement.

As a

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

result, within

12 months

following the date of acquisition, or the measurement period, we

may record adjustments

to consideration transferred, assets acquired and liabilities assumed with

the corresponding offset to goodwill

within our consolidated balance sheets.

At the end of the measurement period or final determination of

the values

of such assets acquired or liabilities assumed, whichever comes first,

any subsequent adjustments are recognized in

our consolidated statements of operations.

Goodwill

Any excess of acquisition consideration over the fair value of identifiable

net assets acquired is recorded as

goodwill.

Goodwill is an asset representing the future economic benefits

arising from other assets acquired in a

business combination that are not individually identified and separately

recognized, such as future customers and

technology, as well as the assembled workforce.

Goodwill is subject to impairment analysis at least once annually as

of the first day of our fourth quarter, or if an

event occurs or circumstances change that would more likely than

not reduce a reporting unit’s fair value below

carrying value.

We conduct our goodwill impairment testing at the reporting unit level.

We identify our reporting

units by assessing whether two or more components are economically

similar and therefore should be aggregated.

Our reporting units are identified as our operating segments.

Goodwill is allocated to such reporting units for the

purposes of our impairment analyses.

For the year ended December 27, 2025, our reporting structure was:

(i)

Global Distribution and Value-Added Services reportable segment, which included the following

operating segments (a) US Distribution Group; (b) Europe, Middle East,

and Africa Distribution Group;

Distribution Group;

(ii)

Global Specialty Products reportable segment, which included the following

operating segments (a) Global

Oral Reconstruction Group; and (b) Healthcare Specialty Group;

and

(iii)

Global Technology,

which is both a reportable segment and an operating segment.

Application of the goodwill impairment test requires judgment, including

the identification of reporting units,

assignment of assets and liabilities that are considered shared services

to the reporting units, and ultimately the

determination of the fair value of each reporting unit.

The fair value of each reporting unit is calculated by

applying the discounted cash flow methodology and confirming with

a market approach.

There are inherent

uncertainties, however, related to fair value models, the inputs and our judgments in applying them

to this analysis.

The most significant inputs include estimation of detailed future cash flows

based on budget expectations, and

determination of comparable companies to develop a weighted average

cost of capital for each reporting unit.

In January 2025, we performed a geographical realignment within

the Global Distribution and Value-Added

Services reportable segment intended to provide increased transparency

into the performance of our global

distribution businesses and to reflect evolving management oversight

and decision-making.

As a result of the

realignment and the change in reporting units, we reallocated goodwill to each

of our new reporting units using a

relative fair value approach.

The relative fair values of the new reporting units were determined based on

quantitative valuation analysis that considered projected cash flows,

market assumptions, and other relevant

valuation inputs.

Reporting units under the former and new structures

of the Global Distribution and Value-Added

Services reportable segment were tested for impairment as of January 1,

2025, and it was determined that the fair

values of our reporting units more likely than not exceeded their carrying

values, resulting in no impairment as of

January 1, 2025 under both structures.

In connection with our restructuring initiatives, during the year ended

December 28, 2024, we recorded an $

million impairment of goodwill in the Global Specialty Products segment,

relating to the disposal of a portion of a

business; such impairment was calculated based on the relative fair value

of goodwill.

Goodwill and Other Intangibles, Net

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Intangible Assets

In connection with our business acquisitions, we recognize assets acquired

and liabilities assumed based on fair

value estimates as of the date of acquisition.

The estimated fair value of identifiable intangible assets

(i.e.,

customer relationships and lists, trademarks and trade names, product development

and non-compete agreements) is

based on critical judgments and assumptions derived from analysis of

market conditions, including discount rates,

projected revenue growth rates (which are based on historical trends

and assessment of financial projections),

estimated customer attrition and projected cash flows.

We have calculated the value of these intangible assets using

the multi-period excess earnings method, the relief-from-royalty method,

and the with and without method, where

applicable.

These assumptions are forward-looking and could be affected by future economic

and market

conditions.

Intangible assets, other than goodwill, are evaluated for impairment whenever

events or changes in circumstances

indicate that the carrying amount of the assets may not be recoverable

through the undiscounted future cash flows

expected to be derived from such asset or asset group.

Definite and indefinite-lived intangible assets primarily consist of customer

relationships, customer lists,

trademarks, trade names, product development and non-compete agreements.

For long-lived assets used in

operations, impairment losses are only recorded if the asset or asset groups

carrying amount is not recoverable

through its undiscounted future cash flows.

We measure the impairment loss based on the difference between the

carrying amount and the estimated fair value.

When an impairment exists, the related assets are written down to

fair value.

During the years ended December 27, 2025, December 28, 2024

and December 30, 2023, we recorded total

impairment charges within the selling, general and administrative line of our consolidated statements

of income on

intangible assets of $

million, $

million and $

million, respectively, as more fully discussed in

Note 9 –

During the years ended December 27, 2025, December 28, 2024

and

December 30, 2023, we recorded impairment charges, within the restructuring and related

costs line of our

consolidated statements of income, of $

million, $

, million, and $

million, respectively.

See

Note 16 – Plans

of Restructuring and Related Costs

for additional information.

Income Taxes

We account for income taxes under an asset and liability approach that requires the recognition of deferred income

tax assets and liabilities for the expected future tax consequences of events

that have been recognized in our

financial statements or tax returns.

In estimating future tax consequences, we generally consider all expected

future

events other than expected enactments of changes in tax laws or rates.

The effect on deferred income tax assets and

liabilities of a change in tax rates is recognized as income or expense in

the period that includes the enactment date.

We file a consolidated U.S. federal income tax return with our 80% or greater owned U.S. subsidiaries.

Redeemable Noncontrolling Interests

Some minority stockholders in certain of our consolidated subsidiaries have

the right, at certain times, to require us

to acquire their ownership interest in those entities at fair value.

Their interests in these subsidiaries are classified

outside permanent equity on our consolidated balance sheets and are

carried at the estimated redemption amounts.

The redemption amounts have been estimated based on recent transactions

and/or implied multiples of earnings

and, if such earnings and cash flows are not achieved, the value of the

redeemable noncontrolling interests might be

impacted.

Changes in the estimated redemption amounts of the noncontrolling

interests subject to put options are

reflected at each reporting period with a corresponding adjustment

to Additional paid-in capital.

Future reductions

in the carrying amounts are subject to a “floor” amount that is equal

to the fair value of the redeemable

noncontrolling interests at the time they were originally recorded.

The recorded value of the redeemable

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

noncontrolling interests cannot go below the floor level.

Adjustments to the carrying amount of noncontrolling

interests to reflect a fair value redemption feature do not impact the

calculation of earnings per share.

Our net

income is reduced by the portion of the subsidiaries’ net income

that is attributable to redeemable noncontrolling

interests.

Noncontrolling Interests

Noncontrolling interest represents the ownership interests of certain

minority owners of our consolidated

subsidiaries.

Our net income is reduced by the portion of the subsidiaries’

net income that is attributable to

noncontrolling interests.

Comprehensive Income

Comprehensive income includes certain gains and losses that, under accounting

principles generally accepted in the

United States, are excluded from net income as such amounts are recorded

directly as an adjustment to

stockholders’ equity.

Our comprehensive income is primarily comprised of net income,

foreign currency

translation gain (loss), unrealized gain (loss) from hedging activities

and unrealized pension adjustment gain (loss).

Risk Management and Derivative Financial Instruments

We use derivative instruments to minimize our exposure to fluctuations in foreign currency exchange rates, interest

rates, and our unfunded non-qualified supplemental retirement plan (“SERP”)

and our deferred compensation plan

(“DCP”).

Our objective is to manage the impact that foreign currency

exchange rate fluctuations could have on

recognized asset and liability fair values, earnings and cash flows, as well

as our net investments in foreign

subsidiaries, the interest rate risk on variable rate debt, and the returns on

our SERP and DCP.

Our risk

management policy requires that derivative contracts used as hedges be

effective at reducing the risks associated

with the exposure being hedged and be designated hedges at inception

of the contracts.

We do not enter into

derivative instruments for speculative purposes.

Our derivative instruments primarily include foreign currency

forward contracts, total return swaps, and interest rate swaps.

Foreign currency forward agreements related to forecasted inventory

purchase commitments with foreign suppliers,

foreign currency swaps related to foreign currency denominated debt, and

interest rate swaps related to variable rate

debt are designated as cash flow hedges.

For derivatives that are designated and qualify as cash flow hedges,

the

changes in the fair value of the derivatives are recorded as a

component of Accumulated other comprehensive

income in stockholders’ equity and subsequently reclassified into

earnings in the period(s) during which the hedged

transactions affect earnings.

We classify the cash flows related to our hedging activities in the same category in our

consolidated statements of cash flows as the cash flows related

to the hedged item.

Foreign currency forward contracts related to our euro-denominated

foreign operations are designated as net

investment hedges.

For derivatives that are designated and qualify as net investment

hedges, changes in the fair

value of the derivatives are recorded in the foreign currency translation gain

(loss) component of Accumulated

other comprehensive income in stockholders’ equity until the net

investment is sold or substantially liquidated.

Interest swap agreements are entered into for the purpose of hedging

the cash flow of our variable interest rate term

loan.

Our foreign currency forward agreements related to foreign currency

balance sheet exposure provide economic

hedges but are not designated as hedges for accounting purposes.

For agreements not designated as hedges, changes in the value of the derivative,

along with the transaction gain or

loss on the hedged item, are recorded in other, net, within our consolidated statements of income.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Total return swaps are entered into for the purpose of economically hedging our SERP and DCP.

These swaps are

expected to be renewed on an annual basis.

Changes in the fair values of these total return swaps are recorded in

selling, general, and administrative expenses within our consolidated

statements of income and offset recognized

changes in the fair values of our SERP and DCP liabilities.

Foreign Currency Translation

and Transactions

The financial position and results of operations of our foreign subsidiaries

are determined using local currencies as

the functional currencies.

Assets and liabilities of foreign subsidiaries are translated at the exchange

rate in effect at

each year-end.

Income statement accounts are translated at the average rate

of exchange prevailing during the year.

Translation adjustments arising from the use of differing exchange rates from period to period are included

Accumulated other comprehensive income in stockholders’ equity.

Gains and losses resulting from foreign

currency transactions are included in earnings.

Accounting Pronouncements Recently Adopted

During the year ended December 27, 2025, we adopted Accounting Standards Update

(“ASU”) 2023-09, “

Income

Taxes (Topic

740): Improvements to Income Tax Disclosures

,” which requires public business entities to disclose

additional information in specified categories with respect to

the reconciliation of the effective tax rate to the

statutory rate for federal, state and foreign income taxes.

It also requires greater detail about individual reconciling

items in the rate reconciliation to the extent the impact of those items

exceeds a specified threshold.

In addition to

new disclosures associated with the rate reconciliation, this ASU requires

information pertaining to taxes paid (net

of refunds received) to be disaggregated for federal, state and foreign

taxes and further disaggregated for specific

jurisdictions to the extent the related amounts exceed a quantitative threshold.

This ASU also describes items that

need to be disaggregated based on their nature, which is determined by

reference to the item’s fundamental or

essential characteristics, such as the transaction or event that triggered

the establishment of the reconciling item and

the activity with which the reconciling item is associated.

This ASU eliminates the historic requirement that

entities disclose information concerning unrecognized tax benefits having

a reasonable possibility of significantly

increasing or decreasing in the 12 months following the reporting date.

We adopted this ASU on a prospective

basis, which resulted in the required additional disclosures included

Note 15 – Income Taxes

During the year ended December 28, 2024, we adopted ASU 2023-07, “

Segment Reporting (Topic 280):

Improvements to Reportable Segments

” (“Topic 280”),

which aims to improve financial reporting by requiring

disclosure of incremental segment information on an annual and

interim basis for all public entities to enable

investors to develop more decision-useful financial analyses.

The amendments in Topic 280 do not change how a

public entity identifies its operating segments, aggregates those operating

segments, or applies the quantitative

thresholds to determine its reportable segments.

We adopted Topic

280 on a retrospective basis, which resulted in

the required additional disclosures included in our consolidated

financial statements.

Recently Issued Accounting Pronouncements

In December 2025, the Financial Accounting Standards Board (“FASB”) issued ASU 2025-11, “

Interim Reporting

(Topic 270): Narrow

-Scope Improvements

,” which is intended to improve navigability of the guidance

in Topic

270, Interim Reporting, and clarify when it applies.

The ASU also addresses the form and content of such financial

statements and interim disclosure requirements, and establishes a principle

under which an entity must disclose

events since the end of the last annual reporting period that have a

material impact on the entity.

This ASU is

effective for annual reporting periods beginning after December 15, 2027, and interim

reporting periods within

those annual reporting periods, with early adoption permitted.

We are currently evaluating the impact that ASU

2025-11 will have on our consolidated financial statements and related disclosures.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

In December 2025, the FASB issued ASU 2025-10, “

Government Grants (Topic 832) - Accounting for Government

Grants Received by Business Entities,

” which establishes guidance on the recognition, measurement, and

presentation of government grants received by business entities.

