Item 1. CONDENSED CONSOLIDATED

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Item 1. CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions,

except share data)

September 24,

December 25,

2022

2021

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

Accounts receivable, net of reserves of $

and $

1,507

1,452

Inventories, net

1,818

1,861

Prepaid expenses and other

Total current assets

3,957

3,844

Property and equipment, net

Operating lease right-of-use assets

Goodwill

2,870

2,854

Other intangibles, net

Investments and other

Total assets

8,534

8,481

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

1,054

Bank credit lines

Current maturities of long-term debt

Operating lease liabilities

Accrued expenses:

Payroll and related

Taxes

Other

Total current liabilities

2,146

2,307

Long-term debt

Deferred income taxes

Operating lease liabilities

Other liabilities

Total liabilities

3,726

3,805

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,

135,258,887

outstanding on September 24, 2022 and

137,145,558

outstanding on December 25, 2021

Additional paid-in capital

Retained earnings

3,922

3,595

Accumulated other comprehensive loss

(312)

(171)

Total Henry Schein, Inc. stockholders' equity

3,611

3,425

Noncontrolling interests

Total stockholders' equity

4,245

4,063

Total liabilities, redeemable noncontrolling

interests and stockholders' equity

8,534

8,481

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENTS

OF INCOME

(unaudited, in millions, except share and per share data)

Three Months Ended

Nine Months Ended

September 24,

September 25,

September 24,

September 25,

2022

2021

2022

2021

Net sales

3,067

3,178

9,276

9,070

Cost of sales

2,153

2,266

6,444

6,376

Gross profit

2,832

2,694

Operating expenses:

Selling, general and administrative

2,010

1,906

Depreciation and amortization

Restructuring and integration costs

Operating income

Other income (expense):

Interest income

Interest expense

(11)

(7)

(27)

(20)

Other, net

Income before taxes, equity in earnings of affiliates

and noncontrolling interests

Income taxes

(46)

(50)

(155)

(154)

Equity in earnings of affiliates

Gain on sale of equity investment

Net income

Less: Net income attributable to noncontrolling interests

(12)

(7)

(24)

Net income attributable to Henry Schein, Inc.

Earnings per share attributable to Henry Schein, Inc.:

Basic

1.10

1.16

3.59

3.44

Diluted

1.09

1.15

3.55

3.40

Weighted-average common

shares outstanding:

Basic

135,608,678

139,377,237

136,731,413

140,661,182

Diluted

137,084,049

141,079,337

138,488,254

142,178,702

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENTS

OF COMPREHENSIVE INCOME

(unaudited, in millions)

Three Months Ended

Nine Months Ended

September 24,

September 25,

September 24,

September 25,

2022

2021

2022

2021

Net income

Other comprehensive loss, net of tax:

Foreign currency translation loss

(89)

(40)

(176)

(40)

Unrealized gain from foreign currency hedging

activities

Pension adjustment gain

Other comprehensive loss, net of tax

(77)

(36)

(155)

(34)

Comprehensive income

Comprehensive income attributable to noncontrolling

interests:

Net income

(12)

(7)

(24)

Foreign currency translation loss

Comprehensive income attributable to noncontrolling

interests

(6)

(2)

(10)

(20)

Comprehensive income attributable to Henry Schein, Inc.

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENT

OF CHANGES IN

STOCKHOLDERS’ EQUITY

(unaudited, in millions, except share and per share data)

Accumulated

Common Stock

Additional

Other

Total

$0.01 Par Value

Paid-in

Retained

Comprehensive

Noncontrolling

Stockholders'

Amount

Capital

Earnings

Income / (Loss)

Interests

Equity

Balance, June 25, 2022

136,439,560

3,834

(241)

4,227

Net income (excluding $

attributable to Redeemable

noncontrolling interests)

Foreign currency translation loss (excluding loss of $

attributable to Redeemable noncontrolling interests)

(83)

Unrealized gain from foreign currency hedging activities,

net of tax of $

Pension adjustment gain, net of tax of $

Dividends paid

(1)

Change in fair value of redeemable securities

Repurchases and retirement of common stock

(1,183,729)

(12)

(78)

(90)

Stock-based compensation expense

3,640

Stock issued upon exercise of stock options

Shares withheld for payroll taxes

(1,194)

(1)

Settlement of stock-based compensation awards

Transfer of charges in excess of

capital

(16)

Balance, September 24, 2022

135,258,887

3,922

(312)

4,245

Accumulated

Common Stock

Additional

Other

Total

$0.01 Par Value

Paid-in

Retained

Comprehensive

Noncontrolling

Stockholders'

Amount

Capital

Earnings

Income / (Loss)

Interests

Equity

Balance, June 26, 2021

139,780,841

3,466

(107)

4,006

Net income (excluding $

attributable to Redeemable

noncontrolling interests)

Foreign currency translation loss (excluding loss of $

attributable to Redeemable noncontrolling interests)

(35)

Unrealized gain from foreign currency hedging activities,

net of tax of $

Change in fair value of redeemable securities

(11)

Repurchases and retirement of common stock

(651,289)

(7)

(43)

(50)

Stock-based compensation expense

Shares withheld for payroll taxes

(20)

Transfer of charges in excess of

capital

(10)

Balance, September 25, 2021

139,129,543

3,595

(138)

4,106

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENT

OF CHANGES IN

STOCKHOLDERS' EQUITY

(unaudited, in millions, except share and per 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 25, 2021

137,145,558

3,595

(171)

4,063

Net income (excluding $

attributable to Redeemable

noncontrolling interests)

Foreign currency translation loss (excluding loss of $

attributable to Redeemable noncontrolling interests)

(162)

(1)

(163)

Unrealized gain from foreign currency hedging activities,

net of tax of $

Pension adjustment gain, net of tax of $

Dividends paid

(1)

Purchase of noncontrolling interests

(7)

