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)

July 1,

December 31,

2023

2022

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

Accounts receivable, net of allowance for credit losses of $

and $

1,468

1,442

Inventories, net

1,843

1,963

Prepaid expenses and other

Total current assets

3,911

3,988

Property and equipment, net

Operating lease right-of-use assets

Goodwill

3,335

2,893

Other intangibles, net

Investments and other

Total assets

9,146

8,607

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND

STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

1,004

Bank credit lines

Current maturities of long-term debt

Operating lease liabilities

Accrued expenses:

Payroll and related

Taxes

Other

Total current liabilities

2,276

2,224

Long-term debt

1,133

1,040

Deferred income taxes

Operating lease liabilities

Other liabilities

Total liabilities

4,140

3,936

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,

130,576,806

outstanding on July 1, 2023 and

131,792,817

outstanding on December 31, 2022

Additional paid-in capital

Retained earnings

3,769

3,678

Accumulated other comprehensive loss

(210)

(233)

Total Henry Schein, Inc. stockholders' equity

3,560

3,446

Noncontrolling interests

Total stockholders' equity

4,186

4,095

Total liabilities, redeemable noncontrolling

interests and stockholders' equity

9,146

8,607

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENTS

OF INCOME

(in millions,

except share and per share data)

(unaudited)

Three Months Ended

Six Months Ended

July 1,

June 25,

July 1,

June 25,

2023

2022

2023

2022

Net sales

3,100

3,030

6,160

6,209

Cost of sales

2,125

2,085

4,219

4,291

Gross profit

1,941

1,918

Operating expenses:

Selling, general and administrative

1,424

1,362

Depreciation and amortization

Restructuring costs

Operating income

Other income (expense):

Interest income

Interest expense

(19)

(8)

(33)

(15)

Other, net

Income before taxes, equity in earnings of affiliates and

noncontrolling interests

Income taxes

(41)

(52)

(80)

(109)

Equity in earnings of affiliates

Net income

Less: Net income attributable to noncontrolling interests

(8)

(7)

(15)

(12)

Net income attributable to Henry Schein, Inc.

Earnings per share attributable to Henry Schein, Inc.:

Basic

1.07

1.17

1.99

2.49

Diluted

1.06

1.16

1.97

2.46

Weighted-average common

shares outstanding:

Basic

130,905,899

137,350,488

131,136,450

137,323,076

Diluted

131,873,174

138,869,064

132,465,749

139,055,205

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENTS

OF COMPREHENSIVE INCOME

(in millions)

(unaudited)

Three Months Ended

Six Months Ended

July 1,

June 25,

July 1,

June 25,

2023

2022

2023

2022

Net income

Other comprehensive income (loss), net of tax:

Foreign currency translation gain (loss)

(90)

(87)

Unrealized gain (loss) from foreign currency hedging

activities

(1)

(4)

Other comprehensive income (loss), net of tax

(82)

(78)

Comprehensive income

Less: Comprehensive income attributable to noncontrolling

interests:

Net income

(8)

(7)

(15)

(12)

Foreign currency translation loss (gain)

(1)

Comprehensive (income) loss attributable to noncontrolling

interests

(7)

(16)

(4)

Comprehensive income attributable to Henry Schein, Inc.

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENT

OF CHANGES IN

STOCKHOLDERS’ EQUITY

(in millions, except share data)

(unaudited)

Accumulated

Common Stock

Additional

Other

Total

$0.01 Par Value

Paid-in

Retained

Comprehensive

Noncontrolling

Stockholders'

Amount

Capital

Earnings

Income / (Loss)

Interests

Equity

Balance, April 1, 2023

131,196,783

3,684

(213)

4,127

Net income (excluding $

attributable to redeemable

noncontrolling interests)

Foreign currency translation gain (excluding loss of $

attributable to redeemable noncontrolling interests)

Unrealized loss from foreign currency hedging activities,

net of tax benefit of $

(1)

Dividends declared

(27)