This ASU is effective for annual reporting periods

beginning after December 15, 2028, and interim reporting periods within

those annual reporting periods, with early

adoption permitted.

We are currently evaluating the impact that ASU 2025-10 will have on our consolidated

financial statements and related disclosures.

In November 2025, the FASB issued ASU 2025-09, “

Derivatives and Hedging (Topic 815): Hedge Accounting

Improvements,

” which is intended to more closely align financial reporting with

the economics of entities’ risk

management activities, including expanded eligibility of forecasted

transactions, additional flexibility in measuring

hedge effectiveness, and clarifications related to hedging non-financial items.

This ASU is effective for annual

reporting periods beginning June 1, 2027, and interim reporting

periods within those annual reporting periods, with

early adoption permitted, and should be applied prospectively.

We are currently evaluating the impact that ASU

2025-09 will have on our consolidated financial statements and related

disclosures.

In September 2025, the FASB issued ASU 2025-06, “

Intangibles - Goodwill and Other - Internal-Use Software

(Subtopic 350-40): Targeted Improvements

to the Accounting for Internal-Use Software

,” which removes all

references to software development project stages.

The ASU requires entities to begin capitalizing software costs

when management authorizes and commits to funding the software project,

and it is probable that the project will

be completed and the software will be used for its intended purpose.

This ASU is effective for annual reporting

periods beginning after December 15, 2027, and interim reporting periods

within those annual reporting periods,

with early adoption permitted.

Upon adoption, the guidance can be applied prospectively, retrospectively, or with a

modified transition approach.

We are currently evaluating the impact that ASU 2025-06 will have on our

consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, “

Financial Instruments - Credit Losses (Subtopic 326): Measurement

of Credit Losses for Accounts Receivable and Contract Assets,

” which introduces a practical expedient permitting

an entity to assume that conditions at the balance sheet date remain unchanged

throughout the remaining life of the

asset when estimating expected credit losses on current accounts

receivable and current contract asset under Topic

606 on revenue from contracts with customers. This ASU is effective for annual

reporting periods beginning after

December 15, 2025, with early adoption permitted.

We do not expect ASU 2025-05 to have a material impact on

our consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, “

Income Statement - Reporting Comprehensive Income -

Expense Disaggregation Disclosure (Subtopic 220-40)

Disaggregation of Income Statement Expenses

,” which

requires additional disclosure about the specific expense categories in

the notes to financial statements at interim

and annual reporting periods.

The amendments in this ASU do not change or remove current

expense disclosure

requirements, but affect where this information appears in the notes to financial statements.

This ASU is effective

for annual reporting periods beginning after December 15, 2026, and

interim reporting periods beginning after

December 15, 2027, with early adoption permitted.

Upon adoption, the guidance can be applied prospectively

retrospectively.

We are currently evaluating the impact that ASU 2024-03 will have on our consolidated financial

statements.

Note 1 – Basis of Presentation and Significant

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 2 – Cyber Incident

In October 2023 Henry Schein experienced a cyber incident that primarily

affected the operations of our North

American and European dental and medical distribution businesses.

Henry Schein One, our practice management

software, revenue cycle management and patient relationship management

solutions business, was not affected, and

our manufacturing businesses were mostly unaffected.

On November 22, 2023, we experienced a disruption of our

ecommerce platform and related applications, which was remediated.

With respect to the October 2023 cyber incident, we had a $

million insurance policy, following a $

million

retention.

During the years ended December 27, 2025, December 28, 2024

and December 30, 2023, we incurred $

million, $

million and $

million, respectively, of expenses related to the cyber incident, mostly consisting of

professional fees.

During the year ended December 28, 2024, we received insurance

proceeds of $

million,

representing a partial insurance recovery of losses related to the cyber incident.

During the year ended December

27, 2025, we received insurance proceeds of $

million under this policy, representing insurance recovery of

losses related to the cyber incident.

The expenses and insurance recoveries related to the cyber

incident are

included in the selling, general and administrative line in our consolidated

statements of income.

Note 3 – Net Sales from Contracts with Customers

Net sales are recognized in accordance with policies disclosed

Accounting Policies

Disaggregation of Net Sales

The following table disaggregates our net sales by reportable segment:

Years

Ended

December 27,

2025

December 28,

2024

December 30,

2023

Net Sales:

Global Distribution and Value

-Added Services

Global Dental merchandise

4,831

4,723

4,783

Global Dental equipment

1,799

1,723

1,675

Global Value

-added services

Global Dental

6,868

6,679

6,649

Global Medical

4,270

4,081

3,912

Total Global Distribution

and Value

-Added Services

11,138

10,760

10,561

Global Specialty Products

1,544

1,446

1,331

Global Technology

Eliminations

(173)

(163)

(155)

Total

13,184

12,673

12,339

Presentation and Significant Accounting Policies

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 4 – Segment and Geographic Data

We conduct our business through

three

reportable segments: (i) Global Distribution and Value-Added Services; (ii)

Global Specialty Products; and (iii) Global Technology.

We aggregate operating segments into these reportable segments based on economic similarities, the nature of their

products, customer base and methods of distribution.

Global Distribution and Value-Added Services includes distribution to the global dental and medical markets of

national brand and corporate brand merchandise, as well as equipment and related

technical services.

This segment

also includes value-added services such as financial services, continuing

education services, consulting and other

services.

This segment also markets and sells under our own corporate brand

a portfolio of cost-effective, high-

quality consumable merchandise.

Global Specialty Products includes manufacturing, marketing

and sales of dental

implant and biomaterial products; and endodontic, orthodontic and orthopedic

products and other health care-

related products and services.

Global Technology includes development and distribution of practice management

software, e-services and other products, which are distributed to health

care providers.

Our organizational structure also includes Corporate, which consists primarily of

income and expenses associated

with support functions and projects.

Our chief operating decision maker (“CODM”) is our Chairman

and Chief Executive Officer.

Our CODM uses

adjusted operating income as the profitability metric for purposes of making

decisions about allocation of resources

to each segment and assessing performance of each segment.

Adjusted operating income provides a measure of our

underlying segment results that is in line with our approach to risk and performance

management.

We define

adjusted operating income as operating income adjusted to exclude

(a) direct cybersecurity costs and related

insurance recovery proceeds, (b) amortization of acquisition intangibles,

expenses, (d) impairment of intangible assets, (e) changes in fair value

of contingent consideration, (f) litigation

settlements, and (g) costs associated with shareholder advisory

matters and select value creation consulting costs.

These adjustments are either: (i) non-cash or non-recurring in nature; (ii) not

allocable or controlled by the segment;

or (iii) not tied to the operational performance of the segment.

Assets by segment are not a measure used to assess

the performance of the Company by CODM and thus are not reported

in our disclosures.

The accounting policies of the reportable segments are generally

the same as those described in

Note 1 – Basis of

Sales and transfers between reportable segments are eliminated

in consolidation.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Segment adjusted operating income is presented in the following

table to reconcile to operating income as

presented on the consolidated statement of operations.

The reconciliation from operating income to income before

taxes and equity in earnings of affiliates is presented on our consolidated statements

of income.

Years Ended

December 27,

December 28,

December 30,

2025

2024

2023

Gross Sales:

Global Distribution and Value

-Added Services

(1)

11,138

10,760

10,561

Global Specialty Products

(2)

1,544

1,446

1,331

Global Technology

(3)

Total Gross Sales

13,357

12,836

12,494

Less: Eliminations:

Global Distribution and Value

-Added Services

(18)

(31)

(36)

Global Specialty Products

(155)

(132)

(119)

Global Technology

Total Eliminations

(173)

(163)

(155)

Net Sales:

Global Distribution and Value

-Added Services

11,120

10,729

10,525

Global Specialty Products

1,389

1,314

1,212

Global Technology

Total Net Sales

13,184

12,673

12,339

Segment Cost of Sales:

(4)

Global Distribution and Value

-Added Services

8,352

7,984

7,862

Global Specialty Products

Global Technology

Segment Operating Expenses:

(5)

Global Distribution and Value

-Added Services

2,106

2,080

2,034

Global Specialty Products

Global Technology

Operating Income:

Global Distribution and Value

-Added Services

Global Specialty Products

Global Technology

Total Segment Operating Income

1,102

1,026

Corporate, net

(130)

(77)

(92)

Adjustments

(6)

(319)

(328)

(275)

Total Operating Income

Years Ended

December 27,

December 28,

December 30,

2025

2024

2023

Depreciation and Amortization:

Global Distribution and Value

-Added Services

Global Specialty Products

Global Technology

Total Segment Depreciation and Amortization

Corporate

Acquisition intangible amortization within adjustments

(6)

Total Depreciation and Amortization

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(1)

Global Distribution and Value

-Added Services: Includes distribution of infection-control products, handpieces, preventatives,

impression materials, composites, anesthetics, teeth, gypsum, acrylics, articulators, abrasives, PPE products, branded and generic

pharmaceuticals, vaccines, surgical products, diagnostic tests, dental chairs, delivery units and lights, digital dental laboratories, X-

ray supplies and equipment, high-tech and digital restoration equipment, equipment repair services, financial services on a non-

recourse basis, continuing education services for practitioners, consulting and other services.

This segment also markets and sells

under our own corporate brand a portfolio of cost-effective, high-quality consumable merchandise.

(2)

Global Specialty Products: Includes manufacturing, marketing and sales of dental implant and biomaterial products; and

endodontic, orthodontic and orthopedic products and other health care-related products and services.

(3)

Global Technology: Includes development and distribution of practice management software, e-services and other products, which

are distributed to health care providers.

(4)

Cost of goods sold in our Global Distribution and Value-Added Services segment and our Global Specialty Products segment

includes product cost and inbound and outbound freight charges.

Cost of goods sold in our Global Technology segment consists

primarily of software development and third-party provider costs, including technology use and hosting fees.

(5)

Significant segment operating expenses for our reportable segments and Corporate include primarily compensation costs, and to a

lesser extent, rent, depreciation and maintenance costs related to operating our facilities.

(6)

Adjustments represent items excluded from segment operating income to enable comparison of financial results between periods.

The following table presents a breakdown of such adjustments:

Years Ended

December 27,

December 28,

December 30,

2025

2024

2023

Adjustments:

Restructuring and related costs

(105)

(110)

(80)

Acquisition intangible amortization

(179)

(184)

(150)

Cyber incident-insurance proceeds, net of third-party advisory

expenses

(11)

Change in contingent consideration

(45)

Litigation settlements

(5)

(6)

Impairment of capitalized assets

(12)

(27)

Impairment of intangible assets

(16)

(7)

Costs associated with shareholder advisory matters and select value

creation consulting costs

(36)

(2)

Total adjustments

(319)

(328)

(275)

The following table presents information about our operations by geographic

area as of and for the years ended

December 27, 2025, December 28, 2024 and December 30, 2023.

Net sales by geographic area are based on the

respective locations of our subsidiaries.

No country, except for the United States, generated net sales greater than

% of consolidated net sales.

There were no material amounts of sales or transfers among geographic

areas and

there were no material amounts of export sales.

2025

2024

2023

Net Sales

Long-Lived

Assets

Net Sales

Long-Lived

Assets

Net Sales

Long-Lived

Assets

United States

9,096

4,033

8,825

3,683

8,662

3,479

Other

4,088

2,120

3,848

2,051

3,677

2,135

Consolidated total

13,184

6,153

12,673

5,734

12,339

5,614

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 5 – Business Acquisitions

Our acquisition strategy is focused on investments in companies, including

high growth high margin businesses

aligned with our BOLD+1 strategy, that add new customers and sales teams, increase our geographic footprint

(whether entering a new country, such as emerging markets, or building scale where we have already invested in

businesses), and finally, those that enable us to access new products and technologies.

2025 Acquisitions

During the year ended December 27, 2025, we acquired companies within

the Global Distribution and Value-

Added Services,

Global Specialty Products and Global Technology segments.

Our acquired ownership interest in

these companies range from

% to

The following table aggregates the preliminary estimated fair value, as of

the date of the acquisition, of

consideration paid and net assets acquired for acquisitions during the year ended

December 27, 2025:

Preliminary

Allocation as of

December 27, 2025

Acquisition consideration:

Cash

Deferred consideration

Estimated fair value of contingent consideration payable

Fair value of previously held equity method investments

Redeemable noncontrolling interests

Total consideration

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

Other noncurrent assets

Current liabilities

(26)

Long-term debt

(1)

Deferred income taxes

(23)

Other noncurrent liabilities

(8)

Total identifiable

net assets

Goodwill

Total net assets acquired

The accounting for acquisitions in the year ended December 27, 2025 has not been

completed in several areas,

including, but not limited to, pending assessment of certain assets,

primarily including identifiable intangibles and

certain equity method investments, and certain liabilities, primarily

including deferred income taxes.

During the

year ended December 27, 2025, we did not record any material measurement

period adjustments.

Goodwill is a result of the synergies and cross-selling opportunities that these acquisitions

are expected to provide

for us, as well as the expected growth potential.

