Item 1. CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions,

except share data)

September 30,

December 31,

2023

2022

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

$

Accounts receivable, net of allowance for credit losses of $

and $

1,573

1,442

Inventories, net

1,833

1,963

Prepaid expenses and other

Total current assets

4,113

3,988

Property and equipment, net

Operating lease right-of-use assets

Goodwill

3,595

2,893

Other intangibles, net

Investments and other

Total assets

$

9,810

$

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

2,093

2,224

Long-term debt

1,815

1,040

Deferred income taxes

Operating lease liabilities

Other liabilities

Total liabilities

4,709

3,936

Redeemable noncontrolling interests

Commitments and contingencies

(nil)

(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,

129,935,883

outstanding on September 30, 2023 and

131,792,817

outstanding on December 31, 2022

Additional paid-in capital

-

-

Retained earnings

3,897

3,678

Accumulated other comprehensive loss

(247)

(233)

Total Henry Schein, Inc. stockholders' equity

3,651

3,446

Noncontrolling interests

Total stockholders' equity

4,280

4,095

Total liabilities, redeemable noncontrolling

interests and stockholders' equity

$

9,810

$

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

Nine Months Ended

September 30,

September 24,

September 30,

September 24,

2023

2022

2023

2022

Net sales

$

3,162

$

3,067

$

9,322

$

9,276

Cost of sales

2,167

2,153

6,386

6,444

Gross profit

2,936

2,832

Operating expenses:

Selling, general and administrative

2,149

2,010

Depreciation and amortization

Restructuring and integration costs

Operating income

Other income (expense):

Interest income

Interest expense

(25)

(8)

(58)

(23)

Other, net

(2)

(2)

Income before taxes, equity in earnings of affiliates and

noncontrolling interests

Income taxes

(39)

(46)

(119)

(155)

Equity in earnings of affiliates

Net income

Less: Net income attributable to noncontrolling interests

(6)

(12)

(21)

(24)

Net income attributable to Henry Schein, Inc.

$

$

$

$

Earnings per share attributable to Henry Schein, Inc.:

Basic

$

1.06

$

1.10

$

3.04

$

3.59

Diluted

$

1.05

$

1.09

$

3.02

$

3.55

Weighted-average common

shares outstanding:

Basic

130,388,353

135,608,678

130,888,717

136,731,413

Diluted

131,442,135

137,084,049

132,149,172

138,488,254

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENTS

OF COMPREHENSIVE INCOME

(in millions)

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 24,

September 30,

September 24,

2023

2022

2023

2022

Net income

$

$

$

$

Other comprehensive income (loss), net of tax:

Foreign currency translation loss

(45)

(89)

(17)

(176)

Unrealized gain from foreign currency hedging

activities

Pension adjustment gain

-

-

Other comprehensive loss, net of tax

(39)

(77)

(15)

(155)

Comprehensive income

Less: Comprehensive income attributable to noncontrolling

interests:

Net income

(6)

(12)

(21)

(24)

Foreign currency translation loss

Comprehensive income attributable to noncontrolling

interests

(4)

(6)

(20)

(10)

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'

Shares

Amount

Capital

Earnings

Income / (Loss)

Interests

Equity

Balance, July 1, 2023

130,576,806

$

$

-

$

3,769

$

(210)

$

$

4,186

Net income (excluding $

attributable to redeemable

noncontrolling interests)

-

-

-

-

Foreign currency translation loss (excluding loss of $

attributable to redeemable noncontrolling interests)

-

-

-

-

(43)

-

(43)

Unrealized gain from foreign currency hedging activities,

net of tax of $

-

-

-

-

-

Dividends declared

-

-

-

-

-

(1)

(1)

Change in fair value of redeemable noncontrolling interests

-

-

-

-

-

Initial noncontrolling interests and adjustments related to

business acquisitions

-

-

(1)

-

-

-

(1)

Repurchases and retirement of common stock

(659,681)

-

(6)

(44)

-

-

(50)

Stock-based compensation expense

23,985

-

-

-

-

Stock issued upon exercise of stock options

3,884

-

-

-

-

-

-

Shares withheld for payroll taxes

(9,183)

-

-

-

-

-

-

Settlement of stock-based compensation awards

-

-

-

-

-

-

Transfer of charges in excess of

capital

-

-

(35)