Change in fair value of redeemable securities

Repurchases and retirement of common stock

(2,529,126)

(28)

(172)

(200)

Stock-based compensation expense

958,539

Stock issued upon exercise of stock options

30,424

Shares withheld for payroll taxes

(343,541)

(30)

Settlement of stock-based compensation awards

(2,967)

Transfer of charges in excess of

capital

(8)

Balance, September 24, 2022

135,258,887

3,922

(312)

4,245

Accumulated

Common Stock

Additional

Other

Total

$0.01 Par Value

Paid-in

Retained

Comprehensive

Noncontrolling

Stockholders'

Amount

Capital

Earnings

Income / (Loss)

Interests

Equity

Balance, December 26, 2020

142,462,571

3,455

(108)

3,984

Net income (excluding $

attributable to Redeemable

noncontrolling interests)

Foreign currency translation loss (excluding loss of $

attributable to Redeemable noncontrolling interests)

(36)

Unrealized gain from foreign currency hedging activities,

net of tax of $

Pension adjustment gain, net of tax of $

Change in fair value of redeemable securities

(144)

Initial noncontrolling interests and adjustments related to

business acquisitions

Repurchases and retirement of common stock

(3,518,846)

(34)

(217)

(251)

Stock-based compensation expense

299,572

Shares withheld for payroll taxes

(113,754)

(7)

Transfer of charges in excess of

capital

(127)

Balance, September 25, 2021

139,129,543

3,595

(138)

4,106

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENTS

OF CASH FLOWS

(unaudited, in millions)

Nine Months Ended

September 24,

September 25,

2022

2021

Cash flows from operating activities:

Net income

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

Depreciation and amortization

Gain on sale of equity investment

(10)

Stock-based compensation expense

Provision for (benefit from) losses on trade and other accounts receivable

(9)

Benefit from deferred income taxes

(20)

(1)

Equity in earnings of affiliates

(12)

(18)

Distributions from equity affiliates

Changes in unrecognized tax benefits

(6)

Other

(25)

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

(93)

(83)

Inventories

(9)

(208)

Other current assets

(96)

(41)

Accounts payable and accrued expenses

(131)

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of fixed assets

(67)

(49)

Payments related to equity investments and business

acquisitions, net of cash acquired

(127)

(415)

Proceeds from sale of equity investments

Proceeds from (payments for) loan to affiliate

(6)

Other

(26)

(19)

Net cash used in investing activities

(211)

(479)

Cash flows from financing activities:

Net change in bank borrowings

(13)

Proceeds from issuance of long-term debt

Principal payments for long-term debt

(58)

(122)

Debt issuance costs

(2)

Proceeds from issuance of stock upon exercise of stock options

Payments for repurchases and retirement of common stock

(200)

(251)

Payments for taxes related to shares withheld for employee taxes

(30)

(7)

Distributions to noncontrolling shareholders

(18)

(9)

Acquisitions of noncontrolling interests in subsidiaries

(33)

(50)

Net cash used in financing activities

(121)

(254)

Effect of exchange rate changes on cash and cash equivalents

(11)

(2)

Net change in cash and cash equivalents

(302)

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 1 – Basis of Presentation

Our condensed consolidated financial statements include the accounts of Henry

Schein, Inc. and all of our

controlled subsidiaries (“we”, “us” or “our”).

All intercompany accounts and transactions are eliminated

consolidation.

Investments in unconsolidated affiliates in 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.

Our accompanying unaudited condensed consolidated financial statements

have been prepared in accordance with

accounting principles generally accepted in the United States

(“U.S. GAAP”) for interim financial information and

with the instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include all of the

information and footnote disclosures required by U.S. GAAP for complete

financial statements.

The unaudited interim condensed consolidated financial statements should be

read in conjunction with the audited

consolidated financial statements and notes to the consolidated financial

statements contained in our Annual Report

on Form 10-K for the year ended December 25, 2021 and with the information

contained in our other publicly-

available filings with the Securities and Exchange Commission.

The condensed consolidated financial statements

reflect all adjustments considered necessary for a fair presentation of

the consolidated results of operations and

financial position for the interim periods presented.

All such adjustments are of a normal recurring nature.

The preparation of 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.

The results of

operations for the nine months ended September 24, 2022 are not necessarily

indicative of the results to be expected

for any other interim period or for the year ending December 31, 2022.

We consolidate the results of operations and financial position of a trade accounts receivable securitization which

we consider a Variable Interest Entity (“VIE”) because we are the primary beneficiary, and we have the power to

direct activities that most significantly affect the economic performance and have

the obligation to absorb the

majority of the losses or benefits.

For this VIE, the trade accounts receivable transferred to the VIE

are pledged as

collateral to the related debt.

The creditors have recourse to us for losses on these trade accounts

receivable.

September 24, 2022 and December 25, 2021, 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.

Our condensed 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 doubtful accounts; hedging activity;

supplier rebates; measurement of

compensation cost for certain share-based performance awards and cash bonus

plans; and pension plan

assumptions.

Due to the significant uncertainty surrounding the future impact of

COVID-19, our judgments

regarding estimates and impairments could change in the future.

There is an ongoing risk that the COVID-19

pandemic may again have a material adverse effect on our business, results of operations

and cash flows and may

result in a material adverse effect on our financial condition and liquidity.

However, the extent of the potential

impact cannot be reasonably estimated at this time

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 2 – Critical Accounting Policies, Accounting Pronouncements Adopted

and Recently Issued Accounting

Standards

Critical Accounting Policies

There have been no material changes in our critical accounting policies

during the nine months ended September

24, 2022, as compared to the critical accounting policies described in Item 7

of our Annual Report on Form 10-K

for the year ended December 25, 2021.

Accounting Pronouncements Adopted

December 26, 2021

we adopted Accounting Standards Update (“ASU”) No. 2021 – 08, “Accounting

for

Contract Assets and Contract Liabilities from Contracts with Customers”

(Subtopic 805).