The majority of the acquired goodwill is not deductible

for tax

purposes.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

The following table summarizes the intangible assets acquired during the year

ended December 27, 2025:

2025

Weighted Average

Useful

Lives (in years)

Customer relationships and lists

Trademarks / Tradenames

Product development

Non-compete agreements

Total

During the year ended December 27, 2025, in connection with acquisitions

of controlling interests of affiliates, we

recognized gains of approximately $

million, related to the remeasurement to fair value of our previously held

equity investments.

Such gains were calculated using a discounted cash flow model

based on Level 3 inputs, as

defined in

which was recorded in

selling, general and administrative

in the

consolidated statements of income.

The impact of these acquisitions, individually and in the aggregate, was

not considered material to our consolidated

financial statements.

Pro forma financial information since the acquisition date has not been presented

because the impact of these

acquisitions was immaterial to our consolidated financial statements.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

2024 Acquisitions

Acquisition of TriMed

On April 1, 2024, we acquired a

% voting equity interest in TriMed Inc. (“TriMed”), a global developer of

solutions for the orthopedic treatment of lower and upper extremities, headquartered

in California,

for consideration

of $

million.

This acquisition is reported in our Global Specialty Products segment.

The following table

aggregates the final fair value, as of the date of the acquisition, of consideration

paid and net assets acquired in the

TriMed acquisition:

Final Allocation

Acquisition consideration:

Cash

Deferred consideration

Redeemable noncontrolling interests

Total consideration

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

Other noncurrent assets

Current liabilities

(7)

Deferred income taxes

(62)

Other noncurrent liabilities

(6)

Total identifiable

net assets

Goodwill

Total net assets acquired

Goodwill is a result of synergies that are expected to originate from the acquisition as well as

the expected growth

potential of TriMed.

The acquired goodwill is not deductible for tax purposes.

The intangible assets acquired consisted of product development of $

million, trademarks and tradenames of $

million, and in-process research and development of $

million.

Weighted average useful lives for these acquired

intangible assets were

years,

years and indefinite-lived, respectively.

Except for in-process research and

development (“IPR&D”), intangible assets acquired as a result of the TriMed acquisition are being

amortized over

their estimated useful lives using the straight-line method of amortization.

IPR&D is accounted for as an

indefinite-lived intangible asset and is not amortized until completion or

abandonment of the associated research

and development efforts.

IPR&D is tested for impairment annually or periodically if

an indicator of impairment

exists during the period until completion.

Pro forma financial information and TriMed’s revenue and earnings since the acquisition date have not been

presented because the impact of the TriMed acquisition was immaterial to our consolidated

financial statements.

11 – Fair Value Measurements

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Other 2024 Acquisitions

During the year ended December 28, 2024, we acquired companies within

the Global Distribution and Value-

Added Services and Global Specialty Products segments.

Our acquired ownership interest in these companies

range from

% to

Total consideration for these acquisitions was $

million (including cash paid of $

million, fair value of previously held equity investment of $

million, noncontrolling interest of $

million,

estimated fair value of contingent consideration payable of $

million, and deferred consideration of $

million).

Net assets acquired primarily consisted of $

million of goodwill and $

million of intangible assets.

The

intangible assets acquired consisted of customer relationships and lists of

million, trademarks and tradenames

of $

million, product development of $

million and non-compete agreements of $

million.

Weighted average

useful lives for these acquired intangible assets were

11 years

7 years

9 years

and

5 years

, respectively.

We completed the accounting for all other acquisitions that occurred during the year ended December 28, 2024 and

we did not record any material measurement period adjustments

related to these acquisitions during the year ended

December 27, 2025.

Goodwill is a result of the synergies and cross-selling opportunities that these acquisitions

are expected to provide

for us, as well as the expected growth potential.

The majority of the acquired goodwill is not deductible

for tax

purposes.

During the year ended December 28, 2024, in connection with the acquisition

of a controlling interest of an

affiliate, we recognized a gain of approximately $

million related to the remeasurement to fair value of our

previously held equity investment, using a discounted cash flow model based

on Level 3 inputs, as defined in

Note

which was recorded in

selling, general and administrative

in the consolidated

statements of income.

Pro forma financial information for our 2024 acquisitions has not been

presented because the impact of the

acquisitions was immaterial to our consolidated financial statements.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

2023 Acquisitions

Acquisition of Shield Healthcare

On October 2, 2023, we acquired a

% voting equity interest in Shield Healthcare, Inc. (“Shield”), a

supplier of

homecare medical products delivered directly to patients in their homes,

for consideration of $

million.

This

acquisition is reported in our Global Distribution and Value-Added Services segment.

Shield expands our existing

medical business by delivering a diverse range of products, including

items such as incontinence, urology, ostomy,

enteral nutrition, advanced wound care and diabetes supplies.

Additionally, Shield offers continuous glucose

monitoring devices directly to patients in their homes.

The following table aggregates the final fair value, as of the date of the acquisition,

of consideration paid and net

assets acquired in the Shield acquisition:

Final Allocation

Acquisition consideration:

Cash

Deferred consideration

Redeemable noncontrolling interests

Total consideration

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

Other noncurrent assets

Current liabilities

(24)

Deferred income taxes

(43)

Other noncurrent liabilities

(7)

Total identifiable

net assets

Goodwill

Total net assets acquired

Goodwill is a result of synergies that are expected to originate from the acquisition as well as

the expected growth

potential of Shield.

The acquired goodwill is not deductible for tax purposes.

The following table summarizes the identifiable intangible assets acquired

as part of the acquisition of Shield:

2023

Weighted Average

Useful

Lives (in years)

Customer relationships and lists

Trademarks / Tradenames

Total

Pro forma financial information and Shield’s revenue and earnings from the acquisition date have

not been presented because the impact of the Shield acquisition was

immaterial to our consolidated financial

statements.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Acquisition of S.I.N. Implant System

On July 5, 2023, we acquired a

% voting equity interest in S.I.N. Implant System (“S.I.N.”) for consideration

million.

This acquisition is reported in our Global Specialty Products segment.

Based in São Paulo, S.I.N.

manufactures an extensive line of products to perform dental implant procedures

and is focused on advancing the

development of value-priced dental implants.

In 2023, S.I.N. expanded the distribution of its products into the

United States and other international markets.

The following table aggregates the final fair value, as of the date of acquisition,

of consideration paid and net assets

acquired in the S.I.N. acquisition:

Final Allocation

Acquisition consideration:

Cash

Total consideration

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

Other noncurrent assets

Current liabilities

(33)

Long-term debt

(22)

Deferred income taxes

(38)

Other noncurrent liabilities

(27)

Total identifiable

net assets

Goodwill

Total net assets acquired

Goodwill is a result of synergies that are expected to originate from the acquisition as well as

the expected growth

potential of S.I.N.

The acquired goodwill is not deductible for tax purposes.

The following table summarizes the identifiable intangible assets acquired

as part of the acquisition of S.I.N.:

2023

Weighted Average

Useful

Lives (in years)

Customer relationships and lists

Product development

Trademarks / Tradenames

Total

Pro forma financial information and S.I.N.’s revenue and earnings from the acquisition date have not been

presented because the impact of the S.I.N. acquisition was immaterial

to our consolidated financial statements.

Acquisition of Biotech Dental

On April 5, 2023, we acquired a

% voting equity interest in Biotech Dental, a provider of dental implants,

clear

aligners, individualized prosthetics and innovative digital dental software based

in France, for preliminary

consideration of $

million.

This acquisition is reported in our Global Specialty Products

segment.

Biotech

Dental has several important solutions for dental practices and dental

labs, including Nemotec, a comprehensive,

integrated suite of planning and diagnostic software using open architecture

that connects disparate medical devices

to create a digital view of the patient, offering greater diagnostic accuracy and an

improved patient experience.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

The following table aggregates the final fair value, as of the date of acquisition,

of consideration paid and net assets

acquired in the Biotech Dental acquisition:

Final Allocation

Acquisition consideration:

Cash

Fair value of contributed equity share in a controlled subsidiary

Redeemable noncontrolling interests

Total consideration

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

Other noncurrent assets

Current liabilities

(60)

Long-term debt

(73)

Deferred income taxes

(53)

Other noncurrent liabilities

(20)

Total identifiable

net assets

Goodwill

Total net assets acquired

Goodwill is a result of synergies that are expected to originate from the acquisition as well as

the expected growth

potential of Biotech Dental.

The acquired goodwill is not deductible for tax purposes.

The following table summarizes the identifiable intangible assets acquired

as part of the acquisition of Biotech

Dental:

2023

Weighted Average

Useful

Lives (in years)

Product development

Customer relationships and lists

Trademarks / Tradenames

Total

Pro forma financial information and Biotech’s revenues and earnings from the acquisition date have not been

presented because the impact of the Biotech Dental acquisition was immaterial

to our consolidated financial

statements.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Other 2023 Acquisitions

During the year ended December 30, 2023, in addition to those noted above,

we acquired companies within the

Global Distribution and Value-Added Services, Global Specialty Products, and Global Technology segments for

total consideration of $

million.

Our acquired ownership interest ranged between

% to

During the

year ended December 30, 2023, in connection with the acquisition of

a controlling interest of an affiliate, we

recognized a gain of approximately $

million related to the remeasurement to fair value of our previously

held

equity investment, using a discounted cash flow model based on Level

3 inputs, as defined in

Note 11 – Fair Value

Measurements

Goodwill of $

million from these acquisitions is a result of the synergies and cross-selling opportunities

that

these acquisitions are expected to provide for us, as well as the expected

growth potential.

The majority of the

acquired goodwill is deductible for tax purposes.

Intangible assets of $

million, consisting of $

million of

customer relationships and lists, $

million of trademarks and tradenames, $

million of product development, and

other of $

million are being amortized over their weighted average useful lives that

range from

two years

ten

years

Pro forma financial information for our 2023 acquisitions has not been

presented because the impact of the

acquisitions was immaterial to our consolidated financial statements.

Acquisition Costs

During the years ended December 27, 2025, December 28, 2024

and December 30, 2023 we incurred $

million, $

million and $

million in acquisition costs, respectively.

These costs are included in selling, general and

administrative in our consolidated statements of income.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 6 – Inventories, Net

Inventories, net consisted of the following as of:

Description

December 27,

2025

December 28,

2024

Finished goods

1,889

1,710

Raw materials

Work-in process

Inventories, net

2,002

1,810

Our inventory reserve was $

million and $

million as of December 27, 2025 and December 28, 2024,

respectively.

Note 7 – Property and Equipment, Net

Property and equipment, including related estimated useful lives, consisted

of the following as of:

December 27,

December 28,

2025

2024

Land

Buildings and permanent improvements

Leasehold improvements

Machinery and warehouse equipment

Furniture, fixtures and other

Computer equipment and software

1,380

1,201

Less accumulated depreciation and amortization

(759)

(670)

Property and equipment, net

Estimated Useful

Lives (in years)

Buildings and permanent improvements

Machinery and warehouse equipment

Furniture, fixtures and other

Computer equipment and software

Leasehold improvements are amortized on a straight-line basis over

the lesser of the useful life of the assets or the

remaining lease term.

Property and equipment related depreciation expense for the years

ended December 27, 2025, December 28, 2024

and December 30, 2023, was $

million, $

million and $

million, respectively.

Please see

Note 8 – Leases

for finance lease amounts included in property and equipment, net within our

consolidated balance sheets.

During the year ended December 30, 2023 we recorded a $

million impairment of capitalized software, related to

the Global Distribution and Value-Added Services segment.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 8 – Leases

We have operating and finance leases for corporate offices, office space, distribution and other facilities, vehicles

and certain equipment.

Our leases have remaining terms of less than one year to

approximately

years, some of

which may include options to extend the leases for up to

years.

The components of lease expense were as

follows:

Years

Ended

December 27,

December 28,

December 30,

2025

2024

2023

Operating lease cost:

Variable

lease cost

Short-term lease cost

Total operating lease cost

(1)

Finance lease cost

Total lease cost

(1)

Total operating lease cost for the years ended December 27, 2025, December 28, 2024 and December 30, 2023, included costs of $

million, $

million and $

million, respectively, related to facility leases recorded in restructuring and related costs within our

consolidated statements of income.

Further, for the year ended December 27, 2025 we recognized a gain of $

million on early lease termination

related to facility leases which was recorded in restructuring and related costs

within our consolidated statement of

income.

For the years ended December 28, 2024 and December

30, 2023, we recognized a net impairment of

operating lease right-of-use assets of $

million and $

million respectively, related to facility leases recorded in

restructuring and related costs within our consolidated statement of

income.