-

-

-

Balance, September 30, 2023

129,935,883

$

$

-

$

3,897

$

(247)

$

$

4,280

Accumulated

Common Stock

Additional

Other

Total

$0.01 Par Value

Paid-in

Retained

Comprehensive

Noncontrolling

Stockholders'

Shares

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)

-

(83)

Unrealized gain from foreign currency hedging activities,

net of tax of $

-

-

-

-

-

Pension adjustment gain, net of tax of $

-

-

-

-

-

Dividends declared

-

-

-

-

-

(1)

(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)

-

-

-

(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

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'

Shares

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 loss (excluding loss of $

attributable to redeemable noncontrolling interests)

-

-

-

-

(16)

-

(16)

Unrealized gain from foreign currency hedging activities,

net of tax of $

-

-

-

-

-

Dividends declared

-

-

-

-

-

(28)

(28)

Change in fair value of redeemable noncontrolling interests

-

-

-

-

-

Initial noncontrolling interests and adjustments related to

business acquisitions

-

-

-

-

-

(2)

(2)

Repurchases and retirement of common stock

(2,521,695)

-

(26)

(175)

-

-

(201)

Stock-based compensation expense

1,060,883

-

-

-

-

Stock issued upon exercise of stock options

19,744

-

-

-

-

Shares withheld for payroll taxes

(415,048)

-

(32)

-

-

-

(32)

Settlement of stock-based compensation awards

(818)

-

-

-

-

Transfer of charges in excess of

capital

-

-

(4)

-

-

-

Balance, September 30, 2023

129,935,883

$

$

-

$

3,897

$

(247)

$

$

4,280

Accumulated

Common Stock

Additional

Other

Total

$.01 Par Value

Paid-in

Retained

Comprehensive

Noncontrolling

Stockholders'

Shares

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 declared

-

-

-

-

-

(1)

(1)

Purchase of noncontrolling interests

-

-

-

-

-

(7)

(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)

-

-

-

(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

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENTS

OF CASH FLOWS

(in millions)

(unaudited)

Nine Months Ended

September 30,

September 24,

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

(4)

(20)

Equity in earnings of affiliates

(10)

(12)

Distributions from equity affiliates

Changes in unrecognized tax benefits

Other

(11)

(25)

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

(72)

(93)

Inventories

(9)

Other current assets

(55)

(96)

Accounts payable and accrued expenses

(170)

(131)

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of fixed assets

(108)

(67)

Payments related to equity investments and business acquisitions,

net of cash acquired

(668)

(127)

Proceeds from loan to affiliate

Other

(36)

(26)

Net cash used in investing activities

(808)

(211)

Cash flows from financing activities:

Net change in bank borrowings

(98)

Proceeds from issuance of long-term debt

1,158

Principal payments for long-term debt

(457)

(58)

Debt issuance costs

(3)

-

Proceeds from issuance of stock upon exercise of stock options

Payments for repurchases and retirement of common stock

(200)

(200)

Payments for taxes related to shares withheld for employee taxes

(34)

(30)

Distributions to noncontrolling shareholders

(41)

(18)

Acquisitions of noncontrolling interests in subsidiaries

(19)

(33)

Net cash provided by (used in) financing activities

(121)

Effect of exchange rate changes on cash and cash equivalents

(11)

Net change in cash and cash equivalents

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

in

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 nine months ended September 30, 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.

At

September 30, 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 STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 2 – Critical Accounting Policies, Accounting Standard 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

30, 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.

Accounting Standard Adopted

During the quarter ended September 30, 2023, we adopted Accounting

Standards Codification (“ASC”) Topic 848,

Reference Rate Reform (Topic 848).

The adoption of Topic 848 did not have a material impact on our condensed

consolidated financial statements.

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.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(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

Nine Months Ended

September 30, 2023

September 30, 2023

North

America

International

Global

North

America

International

Global

Net sales:

Health care distribution

Dental

$

1,134

$

$

1,882

$

3,447

$

2,290

$

5,737

Medical

1,044

1,070

2,920

2,991

Total health care distribution

2,178

2,952

6,367

2,361

8,728

Technology

and value-added services

Total net sales

$

2,363

$

$

3,162

$

6,886

$

2,436

$

9,322

Three Months Ended

Nine Months Ended

September 24, 2022

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 net sales

$

2,374

$

$

3,067

$

7,044

$

2,232

$

9,276

Deferred Revenue

At September 30, 2023, the current and non-current portion of contract

liabilities were $

million and $

million,

respectively.