ASU 2021 – 08 requires

an acquirer to recognize and measure contract assets and contract liabilities acquired

in a business combination in

accordance with Topic 606.

At the acquisition date, an acquirer should account for the related revenue

contracts in

accordance with Topic 606 as if it had originated the contracts.

To achieve this, an acquirer may assess how the

acquiree applied Topic 606 to determine what to record for the acquired revenue contracts.

Generally, this should

result in an acquirer recognizing and measuring the acquired contract assets

and contract liabilities consistent with

how they were recognized and measured in the acquiree’s financial statements.

Our

adoption

of ASU 2021 - 08 did

not have a material impact on our consolidated financial statements.

Recently Issued Accounting Standards

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-04, “Reference Rate

Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” which provides

optional expedients and exceptions for applying U.S. GAAP to contracts,

hedging relationships and other

transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or

by another

reference rate expected to be discontinued because of reference rate reform.

The guidance was effective beginning

March 12, 2020 and can be applied prospectively through December 31,

In January 2021, the FASB issued

ASU 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”).

ASU 2021-01 provides temporary

optional expedients and exceptions to certain guidance in U.S. GAAP

to ease the financial reporting burdens related

to the expected market transition from LIBOR and other interbank offered rates

to alternative reference rates, such

as the Secured Overnight Financing Rate.

The guidance is effective upon issuance, on January 7, 2021, and can be

applied through December 31, 2022.

We do not expect that the requirements of this guidance will have a material

impact on our consolidated financial statements.

In March 2022, the FASB issued ASU No. 2022-01, “Derivatives and Hedging (Topic 815): Fair Value

Hedging –

Portfolio Layer Method,” which will expand companies' abilities

to hedge the benchmark interest rate risk of

portfolios of financial assets (or beneficial interests) in a fair value hedge.

This ASU expands the use of the

portfolio layer method (previously referred to as the last-of-layer

method) to allow multiple hedges of a single

closed portfolio of assets using spot starting, forward starting and amortizing-notional

swaps.

It also permits both

prepayable and non-prepayable financial assets to be included in the closed

portfolio of assets hedged in a portfolio

layer hedge.

This ASU further requires that basis adjustments not be allocated

to individual assets for active

portfolio layer method hedges, but rather be maintained on the closed portfolio

of assets as a whole.

ASU 2022 –

01 is effective for fiscal years beginning after December 15, 2022, including interim periods

within those fiscal

years.

Early adoption is permitted for any entity that has adopted the amendments

in ASU 2017-12.

We do not

expect that the requirements of this guidance will have a material impact

on our consolidated financial statements.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 3 – Revenue from Contracts with Customers

Revenue is recognized in accordance with policies disclosed in Item 8 of our

Annual Report on Form 10-K for

the year ended December 25, 2021.

Disaggregation of Net Sales

The following table disaggregates our Net sales by reportable segment and geographic

area:

Three Months Ended

Nine Months Ended

September 24, 2022

North

America

International

Global

North

America

International

Global

Net Sales:

Health care distribution

Dental

1,131

1,785

3,360

2,106

5,466

Medical

1,088

1,106

3,215

3,274

Total health care distribution

2,219

2,891

6,575

2,165

8,740

Technology

and value-added services

Total revenues

2,374

3,067

7,044

2,232

9,276

Three Months Ended

Nine Months Ended

September 25, 2021

North

America

International

Global

North

America

International

Global

Net Sales:

Health care distribution

Dental

1,115

1,823

3,289

2,235

5,524

Medical

1,162

1,185

3,000

3,078

Total health care distribution

2,277

3,008

6,289

2,313

8,602

Technology

and value-added services

Total revenues

2,426

3,178

6,693

2,377

9,070

At December 25, 2021, the current portion of contract liabilities of $

million was reported in Accrued expenses:

Other, and $

million related to non-current contract liabilities was reported

in Other liabilities.

During the nine

months ended September 24, 2022, we recognized in net sales $

million of the amounts that were previously

deferred at December 25, 2021.

At September 24, 2022, the current and non-current portion of contract

liabilities

were $

million and $

million, respectively.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 4

–

Segment Data

We conduct our business through

two

reportable segments: (i) health care distribution and (ii) technology

and

value-added services.

These segments offer different products and services to the same customer base. Our

global

dental businesses serve office-based dental practitioners, dental laboratories, schools and

other institutions.

Our

global medical businesses serve office-based medical practitioners, ambulatory

surgery centers, other alternate-care

settings and other institutions.

Our global dental and medical groups serve practitioners in

countries worldwide.

The health care distribution reportable segment aggregates our global

dental and medical operating segments.

This

segment distributes consumable products, dental specialty products,

small equipment, laboratory products, large

equipment, equipment repair services, branded and generic pharmaceuticals,

vaccines, surgical products, diagnostic

tests, infection-control products, personal protective equipment (“PPE”)

and vitamins.

Our global technology and value-added services reportable segment provides

software, technology and other value-

added services to health care practitioners.

Our technology offerings include practice management software

systems for dental and medical practitioners.

Our value-added practice solutions include practice consultancy,

education, revenue cycle management and financial services on a non-recourse

basis, e-services, practice

technology, network and hardware services, as well as continuing education services for practitioners.

The following tables present information about our reportable and operating

segments:

Three Months Ended

Nine Months Ended

September 24,

September 25,

September 24,

September 25,

2022

2021

2022

2021

Net Sales:

Health care distribution

Dental

1,785

1,823

5,466

5,524

Medical

1,106

1,185

3,274

3,078

Total health care distribution

2,891

3,008

8,740

8,602

Technology

and value-added services

Total

3,067

3,178

9,276

9,070

Three Months Ended

Nine Months Ended

September 24,

September 25,

September 24,

September 25,

2022

2021

2022

2021

Operating Income:

Health care distribution

Technology

and value-added services

Total

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 5

–

Business Acquisitions

2022 Acquisitions

We completed several acquisitions during the nine months ended September 24, 2022,

which were immaterial to

our condensed consolidated financial statements.