Supplemental balance sheet information related to leases is as follows:

Years

Ended

December 27,

December 28,

2025

2024

Operating Leases:

Operating lease right-of-use assets

Current operating lease liabilities

Non-current operating lease liabilities

Total operating lease liabilities

Finance Leases:

Property and equipment, at cost

Accumulated depreciation

(7)

(9)

Property and equipment, net of accumulated depreciation

Current maturities of long-term debt

Long-term debt

Total finance

lease liabilities

Weighted Average

Remaining Lease Term in

Years:

Operating leases

5.6

5.9

Finance leases

2.9

2.7

Weighted Average

Discount Rate:

Operating leases

4.5

4.2

Finance leases

4.5

4.4

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Supplemental cash flow information related to leases is as follows:

Years

Ended

December 27,

December 28,

2025

2024

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases

Financing cash flows for finance leases

Right-of-use assets obtained in exchange for lease obligations:

Operating leases

Finance leases

Maturities of lease liabilities are as follows:

December 27, 2025

Operating

Finance

Leases

2026

2027

2028

2029

2030

Thereafter

Total future

lease payments

Less imputed interest

Total

As of December 27, 2025, we have additional operating leases that have

not yet commenced with total lease

payments of $

million for buildings and vehicles.

These operating leases will commence after December 27,

2025, with lease terms of less than one year to

ten years

Certain of our facilities related to our acquisitions are leased from

employees and minority shareholders.

These

leases are classified as operating leases and have a remaining lease term

ranging from less than a year to

12 years

As of December 27, 2025, current and non-current liabilities associated

with related party operating leases were $

million and $

million, respectively.

At December 27, 2025, related party leases represented

6.6

% and

8.7

% of

the total current and non-current operating lease liabilities, respectively.

As of December 28, 2024, current and

non-current liabilities associated with related party operating leases were

million and $

million, respectively.

At December 28, 2024 related party leases represented

7.6

% and

7.8

% of the total current and non-current

operating lease liabilities, respectively.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 9 – Goodwill and Other Intangibles, Net

Changes in the carrying amounts

of goodwill for the years ended December 27, 2025 and December

28, 2024 were

as follows:

Global

Distribution and

Value-Added

Services

Global Specialty

Products

Global

Technology

Total

Balance as of December 30, 2023

2,007

1,077

3,875

Adjustments to goodwill:

Acquisitions

Impairment

(11)

(2)

(13)

Foreign currency translation

(39)

(80)

(4)

(123)

Balance as of December 28, 2024

2,009

1,093

3,887

Adjustments to goodwill:

Acquisitions

Disposal

(1)

(2)

(3)

Foreign currency translation

Balance as of December 27, 2025

2,106

1,291

4,213

In January 2025, we performed a geographical realignment within

the Global Distribution and Value-Added

Services reportable segment intended to provide increased transparency

into the performance of our global

distribution businesses and to reflect evolving management oversight

and decision-making.

As a result of the

realignment and the change in reporting units, we reallocated goodwill

to each of our new reporting units using a

relative fair value approach.

The relative fair values of the new reporting units were determined based on

quantitative valuation analysis that considered projected cash flows,

market assumptions, and other relevant

valuation inputs.

Reporting units under the former and new structures of

the Global Distribution and Value-Added

Services reportable segment were tested for impairment as of January 1,

2025, and it was determined that the fair

values of our reporting units more likely than not exceeded their carrying

values, resulting in no impairment as of

January 1, 2025 under both structures.

In connection with our restructuring initiatives, during the year ended

December 28, 2024, we recorded an $

million impairment of goodwill in the Global Specialty Products segment,

relating to the disposal of a portion of a

business; such impairment was calculated based on the relative fair value

of goodwill.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Other intangible assets consisted of the following:

December 27, 2025

Accumulated

Weighted Average

Cost

Amortization

Net

Life (in years)

Customer relationships and lists

(408)

Trademarks / Tradenames

(96)

Product development

(120)

Non-compete agreements

(5)

Other

(9)

Total

1,656

(638)

1,018

December 28, 2024

Accumulated

Weighted Average

Cost

Amortization

Net

Life (in years)

Customer relationships and lists

(356)

Trademarks / Tradenames

(89)

Product development

(71)

Non-compete agreements

(6)

Other

(10)

Total

1,555

(532)

1,023

Trademarks, trade names, customer lists and customer relationships were established through

business acquisitions

and are amortized on a straight-line basis over their respective asset life.

Non-compete agreements represent

amounts paid primarily to prior owners of acquired businesses and certain

sales persons, in exchange for placing

restrictions on their ability to pose a competitive risk to us.

Such amounts are amortized, on a straight-line basis

over the respective non-compete period, which generally commences upon

termination of employment or

separation from us.

Amortization expense, excluding impairment charges, related to definite-lived intangible assets

for the years ended

December 27, 2025, December 28, 2024 and December 30, 2023, was $

million, $

million and $

million,

respectively.

During the year ended December 27, 2025, we recorded $

million of impairment charges related to businesses in

our Global Distribution and Value-Added Services segment.

The impairment charges included $

million

primarily related to customer lists and relationships attributable

to lower than anticipated operating margins in these

businesses.

The remaining impairment charges of $

million related to trade names and non-compete agreements.

During the year ended December 28, 2024, we recorded $

million of impairment charges related to businesses in

our Global Distribution and Value-Added Services segment.

It included $

million of a trade name impairment,

calculated using the relative fair value, related to a disposal of a business, and

million related to trade name

impairment due to business integration in connection with our restructuring

initiatives.

The remaining $

million

impairment charges related to trade names and non-compete agreements.

During the year ended December 30, 2023, we recorded $

million of impairment charges related to businesses in

our Global Distribution and Value-Added Services segment, consisting of $

million primarily related to customer

lists and relationships attributable to lower than anticipated operating

margins in certain businesses, and a $

million charge related to the planned exit of a business in connection with our restructuring

initiatives.

The impairment charges for the years ended December 27, 2025, December 28, 2024,

and December 30, 2023 were

measured as the excess of the carrying values over the estimated fair values

of the related intangible assets,

determined using discounted estimates of future cash flows and the

relief-from-royalty method.

Note 16 – Plans of Restructuring and Related Costs

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Please see

for additional details.

The above intangible asset impairment charges were recorded within selling, general

and administrative expenses

and in restructuring and related costs in our consolidated statement of

income.

The annual amortization expense expected to be recorded for existing

intangibles assets for the years 2026 through

2030 is $

million, $

million and $

million.

Note 10 – Investments and Other

Investments and other consisted of the following:

December 27,

December 28,

2025

2024

Investments in unconsolidated affiliates

Non-current deferred foreign, state and local income taxes

Notes receivable

(1)

Capitalized costs for software and cloud based applications for external use

Security deposits

Acquisition-related indemnification assets

Non-current pension assets

Non-current inventory

Other

Total

(1)

Long-term notes receivable carry interest rates ranging from

3.0

% to

11.8

% and are due in varying installments through

May 31, 2031

Amortization expense, related to capitalized costs for software to be sold,

leased or marketed to external users, and

for cloud-based applications used to deliver our services, for the years

ended December 27, 2025, December 28,

2024 and December 30, 2023, was $

million, $

million and $

million, respectively, and is included in the

selling, general and administrative line within our consolidated statements

of income.

During the year ended December 28, 2024 we recorded a $

million impairment of capitalized software costs,

related to the Global Technology segment.

Note 20 – Redeemable Noncontrolling

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 11 – Fair Value

Measurements

The following section describes the fair values of our financial instruments

and the methodologies that we used to

measure their fair values.

Investments and notes receivable

There are no quoted market prices available for investments in unconsolidated

affiliates and notes receivable.

Certain of our notes receivable contain variable interest rates.

We believe the carrying amounts of the notes

receivable are a reasonable estimate of fair value based on the interest rates

in the applicable markets.

Our notes

receivable fair value is based on Level 3 inputs within the fair value

hierarchy.

Debt

The fair value of our debt (including bank credit lines, current maturities

of long-term debt and long-term debt) is

based on Level 3 inputs within the fair value hierarchy, and as of December 27, 2025 and December 28, 2024 was

estimated at $

3,107

million and $

2,536

million, respectively.

Factors that we considered when estimating the fair

value of our debt include market conditions, such as interest rates and credit

spreads.

Derivative contracts

Derivative contracts are valued using quoted market prices and

significant other observable inputs.

Our derivative

instruments primarily include foreign currency forward contracts, interest

rate swaps and total return swaps.

The fair values for the majority of our foreign currency derivative contracts

are obtained by comparing our contract

rate to a published forward price of the underlying market rates, which

are based on market rates for comparable

transactions that are classified within Level 2 of the fair value hierarchy.

The fair value of the interest rate swap, which is classified within Level 2

of the fair value hierarchy, is determined

by comparing our contract rate to a forward market rate as of the

valuation date.

The fair value of total return swaps is determined by valuing the underlying

exchange traded funds of the swap

using market-on-close pricing by industry providers as of the valuation

date that are classified within Level 2 of the

fair value hierarchy.

Redeemable noncontrolling interests

The values for redeemable noncontrolling interests are based on recent

transactions and/or implied multiples of

earnings that are classified within Level 3 of the fair value hierarchy.

See

Interests for additional information

Intangible Assets

Assets measured on a non-recurring basis at fair value include intangibles.

Inputs for measuring intangibles are

classified as Level 3 within the fair value hierarchy.

See

Note 1 – Basis of Presentation and Significant Accounting

Policies

and

Note 9 – Goodwill and Other Intangibles, Net

for additional information.

Defined Benefit Plans

Assets of our defined benefit plans are measured on a recurring basis

and are classified as Level 1 within the fair

value hierarchy.

See

Note 19 – Employee Benefit Plans

for additional information.

Note 5 – Business Acquisitions

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Contingent Consideration

We estimate the fair value of contingent consideration payments as part of the acquisition price and record the

estimated fair value of contingent consideration as a liability on our

consolidated balance sheet.

For transactions

accounted for as business combinations, subsequent changes in the

estimated fair value of contingent consideration

payments are included in selling, general and administrative expenses

in our consolidated statements of income

(see

For transactions involving changes in our ownership in consolidated

subsidiaries

without a change in our control, subsequent changes in the estimated fair

value of contingent consideration

payments are recognized in additional paid-in capital in our consolidated

balance sheet.

We measure contingent

consideration at the fair value on a recurring basis using significant unobservable

inputs classified as Level 3 of the

fair value hierarchy.

We use various valuation techniques, including the Monte Carlo simulation and probability-

weighted scenarios, to determine the fair value of the contingent consideration

liabilities on the acquisition date and

at each reporting period.

Our fair value measurement inputs include expected operating

performance, discount and

risk-free rates, and credit spread.

Contingent consideration is remeasured to fair value at each reporting

period.

During the year ended December 27,

2025, we updated the fair value of contingent consideration in connection

with 2025 and 2023 business

acquisitions, which resulted in expense of $

million and income of $

million, respectively.

During the year

ended December 28, 2024, we updated the fair value of contingent

consideration in connection with 2023 and 2022

business acquisitions, which resulted in expense of $

million and $

million, respectively.

These changes were

recorded in selling, general and administrative in the consolidated

statements of income.

During the year ended

December 27, 2025, we also updated the fair value of contingent consideration

related to changes in ownership.

These changes were recorded within additional paid-in-capital in the consolidated

balance sheets.

The components of the change in the fair value of contingent consideration

for the year ended December 27, 2025

and December 28, 2024 are presented in the following table:

Years

Ended

December 27,

December 28,

2025

2024

Balance, beginning of period

Increase in contingent consideration due to business acquisitions and acquisitions of

noncontrolling interests in subsidiaries

Decrease in contingent consideration due to payments

(19)

(31)

Change in fair value of contingent consideration in connection with business acquisitions

(2)

Change in fair value of contingent consideration in connection with changes in ownership in

consolidated subsidiaries

(15)

Balance, end of period

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

The following table presents our assets and liabilities that are measured and

recognized at fair value on a recurring

basis classified under the appropriate level of the fair value hierarchy as of

December 27, 2025 and December 28,

2024:

December 27, 2025

Level 1

Level 2

Level 3

Total

Assets:

Derivative contracts designated as hedges

Derivative contracts undesignated

Total return

swap

Total assets

Liabilities:

Derivative contracts designated as hedges

Derivative contracts undesignated

Contingent consideration

Total liabilities

Redeemable noncontrolling interests

December 28, 2024

Level 1

Level 2

Level 3

Total

Assets:

Derivative contracts designated as hedges

Derivative contracts undesignated

Total assets

Liabilities:

Derivative contracts designated as hedges

Derivative contracts undesignated

Total return

swap

Contingent consideration

Total liabilities

Redeemable noncontrolling interests

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 12 – Concentrations of Risk

Certain financial instruments potentially subject us to concentrations of

credit risk.

These financial instruments

consist primarily of cash equivalents, trade receivables, long-term investments,

notes receivable and derivative

instruments.

In all cases, our maximum exposure to loss from credit

risk equals the gross fair value of the financial

instruments.

We routinely maintain cash balances at financial institutions in excess of insured amounts.

We have

not experienced any loss in such accounts and we manage this risk through

maintaining cash deposits and other

highly liquid investments in high quality financial institutions.

We continuously assess the need for reserves for

such losses, which have been within our expectations.

We do not require collateral or other security to support

financial instruments subject to credit risk, except for long-term notes receivable.

We limit credit risk with respect to our cash equivalents, short-term and long-term investments and derivative

instruments, by monitoring the credit worthiness of the financial institutions

who are the counter-parties to such

financial instruments.