During the nine months ended September 30, 2023, we recognized,

in net sales, $

million of the

amount that was 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.

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, 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

Nine Months Ended

September 30,

September 24,

September 30,

September 24,

2023

2022

2023

2022

Net Sales:

Health care distribution

(1)

Dental

$

1,882

$

1,785

$

5,737

$

5,466

Medical

1,070

1,106

2,991

3,274

Total health care distribution

2,952

2,891

8,728

8,740

Technology

and value-added services

(2)

Total

$

3,162

$

3,067

$

9,322

$

9,276

(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

Nine Months Ended

September 30,

September 24,

September 30,

September 24,

2023

2022

2023

2022

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

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.

In

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.

During the nine months ended September 30, 2023 we completed accounting

for certain acquisitions that occurred

in the year ended December 31, 2022.

In relation to these acquisitions, we did not record material adjustments

in

our condensed consolidated financial statements relating to changes in estimated

values of assets acquired,

liabilities assumed and contingent consideration assets and liabilities.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Acquisition of S.I.N. Implant System

On July 5, 2023 we acquired a

% voting equity interest in S.I.N. Implant System (“S.I.N.”), one of Brazil’s

leading manufacturers of dental implants.

Based in São Paulo and founded in 2003, S.I.N. manufactures

an

extensive line of products to perform dental implant procedures and

is focused on advancing the development of

value-priced dental implants.

S.I.N. recently expanded the distribution of its products into the United

States and

other international markets.

The following table aggregates

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

consideration

paid and net assets acquired in the S.I.N.:

2023

Acquisition consideration:

Cash

$

Total consideration

$

Identifiable assets acquired and liabilities assumed:

Current assets

$

Intangible assets

Other noncurrent assets

Current liabilities

(33)

Long-term debt

(22)

Deferred income taxes

(55)

Other noncurrent liabilities

(27)

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 S.I.N.

The acquired goodwill is not deductible for tax purposes.

The following table summarizes the preliminary identifiable intangible assets

acquired as part of the acquisition of

S.I.N.:

2023

Estimated Useful Lives (in years)

Customer relationships and lists

$

Trademarks/ Tradenames

Non-compete agreements

Product development

Other

Total

$

The accounting for the acquisition of S.I.N. 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 of consideration,

we

engaged valuation specialists to determine the fair value of intangible and

tangible assets acquired and liabilities

assumed.

We

will finalize the amounts recognized as the information necessary

to 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 S.I.N. acquisition

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

during the three and nine months ended September 30, 2023 was immaterial

to our condensed consolidated

financial statements.

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, individualized prosthetics,

and innovative digital dental software based

in France.

Biotech Dental has several important solutions for dental practices

and dental labs, including Nemotec, a

comprehensive, integrated suite of planning and diagnostic software

using open architecture that connects disparate

medical devices to create a digital view of the patient, offering greater diagnostic

accuracy and an improved patient

experience.

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.

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

(51)

Long-term debt

(84)

Deferred income taxes

(38)

Other noncurrent liabilities

(22)

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 following table summarizes the preliminary identifiable intangible assets

acquired as part of the acquisition of

Biotech Dental:

2023

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

)

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 of

consideration, we engaged valuation specialists to determine the fair value

of intangible and tangible assets

acquired and liabilities assumed.

We will finalize the amounts recognized as the information necessary to 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 nine months ended September

30, 2023 was immaterial to our condensed

consolidated financial statements.

Other 2023 Acquisitions

During the nine months ended September 30, 2023, we acquired companies

within the health care distribution and

technology and value-added services 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 nine

months ended September 30, 2023.

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

(23)

Deferred income taxes

(13)

Long-term debt

(8)

Other noncurrent liabilities

(10)

Total identifiable

net assets

Goodwill

Total net assets acquired

$

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

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 an

affiliate, we recognized a gain of approximately $

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

equity investment, using a discounted cash

flow model based on Level 3 inputs, as defined in

Note 6 – Fair Value Measurements

.

The following table summarizes the preliminary identifiable intangible assets

acquired during the nine months

ended September 30, 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 nine months ended September 30, 2023 was immaterial to our condensed

consolidated financial statements.