Our acquired ownership interest ranged between

% to

Acquisitions within our healthcare distribution segment included

companies that specialize in the distribution of

dental products.

Within our technology and value-added services segment, we acquired a company that educates

and connects dental office managers, practice administrators and dental business

leaders across North America.

The following table aggregates

the estimated fair value, as of the date of acquisition, of consideration

paid and net

assets acquired for acquisitions during the nine months ended September 24,

While we use our best

estimates and assumptions to accurately value those assets acquired and

liabilities assumed at the acquisition date

as well as contingent consideration, where applicable, our estimates are

inherently uncertain and subject to

refinement.

As a result, during the measurement period we may record adjustments

to the assets acquired and

liabilities assumed with the corresponding offset to goodwill within our condensed consolidated balance

sheets.

Approximately half of the acquired goodwill is deductible for tax purposes.

2022

Acquisition consideration:

Cash

Deferred consideration

Fair value of previously held equity method investment

Redeemable noncontrolling interests

Total consideration

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

Other noncurrent assets

Current liabilities

(23)

Deferred income taxes

(5)

Other noncurrent liabilities

(5)

Total identifiable

net assets

Goodwill

Total net assets acquired

The following table summarizes the identifiable intangible assets acquired

during the nine months ended September

24, 2022 and their estimated useful lives as of the date of the acquisition:

2022

Estimated Useful Lives (in years)

Customer relationships and lists

Trademarks/ Tradenames

Non-compete agreements

Other

Total

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

2021 Acquisitions

We completed several acquisitions during the nine months ended September 25, 2021 which were immaterial to our

financial statements.

Our acquired ownership interest ranged between approximately

% to

Acquisitions

within our health care distribution segment included

companies that specialize in the distribution and

manufacturing of dental and medical products, a provider of home

medical supplies, and product kitting and sterile

packaging.

Within our technology and value-added services segment, we acquired companies that focus on dental

marketing and website solutions, practice transition services, and business

analytics and intelligence software.

The following table aggregates

the estimated fair value, as of the date of acquisition, of consideration paid

and net

assets acquired for acquisitions during the nine months ended September 25,

While we use our best

estimates and assumptions to accurately value those assets acquired

and liabilities assumed at the acquisition date

as well as contingent consideration, where applicable, our estimates are

inherently uncertain and subject to

refinement.

As a result, during the measurement period we may record adjustments

to the assets acquired and

liabilities assumed with the corresponding offset to goodwill within our condensed consolidated

balance sheets.

Approximately half of the acquired goodwill is deductible for tax purposes.

2021

Acquisition consideration:

Cash

Deferred consideration

Fair value of previously held equity method investment

Redeemable noncontrolling interests

Total consideration

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

Other noncurrent assets

Current liabilities

(62)

Deferred income taxes

(18)

Other noncurrent liabilities

(39)

Total identifiable

net assets

Goodwill

Total net assets acquired

The following table summarizes the identifiable intangible assets acquired

during the nine months ended September

25, 2021 and their estimated useful lives as of the date of the acquisition:

2021

Estimated Useful Lives (in years)

Customer relationships and lists

Trademarks / Tradenames

Non-compete agreements

Product development

Other

Total

The major classes of assets and liabilities that we generally allocate purchase

price to, excluding goodwill, include

identifiable intangible assets (i.e., customer relationships and lists, trademarks

and trade names, product

development and non-compete agreements), inventory and accounts

receivable, property, plant and equipment,

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

deferred taxes and other current and long-term assets and liabilities.

The estimated fair value of identifiable

intangible assets is based on critical estimates, judgments and assumptions

derived from analysis of market

conditions, discount rates, discounted cash flows, customer retention rates

and estimated useful lives.

Some prior owners of acquired subsidiaries are eligible to receive additional

purchase price cash consideration if

certain financial targets are met.

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

price consideration at the time of the acquisition.

Any adjustments to these accrual amounts are recorded in our

condensed consolidated statements of income.

For the nine months ended September 24, 2022 and September 25,

2021, there were no material adjustments recorded in our condensed consolidated

statements of income relating to

changes in estimated contingent purchase price liabilities.

During the nine months ended September 24, 2022 and September 25, 2021 we

incurred $

million and $

million,

respectively, in acquisition costs.

Note 6 – 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.

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.

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;

however, we believe the carrying amounts are a reasonable estimate of fair value based on the interest

rates in the

applicable markets.

Debt

The fair value of our debt (including bank credit lines) is classified as

Level 3 within the fair value hierarchy, and

as of September 24, 2022 and December 25, 2021 was estimated at

1,045

million and $

million, respectively.

Factors that we considered when estimating the fair value of our debt

included market conditions, such as interest

rates and credit spreads.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Derivative contracts

Derivative contracts are valued using quoted market prices and

significant other observable inputs.

We use

derivative instruments to minimize our exposure to fluctuations in foreign

currency exchange rates.

Our derivative

instruments primarily include foreign currency forward agreements related

to certain intercompany loans, certain

forecasted inventory purchase commitments with foreign suppliers,

foreign currency forward contracts to hedge a

portion of our euro-denominated foreign operations which are designated as net

investment hedges and a total

return swap for the purpose of economically hedging our unfunded

non-qualified supplemental executive retirement

plan and our deferred compensation plan.

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

is based on market rates for comparable

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

Redeemable noncontrolling interests

The values for Redeemable noncontrolling interests are classified within

Level 3 of the fair value hierarchy and are

based on recent transactions and/or implied multiples of earnings.

See

Note 11–Redeemable Noncontrolling

Interests

for additional information.