As a risk management policy, we limit the amount of credit exposure by diversifying and

utilizing numerous investment grade counterparties.

With respect to our trade receivables, credit risk is somewhat limited due to a relatively large customer base

and its

dispersion across different types of health care professionals and geographic areas.

No single customer accounted

for more than

% of our net sales in each of the years ended December 27, 2025,

December 28, 2024 or December

30, 2023.

With respect to our sources of supply, our top 10 Global Distribution and Value

-Added Services

suppliers and our single largest supplier accounted for approximately

% and

%, respectively, of our aggregate

purchases for the year ended December 27, 2025 and approximately

% and

%, respectively, of our aggregate

purchases for the year ended December 28, 2024.

Our long-term notes receivable primarily represent strategic financing arrangements

with certain affiliates.

Generally, these notes are secured by certain assets of the counterparty; however, in most cases our security is

subordinate to the rights of other commercial financial institutions.

While we have exposure to credit loss in the

event of non-performance by these counterparties, we conduct ongoing assessments

of their financial and

operational performance.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 13 – Derivatives and Hedging Activities

We are exposed to market risks and changes in foreign currency exchange rates against the U.S. dollar and each

other, and changes to the credit risk of the derivative counterparties.

We attempt to minimize these risks using

foreign currency forward contracts and by maintaining counter-party credit limits.

Our hedging activities provide

only limited protection against currency exchange and credit risks.

Factors that could influence the effectiveness of

our hedging programs include currency markets and availability of hedging

instruments and liquidity of the credit

markets.

All foreign currency forward contracts that we enter are for the sole

purpose of hedging an existing or

anticipated currency exposure.

We do not enter into foreign currency forward contracts for speculative purposes

and we manage our credit risks by diversifying our counterparties,

maintaining a strong balance sheet and having

multiple sources of capital.

Our derivative instruments primarily include foreign currency forward contracts,

total

return swaps, and interest rate swaps.

During 2019 we entered foreign currency forward contracts that we

designated as net investment hedges to hedge a

portion of our euro-denominated foreign operations.

These net investment hedges offset changes in the U.S. dollar

value of our investments in certain euro-functional currency subsidiaries due

to fluctuating foreign exchange rates.

Gains and losses related to these net investment hedges are recorded

in accumulated other comprehensive loss

within our consolidated balance sheets.

Amounts excluded from the assessment of hedge effectiveness are

included

in interest expense within our consolidated statements of income.

The aggregate notional value of these net

investment hedges, which matured on

November 16, 2023

, was approximately €

million.

On November 3,

2023 we entered into new foreign currency forward contracts to

hedge a portion of our euro-denominated foreign

operations which are designated as net investment hedges.

The aggregate notional value of this net investment

hedge, which matures on

November 3, 2028

, is approximately €

million.

During the years ended December 27,

2025, December 28, 2024, and December 30, 2023, we recorded an

increase/(decrease) of $

(33)

million, $

million, and $

(32)

million, respectively, within other comprehensive income related to these foreign currency

forward contracts.

See

for additional information.

March 20, 2020

, we entered a total return swap to economically hedge our unfunded

non-qualified SERP and

our DCP.

This swap will offset changes in our SERP and DCP liabilities.

At the swap’s inception, the notional

value of the investments in these plans was $

million.

At December 27, 2025, the notional value of the

investments in these plans was $

million.

At December 27, 2025, the financing blended rate for this swap

was

based on the Secured Overnight Financing Rate (“SOFR”) of

3.79

% plus

0.75

%, for a combined rate of

4.54

For

the years ended December 27, 2025, December 28, 2024,

and December 30, 2023, we recorded within selling,

general and administrative expenses in our consolidated statement of income,

a gain of $

million,

million, and

million, respectively, net of transaction costs, related to this undesignated swap.

See

Note 19 – Employee

Benefit Plans

for additional information.

On July 11, 2023, we entered into interest rate swap agreements to hedge the cash flow of our variable

rate $

million floating debt term loan facility, with

three years

maturity, effectively changing the floating rate portion of

our obligation to a fixed rate.

Under the terms of the interest rate swap agreements, we receive variable

interest

payments based on the one-month Term SOFR rate and pay interest at a fixed rate.

As of December 27, 2025, the

notional value of the interest rate swap agreements was $

million.

For the years ended December 27, 2025 and

December 28, 2024, we recorded, within accumulated other comprehensive

loss within our consolidated balance

sheets, a loss of $

million and $

million, respectively, related to the change in the fair value of these interest rate

swap agreements, since we have designated these swap agreements as cash

flow hedges.

Fluctuations in the value of certain foreign currencies as compared

to the U.S. dollar may positively or negatively

affect our revenues, gross margins, operating expenses and retained earnings, all of which are expressed

in U.S.

dollars.

Where we deem it prudent, we engage in hedging programs using primarily

foreign currency forward

contracts aimed at limiting the impact of foreign currency exchange

rate fluctuations on earnings.

We purchase

short-term (i.e., generally 18 months or less) foreign currency forward contracts

to protect against currency

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

exchange risks associated with intercompany loans due from our international

subsidiaries and the payment of

merchandise purchases to our foreign suppliers.

We do not hedge the translation of foreign currency profits into

U.S. dollars, as we consider foreign currency translation to be an accounting

exposure, not an economic

exposure.

Amounts related to our hedging activities are recorded in prepaid

expenses and other and/or accrued

expenses: other within our consolidated balance sheets.

The following table summarizes the terms and fair value of our outstanding derivative

financial instruments as of

December 27, 2025 and December 28, 2024:

December 27, 2025

Notional

Amount

Classification

Fair

Value

Maturity Date

Derivatives used in cash flow hedges:

Foreign currency forward contracts

Prepaid expenses and other

December 24, 2026

Interest rate swaps

Accrued expenses, other

(3)

July 13, 2026

Derivatives used in net investment hedges:

Foreign currency forward contracts

Accrued expenses, other

(19)

November 3, 2028

Undesignated hedging relationships:

Total return

swaps

Prepaid expenses and other

December 30, 2025

Total

1,254

(21)

December 28, 2024

Notional

Amount

Classification

Fair

Value

Maturity Date

Derivatives used in cash flow hedges:

Foreign currency forward contracts

Prepaid expenses and other

October 30, 2025

Interest rate swaps

Accrued expenses, other

(3)

July 13, 2026

Derivatives used in net investment hedges:

Foreign currency forward contracts

Prepaid expenses and other

November 3, 2028

Undesignated hedging relationships:

Total return

swaps

Accrued expenses, other

(3)

December 30, 2024

Total

1,239

The following table summarizes the effect of cash flow hedges and net investment hedges

on our consolidated

statements of income for the years ended December 27, 2025, December

28, 2024 and December 30, 2023:

Years

Ended

December 27,

December 28,

December 30,

2025

2024

2023

Derivatives used in cash flow hedges:

Foreign currency forward contracts

(1)

Interest rate swaps

(7)

Derivatives used in net investment hedges:

Foreign currency forward contracts

(24)

(10)

Total

(24)

(18)

The amount of gains or losses reclassified from accumulated other comprehensive

loss into income were not

material for the years ended December 27, 2025, December 28, 2024,

and December 30, 2023.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 14 – Debt

Bank Credit Lines

Bank credit lines consisted of the following:

December 27,

December 28,

2025

2024

Revolving credit agreement

Other short-term bank credit lines

Total

Revolving Credit Agreement

August 20, 2021

, we entered into a $

1.0

billion revolving credit agreement (the “Revolving Credit Agreement”)

which was amended and restated on

July 11, 2023

to extend the maturity date to

July 11, 2028

and update the

interest rate provisions to reflect the current market approach for a

multicurrency facility.

On June 6, 2025, we

amended and restated the Revolving Credit Agreement to, among other

things, modify certain financial definitions

and covenants.

The interest rate on this revolving credit facility is based on Term Secured Overnight Financing

Rate (“

Term SOFR

”) plus a spread based on our leverage ratio at the end

of each financial reporting quarter.

As of

December 27, 2025 the interest rate on this revolving credit facility

was

3.78

% plus

1.08

% for a combined rate of

4.86

As of December 28, 2024 the interest rate on this revolving

credit facility was

4.45

% plus

1.18

% for a

combined rate of

5.63

The Revolving Credit Agreement requires, among other things, that we

maintain certain maximum leverage ratios.

Additionally, the Revolving Credit Agreement contains customary representations, warranties and affirmative

covenants as well as customary negative covenants, subject to negotiated

exceptions, on liens, indebtedness,

significant corporate changes (including mergers), dispositions and certain restrictive

agreements.

As of December

27, 2025 and December 28, 2024, we had $

million and $

million in borrowings, respectively, under this

revolving credit facility.

During the year ended December 27, 2025, the average outstanding balance

under the

Revolving Credit Agreement was approximately $

million.

As of December 27, 2025 and December 28, 2024,

there were $

million and $

million of letters of credit, respectively, provided to third parties under the

Revolving Credit Agreement.

Other Short-Term Bank Credit

Lines

As of December 27, 2025 and December 28, 2024, we had various other

short-term bank credit lines available, in

various currencies, with a maximum borrowing capacity of $

million and $

million, respectively.

As of

December 27, 2025 and December 28, 2024, $

million and $

million, respectively, were outstanding.

During the year ended December 27, 2025, the average outstanding balances

under our various other short-term

bank credit lines was approximately $

million.

As of December 27, 2025 and December 28, 2024, borrowings

under other short-term bank credit lines had weighted average interest

rates of

4.68

% and

5.35

%, respectively.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Long-term debt

Long-term debt consisted of the following:

December 27,

December 28,

2025

2024

Private placement facilities

1,149

Term loan

U.S. trade accounts receivable securitization

Various

collateralized and uncollateralized loans payable with interest,

in varying installments through 2031 at interest rates

from

0.00

% to

6.75

% at December 27, 2025 and

from

0.00

% to

9.42

% at December 28, 2024

Finance lease obligations

Total

2,343

1,886

Less current maturities

(33)

(56)

Total long-term debt

2,310

1,830

As of December 27, 2025,

the aggregate amounts of long-term debt, including finance lease obligations

and net of

deferred debt issuance costs, maturing in each of the next five years

and thereafter are as follows:

2026

2027

2028

2029

2030

Thereafter

Total

2,343

Private Placement Facilities

Our private placement facilities provided by

four

insurance companies have a total facility amount of $

1.5

billion,

and are available on an uncommitted basis at fixed rate economic terms

to be agreed upon at the time of issuance,

from time to time through

December 19, 2028

The facilities allow us to issue senior promissory notes to the

lenders at a fixed rate based on an agreed upon spread over applicable treasury

notes at the time of issuance.

The

term of each possible issuance will be selected by us and can range from

five

15 years

(with an average life no

longer than

12 years

The proceeds of any issuances under the facilities will be used for

general corporate

purposes, including working capital and capital expenditures, to refinance

existing indebtedness, and/or to fund

potential acquisitions.

On December 19, 2025, we amended and restated our private placement

facilities to, among

other things, (i) extend the scheduled facility termination dates to

December 19, 2028

and (ii) modify certain

financial definitions and covenants.

The agreements provide, among other things, that we

maintain certain

maximum leverage ratios, and contain restrictions relating to subsidiary

indebtedness, liens, affiliate transactions,

disposal of assets and certain changes in ownership.

These facilities contain make-whole provisions in the event

that we pay off the facilities prior to the applicable due dates.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

The components of our private placement facility borrowings as of December

27, 2025, which have a weighted

average interest rate of

3.93

% are presented in the following table:

Amount of

Date of

Borrowing

Outstanding

Rate

Due Date

June 16, 2017

3.42

June 16, 2027

September 15, 2017

3.52

September 15, 2029

January 2, 2018

3.32

January 2, 2028

September 2, 2020

2.35

September 2, 2030

June 2, 2021

2.48

June 2, 2031

June 2, 2021

2.58

June 2, 2033

May 4, 2023

4.79

May 4, 2028

May 4, 2023

4.84

May 4, 2030

May 4, 2023

4.96

May 4, 2033

May 4, 2023

4.94

May 4, 2033

December 15, 2025

5.23

December 15, 2032

December 15, 2025

5.28

December 15, 2032

Less: Deferred debt issuance costs

(1)

Total

1,149

The components of our private placement facility borrowings as of December

28, 2024, which have a weighted

average interest rate of

3.70

% are presented in the following table:

Amount of

Date of

Borrowing

Outstanding

Rate

Due Date

June 16, 2017

3.42

June 16, 2027

September 15, 2017

3.52

September 15, 2029

January 2, 2018

3.32

January 2, 2028

September 2, 2020

2.35

September 2, 2030

June 2, 2021

2.48

June 2, 2031

June 2, 2021

2.58

June 2, 2033

May 4, 2023

4.79

May 4, 2028

May 4, 2023

4.84

May 4, 2030

May 4, 2023

4.96

May 4, 2033

May 4, 2023

4.94

May 4, 2033

Total

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Term Loan

On July 11, 2023, we entered into a

three-year

million term loan credit agreement (the “Term Credit

Agreement”), which was originally scheduled to mature on

July 11, 2026

On June 6, 2025, this agreement was

amended and restated to, among other things, (i) extend the maturity date

June 6, 2030

, and (ii) modify certain

financial definitions and covenants.