Acquisition Costs

During the nine months ended September 30, 2023 and September 24, 2022

we incurred $

million and $

million, respectively, in acquisition costs, which are included in “selling, general and administrative” within our

condensed consolidated statements of income.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(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 September 30, 2023 and December 31, 2022 was

estimated at $

1,899

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, hedging of the

floating interest rate to a fixed interest rate on our $

million term loan

(see

Note 8 – Debt

for additional

information)

, and a total return swap for the purpose of economically hedging our

unfunded non-qualified

supplemental executive retirement plan (the “SERP”) and our deferred compensation

plan (the “DCP”).

See

Note 7

– Derivatives and Hedging Activities

for additional information.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

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.

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 13 – 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 30, 2023 and December 31,

2022:

September 30, 2023

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 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 STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 7 – Derivatives and Hedging Activities

We are exposed to market risks as well as changes in foreign currency exchange rates as measured against the U.S.

dollar and changes to the credit risk of the derivative counterparties.

We attempt to minimize these risks by

primarily using interest rate swaps, foreign currency forward contracts

and by maintaining counter-party credit

limits.

These hedging activities provide only limited protection

against interest rate, currency exchange and credit

risks.

Factors that could influence the effectiveness of our hedging programs

include market interest rates, currency

markets and availability of hedging instruments and liquidity of the credit

markets.

All interest rate swaps and

foreign currency forward contracts that we enter into are components of

hedging programs and are entered into for

the sole purpose of hedging an existing or anticipated interest rate

or currency exposure.

We do not enter into such

contracts for speculative purposes and we manage our credit risks by diversifying

our counterparties, maintaining a

strong balance sheet and having multiple sources of capital.

During 2019 we entered into foreign currency forward contracts

to hedge a portion of our euro-denominated

foreign operations which are designated as net investment hedges.

These net investment hedges offset the change

in the U.S. dollar value of our investment in certain euro-functional currency

subsidiaries due to fluctuating foreign

exchange rates.

Gains and losses related to these net investment hedges are recorded

in accumulated other

comprehensive loss within our condensed consolidated balance sheets.

Amounts excluded from the assessment of

hedge effectiveness are included in interest expense within our condensed consolidated

statements of income.

The

aggregate notional value of this net investment hedge, which

matured on

November 16, 2023

, is approximately

€

million.

During the three months ended September 30, 2023 and September

24, 2022, we recorded an

increase of $

million and $

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

currency forward contracts.

During the nine months ended September 30, 2023 and September 24, 2022,

we

recorded an increase of $

million and $

million, respectively, within other comprehensive income related to

these foreign currency forward contracts.

See

Note 6 – Fair Value Measurements

for additional information.

On

March 20, 2020

, we entered into a total return swap for the purpose of economically

hedging our unfunded non-

qualified SERP and our DCP.

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

At the inception, the

notional value of the investments in these plans was $

million.

At September 30, 2023, the notional value of the

investments in these plans was $

million.

At September 30, 2023, the financing blended rate for

this swap was

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

5.31

% plus

0.52

%, for a combined rate of

5.83

%.

For

the three months ended September 30, 2023 and September 24, 2022, we have

recorded a loss, within selling,

general and administrative in our condensed consolidated statement of

income, of approximately $

million and $

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

For the nine months ended

September 30, 2023 and September 24, 2022,

we have recorded a loss, within selling, general and administrative

in

our condensed consolidated statement of income, of approximately $

million and $

million, respectively, net of

transaction costs, related to this undesignated swap.

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

rate $

million floating debt term loan facility, with

three years

maturity, effectively changing the floating rate portion of

our obligation to a fixed rate.

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

interest

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

As of September 30, 2023, the

notional value of the interest rate swap agreements was $

million.

For the three and nine months ended

September 30, 2023, we recorded, within accumulated other comprehensive

loss within our condensed consolidated

balance sheets, a gain of $

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

agreements,

since we have designated these swaps agreements as cash flow hedges.

Fluctuations in the value of certain foreign currencies as compared

to the U.S. dollar may positively or negatively

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

in U.S.

dollars.

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

foreign currency forward

contracts aimed at limiting the impact of foreign currency exchange

rate fluctuations on earnings.

We purchase

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

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

to protect against currency

exchange risks associated with intercompany loans due from our international

subsidiaries and the payment of

merchandise purchases to our foreign suppliers.