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 September

24, 2022 and December 25,

2021:

September 24, 2022

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

swaps

Total liabilities

Redeemable noncontrolling interests

December 25, 2021

Level 1

Level 2

Level 3

Total

Assets:

Derivative contracts designated as hedges

Derivative contracts undesignated

Total return

swaps

Total assets

Liabilities:

Derivative contracts designated as hedges

Derivative contracts undesignated

Total liabilities

Redeemable noncontrolling interests

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 7 – Debt

Bank Credit Lines

Bank credit lines consisted of the following:

September 24,

December 25,

2022

2021

Revolving credit agreement

Other short-term bank credit lines

Total

Revolving Credit Agreement

August 20, 2021

, we entered into a $

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

This

facility which matures on

August 20, 2026

replaced our $

million revolving credit facility which was scheduled

to mature in April 2022.

The interest rate is based on the USD LIBOR plus a spread based on our

leverage ratio at

the end of each financial reporting quarter.

Most LIBOR rates have been discontinued after December 31,

2021,

while the remaining LIBOR rates will be discontinued immediately

after June 30, 2023.

We do not expect the

discontinuation of LIBOR as a reference rate in our debt agreements

to have a material adverse effect on our

financial position or to materially affect our interest expense.

The Credit Agreement also requires, among other

things, that we maintain certain maximum leverage ratios.

Additionally, the 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 September 24, 2022 and December 25, 2021, we

had

borrowings under this

revolving credit facility.

As of September 24, 2022 and December 25, 2021, there

were $

million and $

million

of letters of credit, respectively, provided to third parties under the credit facility.

Other Short-Term Bank Credit

Lines

As of September 24, 2022 and December 25, 2021, we had various other

short-term bank credit lines available, of

which $

million and $

million, respectively, were outstanding.

At September 24, 2022 and December 25,

2021, borrowings under all of these credit lines had a weighted average

interest rate of

9.35

% and

10.44

respectively.

Long-term debt

Long-term debt consisted of the following:

September 24,

December 25,

2022

2021

Private placement facilities

U.S. trade accounts receivable securitization

Various

collateralized and uncollateralized loans payable with interest,

in varying installments through 2023 at interest rates

ranging from

0.00

% to

3.50

% at September 24, 2022 and

ranging from

2.62

% to

4.27

% at December 25, 2021

Finance lease obligations

Total

Less current maturities

(4)

(11)

Total long-term debt

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Private Placement Facilities

Our private placement facilities were amended on

October 20, 2021

to include

four

(previously

three

) insurance

companies, have a total facility amount of $

1.5

billion (previously $

1.0

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

October 20, 2026

(previously

June 23, 2023

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.

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.

The components of our private placement facility borrowings as

of September 24, 2022 are presented in the

following table:

Amount of

Borrowing

Date of Borrowing

Outstanding

Rate

Due Date

January 20, 2012

3.45

January 20, 2024

December 24, 2012

3.00

December 24, 2024

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

Less: Deferred debt issuance costs

(1)

Total

U.S. Trade Accounts Receivable Securitization

We have a facility agreement based on the securitization of our U.S. trade accounts receivable that is structured as

an asset-backed securitization program with pricing committed for up

three years

On October 20, 2021, we

extended the expiration date of this facility agreement to

October 18, 2024

and increased the purchase limit under

the facility from $

million to $

million with

two

banks as agents.

As of September 24, 2022 and December

25, 2021, the borrowings outstanding under this securitization facility were

million and $

million,

respectively.

At September 24, 2022, the interest rate on borrowings

under this facility was based on the asset-

backed commercial paper rate of

2.89

% plus

0.75

%, for a combined rate of

3.64

At December 25, 2021, the

interest rate on borrowings under this facility was based on the asset-backed

commercial paper rate of

0.19

% plus

0.75

%, for a combined rate of

0.94

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 CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 8 – Income Taxes

For the nine months ended September 24, 2022 our effective tax rate was

23.5

% compared to

24.2

% for the prior

year period.

The difference between our effective tax rate and the federal statutory tax rate for the nine

months

ended September 24, 2022 primarily relates to state and foreign income taxes

and interest expense as well as share-

based compensation.

The difference between our effective tax rate and the federal statutory tax rate for the nine

months ended September 25, 2021 primarily relates to state and foreign

income taxes, interest expense and tax

charges and credits associated with legal entity reorganizations.

On August 16, 2022, the Inflation Reduction Act (H.R. 5376) (“IRA”) was signed

into law in the United States.

Among other things, the IRA imposes a 15% corporate alternative

minimum tax for tax years beginning after

December 31, 2022 and levies a 1% excise tax on net stock repurchases after

December 31, 2022.

We are still in

the process of analyzing the provisions of the IRA.

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

“Other liabilities” within our condensed

consolidated balance sheets, as of September 24, 2022 and December 25,

2021 was $

million and $

million,

respectively, of which $

million and $

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

It is possible that the amount of unrecognized tax benefits will

change in the next 12 months, which may result in a

material impact on our condensed consolidated statements of income.

All tax returns audited by the IRS are officially closed through 2016.

The tax years subject to examination by the

IRS include years 2017 and forward.

During the year ended December 25, 2021, we were notified by

the IRS that

tax year 2019 was selected for examination.

During the quarter ended September 26, 2020 we reached an agreement

with the Advanced Pricing Division on an

appropriate transfer pricing methodology for the years 2014-2025.

The objective of this resolution was to mitigate

future transfer pricing audit adjustments.

The total amounts of interest and penalties are classified as a component

of the provision for income taxes.

The

amount of tax interest expense/(credit) was $

million for the nine months ended September 24, 2022, and

(2)

million for the nine months ended September 25, 2021.

The total amount of accrued interest is included in

“Other liabilities,” and was $

million as of September 24, 2022 and $

million as of December 25, 2021.

penalties were accrued for the periods presented.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 9 – Legal Proceedings

Henry Schein, Inc. has been named as a defendant in multiple lawsuits

(currently less than one-hundred and fifty

(

); in less than half of those cases one or more of Henry Schein,

Inc.’s subsidiaries is also named as a

defendant).