Change in fair value of redeemable noncontrolling interests

(17)

Initial noncontrolling interests and adjustments related to

business acquisitions

(5)

(4)

Repurchases and retirement of common stock

(638,095)

(7)

(44)

(51)

Stock-based compensation expense

20,598

Stock issued upon exercise of stock options

5,081

Shares withheld for payroll taxes

(6,671)

(3)

Settlement of stock-based compensation awards

(890)

Transfer of charges in excess of

capital

(11)

Balance, July 1, 2023

130,576,806

3,769

(210)

4,186

Accumulated

Common Stock

Additional

Other

Total

$0.01 Par Value

Paid-in

Retained

Comprehensive

Noncontrolling

Stockholders'

Amount

Capital

Earnings

Income / (Loss)

Interests

Equity

Balance, March 26, 2022

137,708,809

3,759

(168)

4,224

Net income (excluding $

attributable to redeemable

noncontrolling interests)

Foreign currency translation loss (excluding loss of $

attributable to redeemable noncontrolling interests)

(81)

(1)

(82)

Unrealized gain from foreign currency hedging activities,

net of tax of $

Change in fair value of redeemable noncontrolling interests

Repurchase and retirement of common stock

(1,345,397)

(16)

(94)

(110)

Stock-based compensation expense

78,738

Stock issued upon exercise of stock options

3,594

Shares withheld for payroll taxes

(6,016)

(1)

Settlement of stock-based compensation awards

(168)

Transfer of charges in excess of

capital

(9)

Balance, June 25, 2022

136,439,560

3,834

(241)

4,227

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENT

OF CHANGES IN

STOCKHOLDERS' EQUITY

(in millions, except share data)

(unaudited)

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 foreign currency hedging activities,

net of tax benefit of $

(4)

Dividends declared

(27)

Change in fair value of redeemable noncontrolling interests

(14)

Initial noncontrolling interests and adjustments related to

business acquisitions

(2)

(1)

Repurchases and retirement of common stock

(1,862,014)

(20)

(131)

(151)

Stock-based compensation expense

1,036,898

Stock issued upon exercise of stock options

15,860

Shares withheld for payroll taxes

(405,865)

(32)

Settlement of stock-based compensation awards

(890)

Transfer of charges in excess of

capital

(39)

Balance, July 1, 2023

130,576,806

3,769

(210)

4,186

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 gain (excluding gain of $

attributable to redeemable noncontrolling interests)

(79)

(1)

(80)

Unrealized gain from foreign currency hedging activities,

net of tax of $

Purchase of noncontrolling interests

(7)

Change in fair value of redeemable noncontrolling interests

Repurchase and retirement of common stock

(1,345,397)

(16)

(94)

(110)

Stock-based compensation expense

954,899

Stock issued upon exercise of stock options

29,827

Shares withheld for payroll taxes

(342,347)

(29)

Settlement of stock-based compensation awards

(2,980)

Transfer of charges in excess of

capital

(8)

Balance, June 25, 2022

136,439,560

3,834

(241)

4,227

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENTS

OF CASH FLOWS

(in millions)

(unaudited)

Six Months Ended

July 1,

June 25,

2023

2022

Cash flows from operating activities:

Net income

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

Depreciation and amortization

Non-cash restructuring charges

Stock-based compensation expense

Provision for losses on trade and other accounts receivable

Benefit from deferred income taxes

(3)

(15)

Equity in earnings of affiliates

(7)

(9)

Distributions from equity affiliates

Changes in unrecognized tax benefits

(1)

Other

(9)

(13)

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

Inventories

Other current assets

(1)

(37)

Accounts payable and accrued expenses

(295)

(198)

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of fixed assets

(68)

(43)

Payments related to equity investments and business acquisitions,

net of cash acquired

(251)

(7)

Proceeds from loan to affiliate

Other

(24)

(15)

Net cash used in investing activities

(340)

(59)

Cash flows from financing activities:

Net change in bank borrowings

Proceeds from issuance of long-term debt

Principal payments for long-term debt

(366)

(57)

Proceeds from issuance of stock upon exercise of stock options

Payments for repurchases and retirement of common stock

(150)

(110)

Payments for taxes related to shares withheld for employee taxes

(33)

(29)

Distributions to noncontrolling shareholders

(6)

(12)

Acquisitions of noncontrolling interests in subsidiaries

(13)

(19)

Net cash provided by (used in) financing activities

(195)

Effect of exchange rate changes on cash and cash equivalents

(6)

Net change in cash and cash equivalents

(10)

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENT

(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.