We do not hedge the translation of foreign currency profits into

U.S. dollars, as we regard this as an accounting exposure, not an

economic exposure.

Amounts related to our

hedging activities are recorded in prepaid expenses and other and/or accrued

expenses: other within our condensed

consolidated balance sheets.

Our hedging activities have historically not had a material impact on our

condensed

consolidated financial statements.

Accordingly, additional disclosures related to derivatives and hedging activities

required by ASC 815 have been omitted.

Note 8 – Debt

Bank Credit Lines

Bank credit lines consisted of the following:

September 30,

December 31,

2023

2022

Revolving credit agreement

$

-

$

-

Other short-term bank credit lines

Total

$

$

Revolving Credit Agreement

On

August 20, 2021

, we entered into a $

1.0

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

which was scheduled to mature on

August 20, 2026

.

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 on this revolving

credit facility is based on Term Secured Overnight Financing Rate (“Term SOFR”) plus a spread based on our

leverage ratio at the end of each financial reporting quarter.

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 September 30, 2023 and December 31, 2022, we had $

million and $

million in borrowings, respectively under this revolving credit facility.

As of September 30, 2023

and December 31, 2022, there were $

million and $

million of letters of credit, respectively, provided to third

parties under this credit facility.

Other Short-Term Bank Credit

Lines

As of September 30, 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

September 30, 2023 and December 31, 2022, $

million and $

million, respectively, were outstanding.

At

September 30, 2023 and December 31, 2022, borrowings under all

of these credit lines had a weighted average

interest rate of

4.34

% and

10.11

%, respectively.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Long-term debt

Long-term debt consisted of the following:

September 30,

December 31,

2023

2022

Private placement facilities

$

1,074

$

U.S. trade accounts receivable securitization

-

Term loan

-

Various

collateralized and uncollateralized loans payable with interest,

in varying installments through 2023 at interest rates

ranging from

0.00

% to

9.42

% at September 30, 2023 and

ranging from

0.00

% to

3.50

% at December 31, 2022

Finance lease obligations

Total

1,887

1,046

Less current maturities

(72)

(6)

Total long-term debt

$

1,815

$

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

to

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 September 30, 2023 are presented in the following table:

Amount of

Borrowing

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 STATEMENTS

(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

to

three years

.

This facility agreement has a

purchase limit of $

million with

two

banks as agents, and expires on

December 15, 2025

.

As of September 30, 2023 and December 31, 2022, the borrowings

outstanding under this securitization facility

were $

million and $

million, respectively.

At September 30, 2023, the interest rate on borrowings under this

facility was based on the asset-backed commercial paper rate of

5.59

% plus

0.75

%, for a combined rate of

6.34

%.

At 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

to

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.

As of September 30,

2023, the borrowings outstanding under this term loan were $

million.

At September 30, 2023, the interest on

this Term Credit Agreement was

5.33

% plus

1.35

% for a combined rate of

6.68

%.

However, we have a hedge in

place

(see

Note 7 – Derivatives and Hedging Activities

for additional information)

that ultimately creates an

effective fixed rate of

5.79

%.

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 STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 9 – Income Taxes

For the nine months ended September 30, 2023 our effective tax rate was

22.5

%, compared to

23.5

% 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 September 30, 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 nine months ended September 30, 2023 and $

million for the

nine months ended September 24, 2022.

The total amount of accrued interest is included in “other

liabilities,” and

was $

million as of September 30, 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.

Note 10 – Plan 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.

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 months ended September 30, 2023 and September 24, 2022,

we recorded restructuring costs of

$

million and $

million, respectively.

During the nine months ended September 30, 2023 and September

24,

2022, we recorded restructuring costs of $

million 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 nine months ended

September 30, 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.

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.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Restructuring and integration costs recorded for the three and nine

months ended September 30, 2023 and

September 24, 2022, consisted of the following:

Three Months Ended September 30, 2023

Health-Care Distribution

Technology

and

Value-Added

Services

Restructuring

Costs

Integration

Costs

Restructuring

Costs

Total

Severance and employee-related costs

$

$

-

$

-

$

Accelerated depreciation and amortization

-

Exit and other related costs

-

-

Total restructuring

and integration costs

$

$

-

$

$

Three Months Ended September 24, 2022

Health-Care Distribution

Technology

and

Value-Added

Services

Restructuring

Costs

Integration

Costs

Restructuring

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 30, 2023

Health-Care Distribution

Technology

and

Value-Added

Services

Restructuring

Costs

Integration

Costs

Restructuring

Costs

Total

Severance and employee-related costs

$

$

-

$

$

Accelerated depreciation and amortization

-

Exit and other related costs

-

Loss on disposal of a business

-

-

Total restructuring

and integration costs

$

$

-

$

$

Nine Months Ended September 24, 2022

Health-Care Distribution

Technology

and

Value-Added

Services

Restructuring

Costs

Integration

Costs

Restructuring

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

$

$

$

-

$

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 30, 2023.