The interest rate on this term loan is based on the

Term SOFR

plus a spread

based on our leverage ratio at the end of each financial reporting quarter.

Beginning in June 2026 and continuing

through June 2027, we are required to make quarterly payments of $

million.

In September 2027, the quarterly

payment amount increases to $

million, continuing through June 2030 with the remaining balance due

June 6,

As of December 27, 2025, the borrowings outstanding under this

term loan were $

million.

At December

27, 2025, the interest rate under the Term Credit Agreement was

3.76

% plus

1.25

% for a combined rate of

5.01

As of December 28, 2024, the borrowings outstanding under this term

loan were $

million.

At December 28,

2024, the interest rate under the Term Credit Agreement was

4.45

% plus

1.60

% for a combined rate of

6.05

However, at December 28, 2024, we had a hedge in place creating an effective fixed rate of

6.04

After renewing

the Term Credit Agreement in June of 2025, our hedged portion of the Term Credit Agreement is now

approximately

% of the notional total.

As of December 27, 2025, the effective fixed rate was

5.69

% and the

floating rate was

5.01

%, resulting in a weighted average rate of

5.62

The Term Credit Agreement requires,

among other things, that we maintain certain maximum leverage ratios.

Additionally, the Term

Credit Agreement

contains customary representations, warranties and affirmative covenants as well

as customary negative covenants,

subject to negotiated exceptions, on liens, indebtedness, significant corporate

changes (including mergers),

dispositions and certain restrictive agreements.

U.S. Trade Accounts Receivable Securitization

We have a facility agreement based on our U.S. trade accounts receivable that is structured as an asset-backed

securitization program with pricing committed for up to

three years

On December 6, 2024, we extended the

expiration date of this facility agreement to

December 6, 2027

(the previous maturity date was

December 15, 2025

This facility agreement has a purchase limit of $

million with

two

banks as agents.

As of December 27, 2025 and December 28, 2024, the borrowings outstanding

under this securitization facility

were $

million and $

million, respectively.

At December 27, 2025, the interest rate on borrowings under

this facility was based on the

asset-backed commercial paper rate

4.06

% plus

0.75

%, for a combined rate of

4.81

At December 28, 2024, the interest rate on borrowings under

this facility was based on the asset-backed

commercial paper rate of

4.73

% plus

0.75

%, for a combined rate of

5.48

If our accounts receivable collection pattern changes due to customers

either paying late or not making payments,

our ability to borrow under this facility may be reduced.

We are required to pay a commitment fee of

basis points depending upon program utilization.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 15 – Income Taxes

Income before taxes and equity in earnings of affiliates was as follows:

Years

ended

December 27,

December 28,

December 30,

2025

2024

2023

Domestic

Foreign

Total

The provisions for income taxes were as follows:

Years

ended

December 27,

December 28,

December 30,

2025

2024

2023

Current income tax expense:

U.S. Federal

State and local

Foreign

Total current

Deferred income tax expense (benefit):

U.S. Federal

(29)

State and local

(12)

(3)

Foreign

(31)

(20)

(26)

Total deferred

(61)

(20)

Total provision

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

The tax effects of temporary differences that give rise to our deferred income tax asset (liability) were

as follows:

Years

Ended

December 27,

December 28,

2025

2024

Deferred income tax asset:

Net operating losses

Other carryforwards

Inventory, premium

coupon redemptions and accounts receivable

valuation allowances

Operating lease liability

Capitalization of research and development costs

Other asset

Total deferred income

tax asset

Valuation

allowance for deferred tax assets

(1)

(53)

(38)

Net deferred income tax asset

Deferred income tax liability

Intangibles amortization

(266)

(260)

Operating lease right-of-use asset

(70)

(67)

Property and equipment

(7)

Total deferred tax

liability

(343)

(334)

Net deferred income tax asset (liability)

(54)

(55)

(1)

Primarily relates to operating losses, the benefits of which are uncertain.

Any future reductions of such valuation allowances will be

reflected as a reduction of income tax expense.

The assessment of the amount of value assigned to our deferred tax assets under

the applicable accounting rules is

judgmental.

are required to consider all available positive and negative evidence

in evaluating the likelihood

that we will be able to realize the benefit of our deferred tax assets in the future.

Such evidence includes reversals

of deferred tax liabilities and projected future taxable income.

Since this evaluation requires consideration of

events that may occur some years into the future, there is an element of

judgment involved.

Realization of our

deferred tax assets is dependent on generating sufficient taxable income in future periods.

believe that it is

more likely than not that future taxable income will be sufficient to allow us to recover

substantially all of the value

assigned to our deferred tax assets.

However, if future events cause us to conclude that it is not more likely than

not that we will be able to recover the value assigned to our deferred tax assets, we

will be required to adjust our

valuation allowance accordingly.

As of December 27, 2025, we had federal, state and foreign net operating

loss carryforwards of approximately $

million, $

million and $

million, respectively.

The federal, state and foreign net operating loss carryforwards

will begin to expire in various years from 2026 through 2045.

The amounts of federal, state and foreign net

operating losses that can be carried-forward indefinitely are $

million, $

million and $

million,

respectively.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

The effective income tax rate for the year ended December 27, 2025 differs from the statutory federal

income tax

rate as follows:

Year

ended December 27, 2025

Income tax provision at federal statutory rate

21.0

State income tax provision, net of federal income tax effect

(1)

2.0

Foreign Tax effects

Cayman Islands:

Foreign partnership loss

1.5

Other

(1)

(0.1)

Other foreign jurisdictions:

Equity investment remeasurement gain

(6)

(1.1)

Notional interest deduction

(6)

(1.1)

Other

3.5

Effects of changes in tax laws or rates enacted in current period

Cross-border tax laws

0.1

Tax credits

(2)

(0.4)

Changes in valuation allowance

0.6

Nontaxable and nondeductible items

0.5

Worldwide changes

in unrecognized tax benefits

0.7

Other adjustments:

Previously held non-controlling equity investment

(9)

(1.7)

Other

(10)

(1.8)

Effective tax rate

23.7

(1)

State taxes in California, Illinois, Massachusetts, New Jersey, and New York

make up the majority (greater than 50%) of the tax effect

in this category.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

As previously disclosed for the years ended December 28, 2024 and December

20, 2023, prior to the adoption of

ASU 2023-09, the tax provisions differ from the amount computed using the federal

statutory income tax rate as

follows:

Years

ended

December 28,

December 30,

2024

2023

Income tax provision at federal statutory rate

State income tax provision, net of federal income tax effect

Foreign income tax provision

Pass-through noncontrolling interest

(8)

Valuation

allowance

(3)

Unrecognized tax benefits and audit settlements

Interest expense related to loans

(14)

(13)

Effect of cross border tax laws

Other

(11)

(6)

Total income

tax provision

For the year ended December 27, 2025 our effective tax rate was

23.7

%, compared to

24.9

% for the prior year

period.

In 2023, our effective tax rate was

22.1

The difference between our effective and federal statutory tax

rates primarily relates to state and foreign income taxes and interest expense,

as well as the tax treatment associated

with the acquisition of a controlling interest of a previously held non-controlling

equity investment.

On July 4, 2025, President Trump signed the reconciliation tax bill, commonly known as the “One Big Beautiful

Bill Act” (OBBBA), into law.

Corporate provisions in the OBBBA include immediate expensing of domestic

research and experimental expenditures, limitations on certain deductions

and modifications to international tax

provisions.

The changes resulting from the OBBBA did not have a significant impact

to the total tax provision.

The OECD issued technical and administrative guidance on Pillar Two rules in December 2021, which provides for

a global minimum tax rate on the earnings of large multinational businesses on a country-by-country

basis.

Effective January 1, 2024, the minimum global tax rate is 15% for various jurisdictions pursuant

to the Pillar Two

rules.

Future tax reform resulting from these developments may result

in changes to long-standing tax principles,

which may adversely impact our effective tax rate going forward or result in higher cash

tax liabilities.

As of

December 27, 2025, the impact of the Pillar Two rules to our financial statements was immaterial.

Due to the one-time transition tax and the imposition of the GILTI provisions, all previously unremitted earnings

will no longer be subject to U.S. federal income tax; however, there could be U.S., state and/or foreign withholding

taxes upon distribution of such unremitted earnings.

Determination of the amount of unrecognized deferred tax

liability with respect to such earnings is not practicable.

ASC Topic 740 prescribes the accounting for uncertainty in income taxes recognized in accordance with other

provisions contained within its guidance.

This topic prescribes a recognition threshold and a measurement

attribute

for the financial statement recognition and measurement of tax positions taken or

expected to be taken in a tax

return.

For those benefits to be recognized, a tax position must be

more likely than not to be sustained upon

examination by the taxing authorities.

The amount recognized is measured as the largest amount of benefit that has

a greater than 50% likelihood of being realized upon ultimate audit settlement.

In the normal course of business,

our tax returns are subject to examination by various taxing authorities.

Such examinations may result in future tax

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

and interest assessments by these taxing authorities for uncertain tax positions

taken in respect of certain tax

matters.

The total amount of unrecognized tax benefits, which are included in “other

liabilities” within our consolidated

balance sheets, as of December 27, 2025 and December 28, 2024 was $

million and $

million, respectively,

of which $

million and $

million, respectively, would affect the effective tax rate if recognized.

All tax returns audited by the IRS are officially closed through 2021.

The tax years subject to examination by the

IRS include years 2022 and forward.

In addition, limited positions reported in the 2017 tax year are subject

to IRS

examination.

The amount of tax interest expense included as a component of the provision

for taxes was $

million, $

million

and $

million during the years ended December 27, 2025, December 28, 2024

and December 30, 2023,

respectively.

The total amount of accrued interest is included in other liabilities

within our consolidated balance

sheets, and was $

million as of December 27, 2025 and $

million as of December 28, 2024.

The amount of

penalties accrued for during the periods presented was not material to our

consolidated financial statements.

The following table provides a reconciliation of unrecognized tax benefits:

December 27,

December 28,

December 30,

2025

2024

2023

Balance, beginning of period

Additions based on current year tax positions

Additions based on prior year tax positions

Reductions based on prior year tax positions

(2)

(14)

(2)

Reductions resulting from settlements with taxing authorities

(3)

Reductions resulting from lapse in statutes of limitations

(7)

(10)

(14)

Balance, end of period

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 16 – Plans of Restructuring and Related Costs

On August 6, 2024, we committed to a restructuring plan (the “2024

Plan”) to integrate our acquisitions, right-size

operations and further increase efficiencies.

We currently expect this plan to be completed at the end of 2027.

During the years ended December 27, 2025 and December 28, 2024, we recorded

restructuring and related charges

associated with the 2024 Plan of $

million and $

million, respectively.

The restructuring and related costs for

these periods primarily related to severance and employee-related costs, accelerated

amortization of right-of-use

assets and fixed assets, and other exit costs.

We expect to record restructuring and related charges associated with

the 2024 Plan through the end of 2027; however, an estimate of the amount of these charges for 2026 through 2027

has not yet been determined.

During the year ended December 27, 2025, in connection with the 2024 Plan,

we recorded a loss of $

million and

million related to the disposal of businesses in the Global Distribution and Value-Added Services and Global

Specialty Product segments, respectively, and a net gain related to disposal of a business in the Global Technology

segment.

These amounts are included in the $

million of restructuring and related charges discussed above.

During the year ended December 28, 2024, in connection with the 2024 Plan,

we recorded an impairment of

goodwill and intangible assets of $

million related to the disposal of a portion of a business in the Global

Specialty Products segment.

This impairment is included in the $

million of restructuring and related charges

discussed above.

On August 1, 2022, we committed to a restructuring plan (the “2022

Plan”) focused on funding the priorities of the

BOLD+1 strategic plan, streamlining operations and other initiatives to

increase efficiency.

The 2022 Plan was

completed as of July 31, 2024.

During the years ended December 28, 2024 and December 30, 2023, in

connection

with our 2022 Plan, we recorded restructuring and related costs of $

million and $

million, respectively, which

primarily related to severance and employee-related costs, accelerated amortization

of right-of-use assets and fixed

assets, and other exit costs.

During the year ended December 30, 2023, in connection with the 2022 Plan,

we recorded an impairment of an

intangible asset of $

million related to disposal of a U.S. business in the Global Specialty Products

segment.

This

impairment is included in the $

million of restructuring and related costs discussed above.

The disposal was

completed during the first quarter of 2024.