These reclassifications, individually and in the aggregate, did

not

have a material impact on our condensed consolidated financial condition,

results of operations or cash flows.

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 31, 2022 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 three and six months ended July 1, 2023 are not necessarily

indicative of the results to be

expected for any other interim period or for the year ending December

30, 2023.

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.

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.

July 1, 2023 and December 31, 2022, 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.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENT

(in millions, except share and per share data)

(unaudited

)

Note 2 – Critical Accounting Policies and Recently Issued Accounting

Standards

Critical Accounting Policies

There have been no material changes in our critical accounting policies

during the six months ended July 1, 2023,

as compared to the critical accounting policies described in Item 7 of our Annual

Report on Form 10-K for the year

ended December 31, 2022.

Recently Issued Accounting Standards

In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update

(“ASU”) No. 2022-04, “Liabilities – Supplier Finance Programs (Subtopic

405-50): Disclosure of Supplier Finance

Program Obligations,” which will increase transparency of supplier finance

programs by requiring entities that use

such programs in connection with the purchase of goods and services to disclose

certain qualitative and quantitative

information about such programs.

ASU 2022-04 is effective for fiscal years beginning after December 15, 2022,

including interim periods within those fiscal years, except for amended

roll forward information, which is effective

for fiscal years beginning after December 15, 2023.

We do not expect that the requirements of this guidance will

have a material impact on our condensed consolidated financial statements.

In December 2022, the FASB issued ASU No. 2022-06, “Reference Rate Reform (Topic 848): Deferral of the

Sunset Date of Topic 848,” which extends the period of application of temporary optional expedients from

December 21, 2022 to December 31, 2024.

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

material impact on our condensed consolidated financial statements.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENT

(in millions, except share and per share data)

(unaudited

)

Note 3 – Net Sales from Contracts with Customers

Net sales are recognized in accordance with policies disclosed in Item

8 of our Annual Report on Form 10-K for

the year ended December 31, 2022.

Disaggregation of Net Sales

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

area:

Three Months Ended

Six Months Ended

July 1, 2023

North

America

International

Global

North

America

International

Global

Net sales:

Health care distribution

Dental

1,169

1,957

2,313

1,542

3,855

Medical

1,876

1,921

Total health care distribution

2,094

2,907

4,189

1,587

5,776

Technology

and value-added services

Total net sales

2,262

3,100

4,523

1,637

6,160

Three Months Ended

Six Months Ended

June 25, 2022

North

America

International

Global

North

America

International

Global

Net sales:

Health care distribution

Dental

1,124

1,853

2,229

1,452

3,681

Medical

2,127

2,168

Total health care distribution

2,101

2,849

4,356

1,493

5,849

Technology

and value-added services

Total net sales

2,259

3,030

4,670

1,539

6,209

Deferred Revenue

During the six months ended July 1, 2023, we recognized in net sales $

million of the amounts that were

previously deferred at December 31, 2022.

At December 31, 2022, 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.

At July 1, 2023, the current and non-current portion of contract liabilities

were $

million and $

million, respectively.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENT

(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, 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.

Our

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

Six Months Ended

July 1,

June 25,

July 1,

June 25,

2023

2022

2023

2022

Net Sales:

Health care distribution

(1)

Dental

1,957

1,853

3,855

3,681

Medical

1,921

2,168

Total health care distribution

2,907

2,849

5,776

5,849

Technology

and value-added services

(2)

Total

3,100

3,030

6,160

6,209

(1)

Consists of consumable products, small equipment, laboratory products, large equipment, equipment repair services, branded and

generic pharmaceuticals, vaccines, surgical products, dental specialty products (including implant, orthodontic and endodontic

products), diagnostic tests, infection-control products, PPE products and vitamins.