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 affiliated companies) reaped

financial rewards by refusing or

otherwise failing to monitor appropriately and restrict the improper distribution

of those drugs.

These actions

consist of some that 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, and others which

remain pending in state courts and are proceeding independently and outside

of the MDL.

At this time, the

following cases are set for trial: the action filed by Mobile County Board

of Health, et al., in Alabama state court,

which is currently stayed but remains set for a jury trial on January 9, 2023;

the action filed by DCH Health Care

Authority, et al. in Alabama state court, which has been designated a bellwether with

eight

thirty-eight

plaintiffs

set for a jury trial on July 24, 2023; and the action filed by Florida Health

Sciences Center, Inc. (and

other

hospitals located throughout the State of Florida) in Florida state court,

which is currently scheduled for a jury trial

in October 2024.

In June 2022, we settled

twenty-six

cases filed by hospitals in West Virginia,

and settled with

one

additional hospital, for a total amount of

three-hundred thousand

dollars.

The

twenty-six

cases have been

dismissed.

Of Henry Schein’s 2021 net sales of approximately $

12.4

billion, sales of opioids represented less than

two-tenths

of 1 percent.

Opioids represent a negligible part of our business.

We intend to defend ourselves

vigorously against these actions.

In August 2022, Henry Schein received a Grand Jury Subpoena from the United

States Attorney’s Office for the

Western District of Virginia,

seeking documents in connection with an investigation of possible

violations of the

Federal Food, Drug & Cosmetic Act by Butler Animal Health Supply, LLC (“Butler”), a former subsidiary of

Henry Schein.

The investigation relates to the sale of veterinary prescription drugs

to certain customers.

October 2022, Henry Schein received a second Grand Jury Subpoena

from the United States Attorney’s Office for

the Western District of Virginia.

The October Subpoena seeks documents relating to payments Henry

Schein

received from Butler or Covetrus, Inc. (“Covetrus”).

Butler was spun off into a separate company and became a

subsidiary of Covetrus in 2019 and is no longer owned by Henry Schein.

We are cooperating with the

investigation.

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 September 24, 2022, 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 CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 10 – Stock-Based Compensation

Stock-based awards are provided to certain employees under the terms of our

2020 Stock Incentive Plan and to

non-employee directors under the terms of our 2015 Non-Employee Director

Stock Incentive Plan (together, the

“Plans”).

The Plans are administered by the Compensation Committee of the Board

of Directors (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”).

However, for our 2021 fiscal year, in

light of the COVID-19 pandemic, the Compensation Committee determined

it would be difficult for management

to set a meaningful three-year cumulative earnings per share target as the goal applicable

to performance-based

RSU awards as it had done in prior years.

Instead, the Compensation Committee set our equity-based awards

employees for fiscal 2021 in the form of time-based RSUs and non-qualified

stock options which focus on stock

value appreciation and retention instead of pre-established performance goals.

Our non-employee directors

continued to receive equity-based awards for fiscal 2021 solely in the form of time-based

RSUs.

In March 2022,

the Compensation Committee reinstated performance-based RSUs

for equity-based awards to employees for fiscal

2022 and awarded grants in the form of time-based RSUs, performance-based

RSUs and non-qualified stock

options.

RSUs are stock-based awards granted to recipients with specified vesting provisions.

In the case of RSUs, common

stock is generally delivered on or following satisfaction of vesting conditions.

We issue RSUs to employees that

vest (i) solely based on the recipient’s continued service over time, primarily with

four

-year cliff vesting and/or (ii)

based on achieving specified performance measurements and the recipient’s continued service over time, primarily

with

three

-year cliff vesting.

RSUs granted under the 2015 Non-Employee Director Stock Incentive

Plan primarily

are granted with

-month cliff vesting.

For these RSUs, we recognize the cost as compensation expense on

straight-line basis.

With respect to time-based RSUs, we estimate the fair value on the date of grant based on our closing

stock price at

the time of grant.

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 2020 Stock Incentive Plan, such

performance measurement adjustments relate to significant events, including, without

limitation, acquisitions,

divestitures, new business ventures, certain capital transactions (including share

repurchases), differences in

budgeted average outstanding shares (other than those resulting from capital

transactions referred to above),

restructuring costs, if any, certain litigation settlements or payments, if any, 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 differences in projected earnings

generated by sales of COVID-

19 test kits (solely with respect to performance-based RSUs

granted in the 2022 plan year) and unforeseen events or

circumstances affecting us.

Over the performance period, the number of shares of common stock 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 will be based on our actual performance metrics

as defined under the Plans.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

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

stock at a fixed price following

vesting of the stock options.

Stock options are granted at an exercise price equal to our closing stock

price on the

date of grant.

Stock options issued beginning in 2021 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 the term

upon certain events.

Compensation expense for these stock options is recognized

using a graded vesting method.

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

In addition to equity-based awards granted in fiscal 2021 under the long-term

incentive program, the Compensation

Committee granted a Special Pandemic Recognition Award under the 2020 Stock Incentive Plan to recipients of

performance-based RSUs under the 2018 long-term incentive program.

The payout under the performance-based

restricted stock units granted under the fiscal 2018 long-term incentive program

(the “2018 LTIP”) was negatively

impacted by the global COVID-19 pandemic.

Given the significance of the impact of the pandemic on our

three

year EPS goal under such equity awards and the contributions made by our employees

(including those who

received such awards), on March 3, 2021, the Compensation Committee granted

a Special Pandemic Recognition

Award to recipients of performance-based restricted stock units under the 2018 LTIP who were employed by us on

the grant date of the Special Pandemic Recognition Award.

These time-based RSU awards vest

% on the first

anniversary of the grant date and

% on the second anniversary of the grant date, based on the recipient’s

continued service and subject to the terms and conditions of the 2020 Stock Incentive

Plan, and are recorded as

compensation expense using a graded vesting method.