The remaining accrued balance of restructuring

costs as of September 30, 2023, which primarily relates to severance and

employee-related costs, 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.

Technology

and

Health Care

Value-Added

Distribution

Services

Total

Balance, December 31, 2022

$

$

$

Restructuring and integration costs

Non-cash asset impairment and accelerated

depreciation and amortization of right-of-use lease

assets and other long-lived assets

(12)

(2)

(14)

Non-cash impairment on disposal of a business

-

Cash payments and other adjustments

(37)

(6)

(43)

Balance, September 30, 2023

$

$

$

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 11 – 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 subsidiaries) 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 September 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.

In

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 30, 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 STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 12 – 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 2023 Non-Employee Director

Stock Incentive Plan (formerly known

as the 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 nine months

ended September 30, 2023 we did

no

t grant any stock options.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(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 nine months ended

September 30, 2023, respectively.

For the three and nine months ended September 24, 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 September 30, 2023 was $

million, which

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

2.5

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.

In

the accompanying condensed 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 nine months

ended September 30, 2023 and September 24, 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 nine

months ended September 30, 2023:

Stock Options

Weighted Average

Weighted Average

Aggregate

Exercise

Remaining Contractual

Intrinsic

Shares

Price

Life (in years)

Value

Outstanding at beginning of period

1,117,574

$

71.38

Exercised

(21,204)

62.74

Forfeited

(10,399)

78.32

Outstanding at end of period

1,085,971

$

71.48

7.8

$

Options exercisable at end of period

573,620

$

68.39

Weighted Average

Weighted Average

Aggregate

Number of

Exercise

Remaining Contractual

Intrinsic

Options

Price

Life (in years)

Value

Vested

or expected to vest

508,728

$

75.04

8.0

$

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

The following tables summarize the activity of our unvested RSUs for

the nine months ended September 30, 2023:

Time-Based Restricted Stock Units

Performance-Based Restricted Stock Units

Weighted Average

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

417,873

77.61

382,387

80.65

Vested

(429,425)

61.91

(631,458)

60.65

Forfeited

(75,227)

71.59

(55,510)

76.82

Outstanding at end of period

1,669,265

$

70.38

$

74.25

216,335

$

69.54

$

74.25

Note 13 – Redeemable Noncontrolling Interests

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

at certain times, to require us to acquire

their ownership interest in those entities at fair value.

ASC 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 30,

2023 and the year ended December 31, 2022 are presented in

the following table:

September 30,

December 31,

2023

2022

Balance, beginning of period

$

$

Decrease in redeemable noncontrolling interests due to acquisitions of

noncontrolling interests in subsidiaries

(19)

(31)

Increase in redeemable noncontrolling interests due to business

acquisitions

Net income attributable to redeemable noncontrolling interests

Dividends declared

(13)

(21)

Effect of foreign currency translation loss attributable to

redeemable noncontrolling interests

(1)

(6)

Change in fair value of redeemable securities

(14)

(4)

Balance, end of period

$

$

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 14 – 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 30,

December 31,

2023

2022

Attributable to redeemable noncontrolling interests:

Foreign currency translation adjustment

$

(38)

$

(37)

Attributable to noncontrolling interests:

Foreign currency translation adjustment

$

(1)

$

(1)

Attributable to Henry Schein, Inc.:

Foreign currency translation adjustment

$

(252)

$

(236)

Unrealized gain from foreign currency hedging activities

Pension adjustment loss

(2)

(2)

Accumulated other comprehensive loss

$

(247)

$

(233)

Total Accumulated

other comprehensive loss

$

(286)

$

(271)

The following table summarizes the components of comprehensive income, net

of applicable taxes as follows:

Three Months Ended

Nine Months Ended

September 30,

September 24,

September 30,

September 24,

2023

2022

2023

2022

Net income

$

$

$

$

Foreign currency translation loss

(45)