Restructuring and related costs recorded for the fiscal years ended 2025,

2024 and 2023 in connection with the

2024 Plan and 2022 Plan, respectively, consisted of the following:

Year Ended

December 27, 2025

Global Distribution

and Value-Added

Services

Global

Specialty

Products

Global

Technology

Corporate

Total

2024 Plan

Severance and employee-related costs

Impairment and accelerated depreciation and

amortization of right-of-use lease assets and other

long-lived assets

(3)

(1)

Exit and other related costs

Loss/(Gain) on disposal of a business

(5)

Restructuring and related costs-2024 Plan

(2)

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Year Ended

December 28, 2024

Global Distribution

and Value-Added

Services

Global

Specialty

Products

Global

Technology

Corporate

Total

2024 Plan

Severance and employee-related costs

Impairment and accelerated depreciation and

amortization of right-of-use lease assets and other

long-lived assets

Exit and other related costs

Loss on disposal of a business

Restructuring and related costs-2024 Plan

2022 Plan

Severance and employee-related costs

Accelerated depreciation and amortization

(3)

Exit and other related costs

Loss on disposal of a business

Restructuring and related costs-2022 Plan

(1)

Total restructuring and related costs

Year Ended

December 30, 2023

Global Distribution

and Value-Added

Services

Global

Specialty

Products

Global

Technology

Corporate

Total

2022 Plan

Severance and employee-related costs

Impairment and accelerated depreciation and

amortization of right-of-use lease assets and other

long-lived assets

Exit and other related costs

Loss on disposal of a business

Restructuring and related costs-2022 Plan

The following table summarizes, by plan year, the activity related to the liabilities associated with

our restructuring

initiatives under the 2022 Plan and the 2024 Plan for the year ended December

27, 2025.

The remaining accrued

balance of restructuring and related costs as of December 27, 2025, which

primarily relates to severance and

employee-related costs, is included in accrued expenses: other within

our consolidated balance sheets.

Liabilities

related to exited leased facilities are recorded within our current and non-current

operating lease liabilities within

our consolidated balance sheets.

2022 Plan

2024 Plan

Total

Balance, December 30, 2023

Restructuring and related costs

Non-cash impairment, accelerated depreciation and

amortization

(7)

(12)

(19)

Non-cash impairment on disposal of a business

(13)

Cash payments and other adjustments

(41)

(20)

(61)

Balance, December 28, 2024

Restructuring and related costs

Non-cash impairment, accelerated depreciation and

amortization

(2)

Non-cash charges related to disposal of a business

(6)

Cash payments and other adjustments

(11)

(77)

(88)

Balance, December 27, 2025

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 17 – Commitments and Contingencies

Purchase Commitments

In our Global Distribution and Value-Added Services business, we sometimes enter into long-term purchase

commitments to ensure the availability of products for distribution.

Future minimum annual payments for

inventory purchase commitments as of December 27, 2025 were:

2026

2027

2028

2029

2030

Thereafter

Total minimum

inventory purchase commitment payments

Employment, Consulting and Non-Compete Agreements

We have employment, consulting and non-compete agreements that have varying base aggregate annual payments

for the years 2026 through 2030 and thereafter of approximately $

million, $

million, and $

million, respectively.

We also have lifetime consulting agreements that provide for current

compensation of

four-hundred thousand

dollars per year, with small scheduled increases every fifth year with the

next increase in 2027.

In addition, some agreements have provisions for additional

incentives and compensation.

Legal Proceedings

Henry Schein, Inc. was named as a defendant in multiple opioid related

lawsuits (currently less than ten (

); one or

more of Henry Schein, Inc.’s subsidiaries was also named as a defendant in a number of those cases).

Generally,

the lawsuits allege that the manufacturers of prescription opioid drugs

engaged in a false advertising campaign to

expand the market for such drugs and their own market share and that

the entities in the supply chain (including

Henry Schein, Inc. and its subsidiaries) reaped financial rewards by refusing

or otherwise failing to monitor

appropriately and restrict the improper distribution of those drugs.

The actions that remain have been consolidated

within the MultiDistrict Litigation (“MDL”) proceeding In Re National

Prescription Opiate Litigation (MDL No.

2804; Case No. 17-md-2804) and are currently stayed.

Of Henry Schein’s 2025 net sales of approximately $

13.2

billion, sales of opioids represented less than

four

-tenths of 1 percent.

Opioids represent a negligible part of our

business.

We intend to defend ourselves vigorously against these actions.

From time to time, we may become a party to other legal proceedings,

including, without limitation, product

liability claims, employment matters, commercial disputes, governmental

inquiries and investigations (which may

in some cases involve our entering into settlement arrangements or consent

decrees), and other matters arising out

of the ordinary course of our business.

While the results of any legal proceeding cannot be predicted with certainty,

in our opinion none of these other pending matters are currently

anticipated to have a material adverse effect on our

consolidated financial position, liquidity or results of operations.

As of December 27, 2025, we had accrued our best estimate of potential

losses relating to claims that were probable

to result in liability and for which we were able to reasonably estimate

a loss.

This accrued amount, as well as

related expenses, was not material to our financial position, results of operations

or cash flows.

Our method for

determining estimated losses considers currently available

facts, presently enacted laws and regulations and other

factors, including probable recoveries from third parties.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 18 – Stock-Based Compensation

Stock-based awards are provided to certain employees under our 2024 Stock Incentive

Plan (formerly known as our

2020 Stock Incentive Plan) and to non-employee directors under our 2023 Non-Employee

Director Stock Incentive

Plan (together, the “Plans”).

The Plans are administered by the Compensation Committee of the Board

(the

“Compensation Committee”).

Historically, equity-based awards to our employees have been granted solely in the

form of time-based and performance-based restricted stock units (“RSUs”)

with the exception of our 2021 plan year

in which non-qualified stock options were issued in place of performance-based

RSUs and in 2022, when we

granted time-based and performance-based RSUs, as well as non-qualified

stock options.

Our non-employee

directors receive equity-based awards solely in the form of time-based RSUs with

-month cliff vesting.

Starting with our 2023 plan year, we returned to granting our employees equity-based awards solely in

the form of

time-based RSUs (which vest solely based on the recipient’s continued service over time) and performance-based

RSUs (which vest based on achieving specified performance

measurements and the recipient’s continued service

over time).

In our 2025 plan year, stock awards issued to our Chief Executive Officer were allocated

% to time-based RSU

awards with

four-year

cliff vesting and

% to performance-based RSU awards with

three-year

cliff vesting.

In our

2025 plan year, stock awards issued to members of our Executive Management Committee were allocated

% to

time-based RSU awards with

four-year

cliff vesting and

% to performance-based RSU awards with

three-year

cliff vesting.

In our 2025 plan year, stock awards issued to our eligible vice-presidents were allocated

% to time-based RSU

awards and

% to performance-based RSU awards with

three-year

cliff vesting.

Our vice-president level time-

based awards will vest

% on the third anniversary of the grant date with the remaining

% vesting on the fourth

anniversary of the grant date.

In our 2025 plan year, we began granting only time-based RSU awards to our eligible director level employees.

Our director level time-based RSU awards will vest

% on the third anniversary of the grant date with the

remaining

% vesting on the fourth anniversary of the grant date.

For the performance-based RSUs and the time-based RSUs with cliff vesting (issued

in 2022-2024 plan years), we

recognize the cost as compensation expense on a straight-line basis.

For the time-based RSUs with graded vesting

(issued in the 2025 plan year), we recognize the cost as compensation

expense on an accelerated basis.

As of December 27, 2025, there were

75,742,657

shares authorized and

9,081,164

shares available to be granted

under the 2025 Stock Incentive Plan and

2,075,000

shares authorized and

324,753

shares available to be granted

under the 2023 Non-Employee Director Stock Incentive Plan.

For all RSUs, we estimate the fair value based on our closing stock

price on the grant date.

With respect to

performance-based RSUs, the number of shares that ultimately vest and

are received by the recipient is based upon

our performance as measured against specified targets over a specified period, as

determined by the Compensation

Committee.

Although there is no guarantee that performance targets will be achieved, we

estimate the fair value of

performance-based RSUs based on our closing stock price at time of grant.

Each of the Plans provide for certain adjustments to the performance

measurement in connection with awards under

the Plans.

With respect to the performance-based RSUs granted under our 2024 Stock Incentive Plan, such

performance measurement adjustments relate to significant events, including,

without limitation, acquisitions,

divestitures, new business ventures, changes in fair value of contingent

consideration (solely with respect to

performance-based RSUs granted in the 2024 and 2025 plan years),

certain capital transactions (including share

repurchases), differences in budgeted average outstanding shares (other

than those resulting from capital

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

transactions referred to above), restructuring and related costs, amortization

expense recorded for acquisition-

related intangible assets, certain litigation settlements or payments,

changes in accounting principles or in

applicable laws or regulations, changes in income tax rates in certain

markets, foreign exchange fluctuations, the

financial impact either positive or negative, of the difference in projected earnings

generated by COVID-19 test kits

(solely with respect to performance-based RSUs granted in the 2023 plan

year), intangibles impairment charges and

costs related to shareholder advisory matters (solely with respect to performance-based

RSUs granted in the 2025

plan year).

Over the performance period, the number of performance-based RSUs that will

ultimately vest and be issued and

the related compensation expense is adjusted upward or downward based upon

our estimation of achieving such

performance targets.

The ultimate number of shares delivered to recipients and

the related compensation cost

recognized as an expense is based on our actual performance against

the pre-determined performance metrics (in

each case as adjusted).

Stock options are awards that allow the recipient to purchase shares of our

common stock after vesting at a fixed

price set at the time of grant.

Stock options were granted at an exercise price equal to our

closing stock price on the

date of grant.

Stock options issued in 2021 and 2022 vest one-third per year based

on the recipient’s continued

service, subject to the terms and conditions of the 2020 Stock Incentive Plan,

are fully vested

three years

from the

grant date and have a contractual term of

ten years

from the grant date, subject to earlier termination of term and

term acceleration upon certain events.

Compensation expense for stock options is recognized on

an accelerated

basis.

We estimate grant date fair value of stock options using the Black-Scholes valuation model.

During the year

ended December 27, 2025, we did

t grant any stock options.

Our consolidated statements of income reflect pre-tax share-based compensation

expense of $

million, $

million and $

million for the years ended December 27, 2025, December 28, 2024

and December 30, 2023,

respectively.

Total unrecognized compensation cost related to unvested awards as of December 27, 2025 was $

million, which

is expected to be recognized over a weighted-average period of approximately

2.5

years.

The weighted-average grant date fair value of stock-based awards granted

was $

75.78

, $

75.12

and $

76.43

per share

during the years ended December 27, 2025, December 28, 2024 and December

30, 2023, respectively.

record deferred income tax assets for awards that will result in

future income tax deductions based on the

amount of compensation cost recognized and our statutory tax rate in the

jurisdiction in which we will receive a

deduction.

Our consolidated statements of cash flows present our stock-based compensation

expense as a reconciling

adjustment between net income and net cash provided by operating

activities for all periods presented.

There were

no cash benefits associated with tax deductions in excess of recognized

compensation for the years ended

December 27, 2025, December 28, 2024 and December 30, 2023.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

The following table summarizes the stock option activity for the year

ended December 27, 2025:

Stock Options

Weighted Average

Aggregate

Weighted Average

Remaining Contractual

Intrinsic

Exercise Price

Life (in years)

Value

Outstanding at beginning of year

963,491

72.16

Granted

Exercised

(24,945)

62.71

Forfeited

(15,831)

81.75

Outstanding at end of year

922,715

72.26

5.6

Options exercisable at end of year

922,715

72.26

5.6

The following tables summarize the activity of our unvested RSUs for

the year ended December 27, 2025:

Time-Based Restricted Stock Units

Performance-Based Restricted Stock Units

Weighted Average

Grant Date Fair

Shares/Units

Value Per Share

Shares/Units

Value Per Share

Outstanding at beginning of period

1,685,550

72.90

389,111

75.98

Granted

592,716

75.18

251,287

75.30

Performance adjustment

n/a

(31,313)

76.20

Vested

(564,037)

66.54

(14,499)

84.04

Forfeited

(107,687)

77.10

(206,626)

77.33

Outstanding at end of period

1,606,542

75.69

387,960

75.89

The fair value of time and performance RSUs that vested was $

million and $

million, respectively, for the year

ended December 27, 2025; $

million and $

million, respectively, for the year ended December 28, 2024; and

million and $

million, respectively, for the year ended December 30, 2023.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 19 – Employee Benefit Plans

Defined benefit plans

Certain of our employees in our international markets participate

in various noncontributory defined benefit plans.

These plans are managed to provide pension benefits to covered employees

in accordance with local regulations

and practices.

Our net unfunded liability for these plans are recorded

in accrued expenses: other; and other

liabilities within our consolidated balance sheets.

The following table presents the changes in projected benefit

obligations, plan assets, and the funded status of our defined benefit

pension plans:

Years

Ended

December 27,

December 28,

2025

2024

Obligation and funded status:

Change in benefit obligation

Projected benefit obligation, beginning of period

Service costs

Interest cost

Past service cost (credit)

(1)

Actuarial gain (loss)

(2)

Benefits paid

Participant contributions

Settlements and curtailments

(7)

(1)

Effect of foreign currency translation

(9)

Projected benefit obligation, end of period

Change in plan assets

Fair value of plan assets at beginning of period

Actual return on plan assets

Employer contributions

Plan participant contributions

Expected return on plan assets

Benefit received

Settlements

(6)

(2)

Effect of foreign currency translation

(6)

Fair value of plan assets at end of period

Unfunded status at end of period

The majority of our defined benefit plans are unfunded, with the exception

of one plan in one country where the

amount of assets exceeds the projected benefit obligation by approximately

million and $

million as of

December 27, 2025 and December 28, 2024, respectively.