The combination of the

% payout based on actual

performance of the 2018 LTIP and the one-time Special Pandemic Recognition Award granted in 2021 will

generate a cumulative payout of

% of each recipient’s original number of performance-based restricted stock

units awarded in 2018 if the recipient satisfies the

two

-year vesting schedule commencing on the grant date.

Our accompanying condensed consolidated statements of income reflect

pre-tax share-based compensation expense

of $

million ($

million after-tax) and $

million ($

million after-tax) for the three and nine months ended

September 24, 2022, respectively.

For the three and nine months ended September 25, 2021, we

recorded pre-tax

share-based compensation expense of $

million ($

million after-tax) and $

million ($

million after-tax),

respectively.

Total unrecognized compensation cost related to unvested awards as of September 24, 2022 was $

million,

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

approximately

2.2

years.

The following weighted-average assumptions were used in determining

the most recent fair values of stock options

granted using the Black-Scholes valuation model:

2022

Expected dividend yield

0.0

Expected stock price volatility

27.70

Risk-free interest rate

3.42

Expected life of options (years)

6.00

We have not declared cash dividends on our stock in the past and we do not anticipate declaring cash dividends in

the foreseeable future.

The expected stock price volatility is based on implied volatilities

from traded options on

our stock, historical volatility of our stock, and other factors.

The risk-free interest rate is based on the U.S.

Treasury yield curve in effect at the time of grant in conjunction with considering the expected life of options.

The

six

-year expected life of the options was determined using the simplified

method for estimating the expected term

as permitted under SAB Topic 14.

Estimates of fair value are not intended to predict actual future events or

the

value ultimately realized by recipients of stock options, and subsequent events

are not indicative of the

reasonableness of the original estimates of fair value made by us.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

The following table summarizes stock option activity under the Plans

during the nine months ended September 24,

2022:

Stock Options

Weighted

Average

Weighted

Remaining

Average

Contractual

Aggregate

Exercise

Life in

Intrinsic

Price

Years

Value

Outstanding at beginning of period

767,717

63.24

Granted

418,425

85.82

Exercised

(30,554)

62.71

Forfeited

(17,850)

72.96

Outstanding at end of period

1,137,738

71.41

8.8

Options exercisable at end of period

223,198

63.19

Weighted

Average

Remaining

Aggregate

Number of

Exercise

Contractual

Intrinsic

Options

Price

Life (in years)

Value

Vested

or expected to vest

898,310

73.60

8.9

The following tables summarize the activity of our unvested RSUs for the nine

months ended September 24, 2022:

Time-Based Restricted Stock Units

Weighted Average

Grant Date Fair

Intrinsic Value

Shares/Units

Value Per Share

Per Share

Outstanding at beginning of period

1,945,862

58.79

Granted

466,473

85.67

Vested

(505,004)

54.74

Forfeited

(54,618)

67.23

Outstanding at end of period

1,852,713

66.39

67.34

Performance-Based Restricted Stock Units

Weighted Average

Grant Date Fair

Intrinsic Value

Shares/Units

Value Per Share

Per Share

Outstanding at beginning of period

674,753

59.63

Granted

442,871

76.68

Vested

(392,646)

59.18

Forfeited

(13,631)

67.17

Outstanding at end of period

711,347

63.27

67.34

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 11 – 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.

Accounting Standards Codification 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 nine months ended September 24, 2022 and the year

ended December 25, 2021 are presented in the

following table:

September 24,

December 25,

2022

2021

Balance, beginning of period

Decrease in redeemable noncontrolling interests due to acquisitions of

noncontrolling interests in subsidiaries

(26)

(60)

Increase in redeemable noncontrolling interests due to business

acquisitions

Net income attributable to redeemable noncontrolling interests

Dividends declared

(16)

(21)

Effect of foreign currency translation loss attributable to

redeemable noncontrolling interests

(13)

(6)

Change in fair value of redeemable securities

(18)

Balance, end of period

Note 12 – Comprehensive Income

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

GAAP,

are excluded from net income as

such amounts are recorded directly as an adjustment to stockholders’

equity.

The following table summarizes our Accumulated other comprehensive loss, net of

applicable taxes as of:

September 24,

December 25,

2022

2021

Attributable to Redeemable noncontrolling interests:

Foreign currency translation adjustment

(44)

(31)

Attributable to noncontrolling interests:

Foreign currency translation adjustment

(1)

Attributable to Henry Schein, Inc.:

Foreign currency translation adjustment

(317)

(155)

Unrealized gain (loss) from foreign currency hedging activities

(2)

Pension adjustment loss

(13)

(14)

Accumulated other comprehensive loss

(312)

(171)

Total Accumulated

other comprehensive loss

(357)

(202)

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

The following table summarizes the components of comprehensive income, net

of applicable taxes as follows:

Three Months Ended

Nine Months Ended

September 24,

September 25,

September 24,

September 25,

2022

2021

2022

2021

Net income

Foreign currency translation loss

(89)

(40)

(176)

(40)

Tax effect

Foreign currency translation loss

(89)

(40)

(176)

(40)

Unrealized gain from foreign currency hedging

activities

Tax effect

(4)

(1)

(7)

(2)

Unrealized gain from foreign currency hedging

activities

Pension adjustment gain

Tax effect

(1)

Pension adjustment gain

Comprehensive income

The change in the unrealized gain from foreign currency hedging activities

during the three and nine months ended

September 24, 2022 and September 25, 2021 was primarily attributable to

a net investment hedge that was entered

into during 2019.

Our financial statements are denominated in the U.S. Dollar currency.

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 loss during the nine months ended September

24, 2022 was primarily due to

strengthening of the U.S. Dollar as compared to the Euro, British Pound, Australian

Dollar and Canadian Dollar.