(2)

Consists of practice management software and other value-added products, which are distributed primarily to health care providers,

practice consultancy, education, revenue cycle management and financial services on a non-recourse basis, e-services, continuing

education services for practitioners, consulting and other services.

Three Months Ended

Six Months Ended

July 1,

June 25,

July 1,

June 25,

2023

2022

2023

2022

Operating Income:

Health care distribution

Technology

and value-added services

Total

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENT

(in millions, except share and per share data)

(unaudited

)

Note 5

–

Business Acquisitions

Our acquisition strategy is focused on investments in companies that

add new customers and sales teams, increase

our geographic footprint (whether entering a new country, such as emerging markets, or building scale where we

have already invested in businesses), and finally, those that enable us to access new products and technologies.

connection with our business acquisitions, the major classes of assets

and liabilities to which we generally allocate

acquisition consideration 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.

The estimated fair value of identifiable intangible assets 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.

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

market conditions.

While we use our best estimates and assumptions to accurately value

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, within 12 months following the date of acquisition,

or 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.

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 condensed consolidated statements of operations.

The accounting for certain of our acquisitions during the year ended December

31, 2022 had not been completed in

several areas, including but not limited to pending assessments of intangible

assets, and contingent consideration

assets and liabilities.

For the six months ended July 1, 2023 and June 25, 2022, there were

no material adjustments

recorded in our condensed consolidated statements of income relating to

changes in estimated values of assets

acquired, liabilities assumed and contingent consideration assets and liabilities.

Acquisition of Biotech Dental

On April 5, 2023, we acquired a

% voting equity interest in Biotech Dental (“Biotech Dental”), which

is a

provider of dental implants, clear aligners, and innovative digital dental

software based in France.

Biotech Dental

has several important solutions, 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.

The integration of Biotech Dental’s

software with Henry Schein One’s industry-leading practice management software solutions will help customers

streamline their clinical as well as administrative workflow for the ultimate

benefit of patients.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENT

(in millions, except share and per share data)

(unaudited

)

The following table aggregates

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

consideration

paid and net assets acquired in the Biotech Dental acquisition:

2023

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

(50)

Long-term debt

(90)

Deferred income taxes

(38)

Other noncurrent liabilities

(16)

Total identifiable

net assets

Goodwill

Total net assets acquired

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

acquisition as well as the expected

growth potential of Biotech Dental.

The acquired goodwill is deductible for tax purposes.

The accounting for the acquisition of Biotech Dental has

not been completed in several areas, including but not

limited to pending assessments of accounts receivable, inventory, intangible assets, right-of-use lease assets,

accrued liabilities and income and non-income based taxes.

To assist management in the allocation, we engaged

valuation specialists to prepare appraisals.

will finalize the amounts recognized as the information necessary

complete the analysis is obtained. We expect to finalize these amounts as soon as possible but no later than one year

from the acquisition date.

The pro forma financial information has not been presented because the

impact of the Biotech Dental acquisition

during the three and six months ended July 1, 2023 was immaterial to our condensed

consolidated financial

statements.

Other 2023 Acquisitions

During the six months ended July 1, 2023, we acquired companies within

the dental technology, medical device

and medical distribution segments.

Our acquired ownership interest ranged between

% to

The following table aggregates

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

consideration

paid and net assets acquired for these acquisitions during the six months

ended July 1, 2023.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENT

(in millions, except share and per share data)

(unaudited

)

2023

Acquisition consideration:

Cash

Deferred consideration

Estimated fair value of contingent consideration payable

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

(11)

Deferred income taxes

(9)

Other noncurrent liabilities

(10)

Total identifiable

net assets

Goodwill

Total net assets acquired

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

these acquisitions are expected to

provide for us, as well as the expected growth potential.