(89)

(17)

(176)

Tax effect

-

-

-

-

Foreign currency translation loss

(45)

(89)

(17)

(176)

Unrealized gain from foreign currency hedging

activities

Tax effect

(3)

(4)

(1)

(7)

Unrealized gain from foreign currency hedging

activities

Pension adjustment gain

-

-

Tax effect

-

(1)

-

(1)

Pension adjustment gain

-

-

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 loss during the nine months ended September

30, 2023 and nine months ended

September 24, 2022 was primarily due to changes in foreign currency

exchange rates of the Australian Dollar,

Brazilian Real, British Pound, Canadian Dollar, Chinese Yuan, and Euro.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

The following table summarizes our total comprehensive income, net of

applicable taxes as follows:

Three Months Ended

Nine Months Ended

September 30,

September 24,

September 30,

September 24,

2023

2022

2023

2022

Comprehensive income attributable to

Henry Schein, Inc.

$

$

$

$

Comprehensive income attributable to

noncontrolling interests

Comprehensive income attributable to

redeemable noncontrolling interests

-

Comprehensive income

$

$

$

$

Note 15

–

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 30,

September 24,

September 30,

September 24,

2023

2022

2023

2022

Basic

130,388,353

135,608,678

130,888,717

136,731,413

Effect of dilutive securities:

Stock options and restricted stock units

1,053,782

1,475,371

1,260,455

1,756,841

Diluted

131,442,135

137,084,049

132,149,172

138,488,254

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 30,

September 24,

September 30,

September 24,

2023

2022

2023

2022

Stock options

424,005

482,497

426,237

310,565

Restricted stock units

7,362

445,994

15,072

261,718

Total anti-dilutive

securities excluded from earnings per

share computation

431,367

928,491

441,309

572,283

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 16 – Supplemental Cash Flow Information

Cash paid for interest and income taxes was:

Nine Months Ended

September 30,

September 24,

2023

2022

Interest

$

$

Income taxes

During the nine months ended September 30, 2023 and September 24, 2022,

we had $

million and $

million of

non-cash net unrealized gains related to foreign currency hedging activities,

respectively.

See

Note 7 – Derivatives

and Hedging Activities

for

additional information related to our total return swap and our interest rate

swap

agreements.

Note 17 – 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 30, 2023, we recorded $

million and $

million, respectively, in connection with

costs related to this royalty agreement.

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.

As of

September 30, 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.

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 30, 2023, we

recorded net sales of $

million and

$

million, respectively, to such entities.

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 30, 2023, we purchased $

million and $

million, respectively, from such entities.

During the

three and nine months ended September 24, 2022, we purchased $

million and $

million, respectively, from such

entities.

At September 30, 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

to

years.

As of September 30, 2023, current and non-current liabilities associated with

related party operating leases

were $

million and $

million, respectively.

Related party leases represented

6.9

% and

7.6

% of the total current

and non-current operating lease liabilities.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 18 – Subsequent Event

On October 14, 2023, we became aware of a cybersecurity incident

that primarily affected the operations of our

North American and European dental and medical distribution businesses.

Henry Schein One, our practice

management software, revenue cycle management and patient relationship

management solutions business was not

affected, and our manufacturing businesses and our equipment sales and

service operations were mostly unaffected.

Once we became aware of the issue, we took steps to assess, contain and

remediate this incident.

Our distribution

operations resumed and we reactivated our ecommerce platform.

We also notified law enforcement and our

customers and suppliers informing them of both the incident and

management’s efforts to mitigate its impact on our

daily operations.

As previously disclosed, while our forensic investigation is still

ongoing, we have determined that

a data breach occurred.

We are notifying potentially affected parties as appropriate.

On November 22, 2023, we experienced a disruption to our ecommerce

platform and related applications. The

Company has restored its ecommerce platform and certain other

applications in the United States, Canada and

certain European countries.

Our ecommerce platform in the remaining European countries and other applications

are expected to follow shortly.

We continue to review the impact of the incident on our business.

As previously disclosed, we believe the incident

will adversely impact our financial results for the fourth quarter and

full year 2023.

We maintain cyber insurance, subject to certain retentions and policy limitations.

There can be no assurance that

the insurance coverage we maintain is sufficient to cover costs and expenses related

to this cybersecurity incident.