The following table summarizes our total comprehensive income, net of

applicable taxes, as follows:

Three Months Ended

Nine Months Ended

September 24,

September 25,

September 24,

September 25,

2022

2021

2022

2021

Comprehensive income attributable to

Henry Schein, Inc.

Comprehensive income attributable to

noncontrolling interests

Comprehensive income attributable to

Redeemable noncontrolling interests

Comprehensive income

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 13 – Plans of Restructuring

and Integration Costs

On August 1, 2022, we committed to a restructuring plan focused on

funding the priorities of the strategic plan and

streamlining operations and other initiatives to increase efficiency.

This plan also includes the rationalization of the

Company’s office space in North America as a result of transitioning to a partial and full remote work model for

certain employees.

We recorded restructuring charges of $

million primarily related to severance and employee-

related costs and lease right-of-use and other long-lived asset accelerated depreciation

and amortization and lease

exit costs.

We expect this initiative to extend through 2023.

We are currently unable in good faith to make a

determination of an estimate of the amount or range of amounts expected to

be incurred in connection with these

activities, both with respect to each major type of cost associated

therewith and with respect to the total cost, or an

estimate of the amount or range of amounts that will

result in future cash expenditures.

On August 26,

2022, we acquired Midway Dental Supply.

In connection with this acquisition, during the three

months ended September 24, 2022, we recorded integration costs of $

million related to one-time employee and

other costs, as well as restructuring charges of $

million, which are included in the $

million of restructuring

charges discussed above.

On November 20, 2019, we committed to a contemplated restructuring

initiative intended to mitigate stranded costs

associated with the spin-off of our animal health business and to rationalize operations

and provide expense

efficiencies.

These activities were originally expected to be completed by

the end of 2020 but we extended them to

the end of 2021 in light of the changes to the business environment brought

on by the COVID-19 pandemic.

The

restructuring activities under this prior initiative were completed in

Restructuring and integration costs recorded for the three and nine

months ended September 24, 2022 and nine

months ended September 25, 2021 (there were

restructuring costs for the three months ended September 25,

consisted of the following:

Three and Nine Months Ended September 24, 2022

Health-Care Distribution

Technology

and Value-Added

Services

Restructuring

Costs

Integration

Costs

Restructuring

Costs

Integration

Costs

Total

Severance and employee-related costs

Accelerated depreciation and amortization

Exit and other related costs

Integration employee-related and other

costs

Total restructuring

and integration costs

Nine Months Ended September 25, 2021

Health-Care Distribution

Technology

and Value-Added

Services

Restructuring

Costs

Integration

Costs

Restructuring

Costs

Integration

Costs

Total

Severance and employee-related costs

Total restructuring

and integration costs

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

The following table summarizes,

by reportable segment, the activity related to the liabilities associated

with our

restructuring initiatives

for the period ended September 24, 2022.

The remaining accrued balance of restructuring

costs as of September 24, 2022 is included in accrued expenses: other within

our condensed consolidated balance

sheet.

Technology

and

Health Care

Value-Added

Distribution

Services

Total

Balance, December 25, 2021

Restructuring charges

Non-cash charges

(2)

Cash payments and other adjustments

(5)

(1)

(6)

Balance, September 24, 2022

Note 14

–

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 presently 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:

Three Months Ended

Nine Months Ended

September 24,

September 25,

September 24,

September 25,

2022

2021

2022

2021

Basic

135,608,678

139,377,237

136,731,413

140,661,182

Effect of dilutive securities:

Stock options and restricted stock units

1,475,371

1,702,100

1,756,841

1,517,520

Diluted

137,084,049

141,079,337

138,488,254

142,178,702

The number of antidilutive securities that were excluded from the calculation

of diluted weighted average common

shares outstanding are as follows:

Three Months Ended

Nine Months Ended

September 24,

September 25,

September 24,

September 25,

2022

2021

2022

2021

Stock options

482,497

789,130

310,565

595,798

Restricted stock units

445,494

261,718

5,716

Total anti-dilutive

securities excluded from EPS

computation

927,991

789,130

572,283

601,514

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 15 – Supplemental Cash Flow Information

Cash paid for interest and income taxes was:

Nine Months Ended

September 24,

September 25,

2022

2021

Interest

Income taxes

During the nine months ended September 24, 2022 and September 25, 2021,

we had $

million and $

million,

respectively of non-cash net unrealized gains related to foreign currency

hedging activities.

Note 16 – Related Party Transactions

In connection with the formation of Henry Schein One, LLC, our joint venture

with Internet Brands, which was

formed on July 1, 2018, 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 three and

nine months ended September 24, 2022, we recorded $

million and $

million, respectively in connection with

costs related to this royalty agreement.

During the three and nine months ended September 25, 2021, we recorded

million and $

million, respectively, in connection with costs related to this royalty agreement.

As of

September 24, 2022 and December 25, 2021, Henry Schein One, LLC had

a net (payable) receivable balance due

(to) from Internet Brands of $

(14)

million and $

million, respectively, comprised of amounts related to results of

operations and the royalty agreement.

During our normal course of business, we have interests in entities that we account for under the equity accounting

method.

During the three and nine months ended September 24, 2022, we

recorded net sales of $

million and

million, respectively, to such entities.

During the three and nine months ended September 25, 2021, we

recorded net sales of $

million and $

million, respectively, to such entities.

During the three and nine months

ended September 24, 2022, we purchased $

million and $

million, respectively, from such entities.

During the

three and nine months ended September 25, 2021, we purchased $

million and $

million, respectively, from

such entities.

At September 24, 2022 and December 25, 2021, in the aggregate we

had $

million and $

million

due from our equity affiliates, and $

million and $

million due to our equity affiliates, respectively.

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

one year

9 years

As of

September 24, 2022, current and non-current liabilities associated with related

party operating leases were $

million and $

million, respectively.

Related party leases represented

5.2

% and

5.8

% of the total current and non-

current operating lease liabilities.

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