Approximately half of the acquired goodwill is deductible

for tax purposes.

In connection with an acquisition of a controlling interest of our 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 6 – Fair Value Measurements

The following table summarizes the preliminary identifiable intangible assets

acquired during the six months ended

July 1, 2023 and their estimated useful lives as of the date of the acquisition:

2023

Estimated Useful Lives (in years)

Customer relationships and lists

Trademarks/ Tradenames

Non-compete agreements

Product development

Patents

Other

Total

The pro forma financial information has not been presented because the

impact of the acquisitions during the three

and six months ended July 1, 2023 was immaterial to our condensed consolidated

financial statements.

Acquisition Costs

During the six months ended July 1, 2023 and June 25, 2022 we

incurred $

million and $

million, respectively,

in acquisition costs.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENT

(in millions, except share and per share data)

(unaudited

)

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.

Certain of our notes receivable contain variable interest rates.

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, current maturities

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

classified as Level 3 within the fair value hierarchy, and as of July 1, 2023 and December 31, 2022 was estimated at

1,524

million and $

1,149

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.

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.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENT

(in millions, except share and per share data)

(unaudited

)

Total

Return Swaps

The fair value for the total return swap is measured by valuing

the underlying exchange traded funds of the swap

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

date 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 12 – 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

July 1, 2023 and December 31, 2022:

July 1, 2023

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

December 31, 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

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENT

(in millions, except share and per share data)

(unaudited

)

Note 7 – Debt

Bank Credit Lines

Bank credit lines consisted of the following:

July 1,

December 31,

2023

2022

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 matures on

August 20, 2026

The interest rate on this revolving credit facility is based on

the USD LIBOR

plus a spread based on our leverage ratio at the end of each financial

reporting quarter.

At July 1, 2023, the interest

rate on borrowings under this revolving credit agreement was

5.25

% plus

0.80

%, for a combined rate of

6.05

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 July 1,

2023 and December 31, 2022, we had $

million and $

million in borrowings, respectively under this revolving

credit facility.

As of July 1, 2023 and December 31, 2022, there were $

million and $

million of letters of credit,

respectively, provided to third parties under this credit facility.

On July 11, 2023, we amended and restated the Revolving Credit Agreement to, among other

things, extend the

maturity date to July 11, 2028 and update the interest rate provisions to reflect the current market

approach for a

multicurrency facility.

The interest rate in the amended Credit Agreement 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 (effective June 30, 2023).

Other Short-Term Bank Credit

Lines

As of July 1, 2023 and December 31, 2022, 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 July 1, 2023

and December 31, 2022, $

million and $

million, respectively, were outstanding.

At July 1, 2023 and

December 31, 2022, borrowings under all of these credit lines had a weighted

average interest rate of

12.09

% and

10.11

%, respectively.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENT

(in millions, except share and per share data)

(unaudited

)

Long-term debt

Long-term debt consisted of the following:

July 1,

December 31,

2023

2022

Private placement facilities

1,074

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

9.42

% at July 1, 2023 and

ranging from

0.00

% to

3.50

% at December 31, 2022

Finance lease obligations

Total

1,199

1,046

Less current maturities

(66)

(6)

Total long-term debt

1,133

1,040

Private Placement Facilities

Our private placement facilities include

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

October 20, 2026

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

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, which

have a weighted average interest rate of

3.65

%, as of July 1, 2023 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

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

Less: Deferred debt issuance costs

(1)

Total

1,074

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENT

(in millions, except share and per share data)

(unaudited

)

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

This facility agreement has a

purchase limit of $

million with

two

banks as agents, expires on

December 15, 2025

As of July 1, 2023 and December 31, 2022, the borrowings outstanding

under this securitization facility were $

million and $

million, respectively.