At December 27, 2025 and December 28, 2024 the

accumulated benefit obligations were $

million and $

million, respectively.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

The following table provides the amounts recognized in our consolidated

balance sheets for our defined benefit

pension plans:

Years

Ended

December 27,

December 28,

2025

2024

Non-current assets

Current liabilities

(1)

Non-current liabilities

(76)

(68)

Accumulated other comprehensive loss, pre-tax

The following table provides the components of net periodic pension cost

for our defined benefit plans:

Years

Ended

December 27,

December 28,

December 30,

2025

2024

2023

Service cost

Interest cost

Expected return on plan assets

(3)

Employee contributions

(1)

Settlements

(1)

Net periodic pension cost

The following tables present the weighted-average actuarial assumptions

used to determine our pension benefit

obligation and our net periodic pension cost for the periods presented:

Years

Ended

December 27,

December 28,

Pension Benefit Obligation

2025

2024

Weighted average

discount rate

2.75

2.23

Years

Ended

December 27,

December 28,

December 30,

Net Periodic Pension Cost

2025

2024

2023

Discount rate-pension benefit

2.05

1.70

1.50

Expected return on plan assets

0.92

1.13

0.51

Rate of compensation increase

2.00

1.98

1.64

Pension increase rate

0.74

0.63

0.80

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

The following table presents the estimated pension benefit payments that

are payable to the plan’s participants as of

December 27, 2025:

Year

2026

2027

2028

2029

2030

2031 to 2035

Total

401(k) Plans

We offer

qualified 401(k) plans to substantially all domestic full-time employees.

As determined by our Board,

matching contributions to these plans generally do not exceed

% of the participants’ contributions up to

% of

their base compensation, subject to applicable legal limits.

Matching contributions are made in cash and are

allocated consistent with the participants’ investment elections on file, subject

to a

% allocation limit to the

Henry Schein Stock Fund.

Forfeitures attributable to participants whose employment terminates

prior to becoming

fully vested are reallocated as part of our ongoing matching contributions

and to offset administrative expenses of

the 401(k) plans.

Assets of the 401(k) and other defined contribution plans are held

in self-directed accounts enabling participants to

choose from various investment fund options.

Matching contributions related to these plans charged to operations

during the years ended December 27, 2025, December 28, 2024 and December

30, 2023 amounted to $

million,

million and $

million, respectively.

Within our consolidated statements of income, $

million, $

million,

and $

million, is included in selling, general and administrative; and $

million, $

million, and $

million is

included in cost of goods sold for the years ended December 27, 2025, December

28, 2024, and December 30,

2023, respectively.

Supplemental Executive Retirement Plan

We offer

an unfunded, non-qualified SERP to eligible employees.

This plan generally covers officers and certain

highly compensated employees after they have reached the maximum

IRS allowed pre-tax 401(k) contribution

limit.

Our contributions to this plan are equal to the 401(k) employee-elected

contribution percentage applied to

base compensation for the portion of the year in which such employees are

not eligible to make pre-tax

contributions to the 401(k) plan.

The amounts charged to operations during the years ended December 27, 2025,

December 28, 2024 and December 30, 2023 amounted to $

million, $

million and $

million, respectively.

The

charges are included in selling, general and administrative within our consolidated

statements of income.

Please

see

for additional information.

Deferred Compensation Plan

offer DCP to a select group of management or highly compensated employees

of the Company and certain

subsidiaries.

This plan allows for the elective deferral of base salary, bonus and/or commission compensation by

eligible employees.

The amounts charged to operations during the years ended December

27, 2025, December 28,

2024 and December 30, 2023 were approximately $

million, $

million and $

million, respectively.

The

charges are included in selling, general and administrative within our consolidated

statements of income.

Please

see

for additional information.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 20 – Redeemable Noncontrolling Interests

Some minority stockholders in certain of our subsidiaries have the right,

at certain times, to require us to acquire

their ownership interest in those entities at fair value.

ASC Topic 480-10 is applicable for noncontrolling interests

where we are or may be required to purchase all or a portion of the

outstanding interest in a consolidated subsidiary

from the noncontrolling interest holder under the terms of a put option contained

in contractual agreements.

The

components of the change in the redeemable noncontrolling interests for the

years ended December 27, 2025,

December 28, 2024 and December 30, 2023, are presented in the following table:

December 27,

December 28,

December 30,

2025

2024

2023

Balance, beginning of period

Decrease in redeemable noncontrolling interests due to acquisitions of

noncontrolling interests in subsidiaries

(76)

(273)

(19)

Increase in redeemable noncontrolling interests due to business

acquisitions

Net income (loss) attributable to redeemable noncontrolling interests

(5)

(1)

Distributions declared, net of capital contributions

(18)

(50)

(19)

Effect of foreign currency translation gain (loss) attributable

redeemable noncontrolling interests

(24)

Change in fair value of redeemable securities

(11)

Balance, end of period

Note 21 – Comprehensive Income

Comprehensive income includes certain gains and losses that, under U.S.

GAAP,

are excluded from net income and

are recorded directly to stockholders’ equity.

The following table summarizes our Accumulated other comprehensive loss, net

of applicable taxes as of:

December 27,

December 28,

December 30,

2025

2024

2023

Attributable to redeemable noncontrolling interests:

Foreign currency translation adjustment

(26)

(56)

(32)

Attributable to noncontrolling interests:

Foreign currency translation adjustment

(1)

Attributable to Henry Schein, Inc.:

Foreign currency translation adjustment

(196)

(371)

(188)

Unrealized gain loss from hedging activities

(24)

(13)

Pension adjustment loss

(6)

(8)

(5)

Accumulated other comprehensive loss

(226)

(379)

(206)

Total Accumulated

other comprehensive loss

(251)

(436)

(239)

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

The following table summarizes the components of comprehensive income, net

of applicable taxes as follows:

December 27,

December 28,

December 30,

2025

2024

2023

Net income

Foreign currency translation gain (loss)

(207)

Tax effect

Foreign currency translation gain (loss)

(207)

Unrealized gain (loss) from hedging activities

(33)

(25)

Tax effect

(5)

Unrealized gain (loss) from hedging activities

(24)

(18)

Pension adjustment gain (loss)

(5)

(3)

Tax effect

(3)

Pension adjustment gain (loss)

(3)

Comprehensive income

Our financial statements are denominated in U.S. Dollars.

Fluctuations in the value of foreign currencies as

compared to the U.S. Dollar may have a significant impact on our

comprehensive income.

The foreign currency

translation gain (loss) during the years ended December 27, 2025, December 28,

2024 and December 30, 2023 was

primarily due to changes in foreign currency exchange rates of the Brazilian

Real, British Pound, Euro, Swiss

Franc, Israel Shekel, Canadian Dollar, Australian Dollar, and New Zealand Dollar.

The hedging gain (loss) during the years ended December 27, 2025, December

28, 2024, and December 30, 2023

was attributable to a net investment hedge.

See

for further

information.

The following table summarizes our total comprehensive income, net of

applicable taxes as follows:

December 27,

December 28,

December 30,

2025

2024

2023

Comprehensive income attributable to

Henry Schein, Inc.

Comprehensive income attributable to

noncontrolling interests

Comprehensive income (loss) attributable to

Redeemable noncontrolling interests

(25)

Comprehensive income

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 22 – Earnings Per Share

Basic earnings per share is computed by dividing net income attributable

to Henry Schein, Inc. by the weighted-

average number of common shares outstanding for the period.

Our diluted earnings per share is computed similarly

to basic earnings per share, except that it reflects the effect of common shares issuable

for unvested RSUs and upon

exercise of stock options using the treasury stock method in periods

in which they have a dilutive effect.

A reconciliation of shares used in calculating earnings per basic and

diluted share follows:

Years

Ended

December 27,

December 28,

December 30,

2025

2024

2023

Basic

120,813,977

126,788,997

130,618,990

Effect of dilutive securities:

Stock options and restricted stock units

903,899

990,231

1,129,181

Diluted

121,717,876

127,779,228

131,748,171

The number of antidilutive securities that were excluded from the calculation

of diluted weighted average common

shares outstanding are as follows:

Years

Ended

December 27,

December 28,

December 30,

2025

2024

2023

Stock options

396,052

406,676

424,695

Restricted stock units

6,200

9,287

15,040

Total anti-dilutive

securities excluded from earnings per share

computation

402,252

415,963

439,735

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 23 – Supplemental Cash Flow Information

Cash paid for interest and income taxes was:

Years

Ended

December 27,

December 28,

December 30,

2025

2024

2023

Cash paid for interest

Cash paid for income taxes, net of refunds:

U.S. Federal

U.S. State and local

Foreign:

Switzerland

Other

Total

Years

Ended

December 28,

December 30,

2024

2023

Cash paid during the period for income taxes (prior to ASU 2023-09)

For the years ended December 27, 2025, December 28, 2024 and December

30, 2023, we had $

(33)

million, $

million and $

(25)

million of non-cash net unrealized gains (losses) related to hedging activities,

respectively.

See

for additional information related to our total return swap and

our

interest rate swap agreements.

There was approximately $

million, $

million and $

million of debt assumed as a part of the acquisitions for

the years ended December 27, 2025, December 28, 2024 and December 30, 2023,

respectively.

Debt assumed

during the year ended December 30, 2023 primarily relates to the acquisitions

of Biotech Dental and S.I.N.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 24 – Related Party Transactions

During 2018, we entered into a joint venture with Internet Brands to create Henry

Schein One, LLC.

Internet

Brands initially held a

% noncontrolling interest, which has since increased to a

33.6

% noncontrolling interest in

Henry Schein One, LLC, and a freestanding and separately exercisable right

to put its noncontrolling interest to

Henry Schein, Inc. for fair value following the fifth anniversary of the effective date of the

formation of the joint

venture.

On January 29, 2025, Henry Schein, Inc. signed a Memorandum of Understanding

with Internet Brands to

extend the time-based trigger for the exercise of our call option to July 1, 2032

and to pause the exercise by Internet

Brands of its put option for a period of

four years

, to January 29, 2029.

In connection with the formation of Henry Schein One, LLC we entered

into a

ten-year

royalty agreement with

Internet Brands whereby we will pay Internet Brands approximately $

million annually for the use of their

intellectual property.

During the years ended December 27, 2025, December 28, 2024 and December

30, 2023,

recorded $

million, $

million and $

million, respectively, within selling, general and administrative in our

consolidated statements of income,

in connection with costs related to this royalty agreement.

As of December 27,

2025 and December 28, 2024, Henry Schein One, LLC had a net payable balance

to Internet Brands of $

million

and $

million, respectively, comprised of amounts related to results of operations and the royalty agreement.

The

components of this payable are recorded within accrued expenses: other within

our consolidated balance sheets.

have interests in entities that we account for under the equity accounting

method.

In our normal course of

business, during the years ended December 27, 2025, December 28, 2024

and December 30, 2023, we recorded net

sales of $

million, $

million, and $

million respectively, to such entities.

During the years ended December

27, 2025, December 28, 2024 and December 30, 2023, we purchased

million, $

million and $

million

respectively, from such entities.

At December 27, 2025 and December 28, 2024, we had an aggregate

million

and $

million, respectively, due from our equity affiliates, and $

million and $

million, respectively, due to our

equity affiliates.

Certain of our facilities related to our acquisitions are leased from employees

and minority shareholders.

Please see

Note 8 – Leases

for further information.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 25 – KKR Investment and Accelerated Share Repurchase Program

On January 29, 2025, Henry Schein, Inc. announced a strategic investment

by funds affiliated with KKR, a leading

global investment firm, and entered into a Strategic Partnership Agreement

with KKR (the “Agreement”).

On May

16, 2025, we issued

3,285,151

shares of common stock to funds affiliated with KKR for an investment of $

million, at approximately $

76.10

per share.

In addition, under the Agreement,

two

independent directors have

joined our Board of Directors.

On May 19, 2025, we executed an accelerated share repurchase program

to repurchase a total of $

million of

our outstanding common stock based on volume-weighted average prices.

In May 2025 we received

3,122,832

shares at an estimated fair value of $

million.

In July 2025, we received an additional

368,651

shares at an

estimated fair value of $

million, representing the final amount of shares to be received under

this accelerated

share repurchase program.

On November 4, 2025, the Company and KKR entered into an amendment

to the Agreement that increased the

beneficial ownership limit from

14.9

% to

19.9

% of the outstanding shares of the Company’s common stock that

KKR is permitted to acquire during the standstill period.

The standstill provisions, including the increased

ownership limit, continue in effect for a period of six months following the later

of the expiration of the term of the

Agreement and the date on which no KKR director appointed pursuant

to the Agreement is serving on the Board of

Directors.