At July 1, 2023, the interest rate on borrowings under this facility was

based on the asset-backed commercial paper rate of

5.38

% plus

0.75

%, for a combined rate of

6.13

December 31, 2022, the interest rate on borrowings under this facility was

based on the asset-backed commercial

paper rate of

4.58

% plus

0.75

%, for a combined rate of

5.33

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.

Term Loan

On July 11, 2023, we entered into a

three

-year $

million term loan credit agreement (the “Term Credit

Agreement”).

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.

This term loan matures on July 11, 2026.

We plan to use this

new credit facility for working capital and general corporate purposes,

including, but not limited to, capital

expenditures, the repurchase of the Company’s capital stock and permitted refinancing of existing debt, as well as

for funding potential acquisitions.

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.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENT

(in millions, except share and per share data)

(unaudited

)

Note 8 – Income Taxes

For the six months ended July 1, 2023 our effective tax rate was

22.8

%, compared to

23.9

% for the prior year

period.

The difference between our effective tax rate and the federal statutory tax rate primarily

relates to state and

foreign income taxes and interest expense.

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

“other liabilities” within our condensed

consolidated balance sheets, as of July 1, 2023 and December 31, 2022 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 2019.

The tax years subject to examination by the

IRS include years 2020 and forward.

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

to IRS

examination.

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

of the provision for income taxes.

The

amount of tax interest expense was $

million for the six months ended July 1, 2023 and $

million for the six

months ended June 25, 2022.

The total amount of accrued interest is included in “other liabilities,” and

was $

million as of July 1, 2023 and $

million as of December 31, 2022.

The amount of penalties accrued for during

the periods presented were not material to our condensed consolidated financial

statements

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENT

(in millions, except share and per share data)

(unaudited

)

Note 9 – Plan of Restructuring

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.

We revised our previous expectations of

completion and now expect this initiative to extend through 2024.

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.

During the three and six months ended July 1, 2023, we recorded restructuring

costs of $

and $

million,

respectively.

The restructuring costs for these periods primarily related to

severance and employee-related costs,

accelerated amortization of right-of-use lease assets and fixed assets, and other

lease exit costs.

Included in

restructuring costs for the six months ended July 1, 2023 were

immaterial amounts related to the disposal of an

unprofitable U.S. business initiated during 2022 and completed during

the first quarter of 2023.

Restructuring costs recorded for the three and six months ended July 1,

2023 consisted of the following (there were

restructuring costs for the three and six months ended June 25, 2022):

Three Months Ended July 1, 2023

Health-Care

Distribution

Technology

and

Value-Added

Services

Total

Severance and employee-related costs

Accelerated depreciation and amortization

Exit and other related costs

Total restructuring

costs

Six Months Ended July 1, 2023

Health-Care

Distribution

Technology

and

Value-Added

Services

Total

Severance and employee-related costs

Accelerated depreciation and amortization

Exit and other related costs

Loss on disposal of a business

Total restructuring

costs

The following table summarizes,

by reportable segment, the activity related to the liabilities associated

with our

restructuring initiatives

for the period ended July 1, 2023.

The remaining accrued balance of restructuring costs as

of July 1, 2023 is included in accrued expenses: other within our condensed

consolidated balance sheet.

Liabilities

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

operating lease liabilities within

our condensed consolidated balance sheet.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENT

(in millions, except share and per share data)

(unaudited

)

Technology

and

Health Care

Value-Added

Distribution

Services

Total

Balance, December 31, 2022

Restructuring costs

Non-cash asset impairment and accelerated

depreciation and amortization of right-of-use lease

assets and other long-lived assets

(9)

(1)

(10)

Cash payments and other adjustments

(24)

(5)

(29)

Balance, July 1, 2023

Note 10 – Legal Proceedings

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

related lawsuits (currently less than one-

hundred and seventy-five (

); one or more of Henry Schein, Inc.’s subsidiaries is 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 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 has been set for a jury trial on August 12, 2024; 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 May 2025.

Of Henry Schein’s 2022 net sales of approximately $

12.6

billion from continuing

operations, 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 July 1, 2023, 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 STATEMENT

(in millions, except share and per share data)

(unaudited

)

Note 11 – 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”)

with the exception of our 2021 plan year

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

RSUs.

In 2022, we granted time-

based and performance-based RSUs, as well as non-qualified stock

options.

For our 2023 plan year, we returned to

granting our employees equity-based awards solely in the form of time-based

and performance-based RSUs.

Our

non-employee directors receive equity-based awards solely in the form

of time-based RSUs.

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

In the case of RSUs, common

stock is delivered on or following satisfaction of vesting conditions.

We issue RSUs to employees that primarily

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 to our non-employee directors primarily are granted

with

-month

cliff vesting.

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

a straight-line basis.

With respect to time-based RSUs, we estimate the fair value based on our closing stock price on the date 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 difference in projected earnings

generated by COVID-19 test kits

(solely with respect to performance-based RSUs granted in the 2022 and

2023 plan years) and impairment charges

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

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 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 the term

upon certain events.

Compensation expense for these stock options is recognized

using a graded vesting method.

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

During the six months

ended July 1, 2023 we did

t grant any stock options.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENT

(in millions, except share and per share data)

(unaudited

)

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 six months ended

July 1, 2023, respectively.

For the three and six months ended June 25, 2022, 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 July 1, 2023 was $

million, which is

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

2.4

years.

Our accompanying condensed consolidated statements of cash flows present

our stock-based compensation expense

as an adjustment to reconcile net income to net cash provided by operating

activities for all periods presented.

the accompanying consolidated statements of cash flows, there were no

benefits associated with tax deductions in

excess of recognized compensation as a cash inflow from financing

activities for the six months ended July 1, 2023

and June 25, 2022, respectively.

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.

The following table summarizes the stock option activity during the six months

ended July 1, 2023:

Stock Options

Weighted Average

Aggregate

Exercise

Remaining Contractual

Intrinsic

Price

Life (in years)

Value

Outstanding at beginning of period

1,117,574

71.38

Exercised

(17,905)

62.71

Forfeited

(7,541)

78.22

Outstanding at end of period

1,092,128

71.48

8.1

Options exercisable at end of period

568,623

68.25

Weighted Average

Aggregate

Number of

Exercise

Remaining Contractual

Intrinsic

Options

Price

Life (in years)

Value

Vested

or expected to vest

517,576

75.12

8.3

The following tables summarize the activity of our unvested RSUs for

the six months ended July 1, 2023:

Time-Based Restricted Stock Units

Performance-Based Restricted Stock Units

Weighted Average

Grant Date Fair

Intrinsic Value

Grant Date Fair

Intrinsic Value

Shares/Units

Value Per Share

Per Share

Shares/Units

Value Per Share

Per Share

Outstanding at beginning of period

1,756,044

66.59

520,916

60.23

Granted

407,570

77.70

530,224

78.38

Vested

(406,604)

61.66

(630,294)

60.64

Forfeited

(54,420)

71.07

(49,524)

76.09

Outstanding at end of period

1,702,590

70.34

81.10

371,322

69.62

81.10

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENT

(in millions, except share and per share data)

(unaudited

)

Note 12 – 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 six months ended July 1, 2023 and the year ended December

31, 2022 are presented in the

following table:

July 1,

December 31,

2023

2022

Balance, beginning of period

Decrease in redeemable noncontrolling interests due to acquisitions of

noncontrolling interests in subsidiaries

(13)

(31)

Increase in redeemable noncontrolling interests due to business

acquisitions

Net income attributable to redeemable noncontrolling interests

Dividends declared

(7)

(21)

Effect of foreign currency translation gain (loss) attributable to

redeemable noncontrolling interests

(6)

Change in fair value of redeemable securities

(4)

Balance, end of period

Note 13 – 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:

July 1,

December 31,

2023

2022

Attributable to redeemable noncontrolling interests:

Foreign currency translation adjustment

(36)

(37)

Attributable to noncontrolling interests:

Foreign currency translation adjustment

(1)

Attributable to Henry Schein, Inc.:

Foreign currency translation adjustment

(209)

(236)

Unrealized gain from foreign currency hedging activities

Pension adjustment loss

(2)

Accumulated other comprehensive loss

(210)

(233)

Total Accumulated

other comprehensive loss

(247)

(271)

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENT

(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

Six Months Ended

July 1,

June 25,

July 1,

June 25,

2023

2022

2023

2022

Net income

Foreign currency translation gain (loss)

(90)

(87)

Tax effect

Foreign currency translation gain (loss)

(90)

(87)

Unrealized gain (loss) from foreign currency hedging

activities

(2)

(6)

Tax effect

(2)

(3)

Unrealized gain (loss) from foreign currency hedging

activities

(1)

(4)

Comprehensive income

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 gain (loss) during the six months ended

July 1, 2023 and six months ended June 25,

2022 was primarily due to changes in foreign currency exchange rates of

the British Pound, Brazilian Real,

Canadian Dollar, Euro, Australian Dollar, Chinese Yuan,

and

Israel Shekel.

The following table summarizes our total comprehensive income, net of

applicable taxes as follows:

Three Months Ended

Six Months Ended

July 1,

June 25,

July 1,

June 25,

2023

2022

2023

2022

Comprehensive income attributable to

Henry Schein, Inc.

Comprehensive income attributable to

noncontrolling interests

Comprehensive income (loss) attributable to

redeemable noncontrolling interests

(3)

Comprehensive income

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENT

(in millions, except share and per share data)

(unaudited

)

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

Six Months Ended

July 1,

June 25,

July 1,

June 25,

2023

2022

2023

2022

Basic

130,905,899

137,350,488

131,136,450

137,323,076

Effect of dilutive securities:

Stock options and restricted stock units

967,275

1,518,576

1,329,299

1,732,129

Diluted

131,873,174

138,869,064

132,465,749

139,055,205

The number of antidilutive securities that were excluded from the calculation

of diluted weighted average common

shares outstanding are as follows:

Three Months Ended

Six Months Ended

July 1,

June 25,

July 1,

June 25,

2023

2022

2023

2022

Stock options

426,002

423,786

427,355

250,226

Restricted stock units

19,405

51,453

19,405

226,203

Total anti-dilutive

securities excluded from EPS

computation

445,407

475,239

446,760

476,429

Note 15 – Supplemental Cash Flow Information

Cash paid for interest and income taxes was:

Six Months Ended

July 1,

June 25,

2023

2022

Interest

Income taxes

During the six months ended July 1, 2023 and June 25, 2022, we had

(6)

million and $

million of non-cash net

unrealized gains (losses) related to foreign currency hedging activities, respectively.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENT

(in millions, except share and per share data)

(unaudited

)

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

six months ended July 1, 2023, we recorded $

million and $

million, respectively, in connection with costs

related to this royalty agreement.

During the three and six months ended June 25, 2022, we recorded

million

and $

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

As of July 1, 2023 and

December 31, 2022, Henry Schein One, LLC had a net payable balance due

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 condensed consolidated

balance sheets.

As of July 1, 2023 Henry Schein One, LLC had declared

a cash distribution of $

million to

Internet Brands, which was paid subsequent to July 1, 2023.

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

method.

During the three and six months ended July 1, 2023, we recorded

net sales of $

million and $

million,

respectively, to such entities.

During the three and six months ended June 25, 2022, we recorded net sales

of $

million and $

million, respectively, to such entities.

During the three and six months ended July 1, 2023, we

purchased $

million and $

million, respectively, from such entities.

During the three and six months ended June

25, 2022, we purchased $

million and $

million, respectively, from such entities.

At July 1, 2023 and December

31, 2022, we had an aggregate of $

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.

These

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

ranging from less than

one year

years.

As of July 1, 2023, current and non-current liabilities associated with

related party operating leases were $

million and $

million, respectively.

Related party leases represented

7.6

% and

9.0

% of the total current and non-

current operating lease liabilities.

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