filings.toolsHenry Schein 10-Q 2024-03-30
Filed 2024-05-07. 8 sections, 136K characters. Original on sec.gov · Markdown · JSON
Cover and table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark One)
☒
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the
quarterly
period ended
March 30, 2024
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
OF 1934
For the transition period from ____________ to ____________
Commission File Number:
0-27078
HENRY SCHEIN, INC.
(Exact name of registrant as specified in its charter)
Delaware
11-3136595
(State or other jurisdiction of
(I.R.S. Employer Identification No.)
incorporation or organization)
135 Duryea Road
Melville
,
New York
(Address of principal executive offices)
11747
(Zip Code)
(
)
843-5500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $.01 per share
HSIC
The
Nasdaq
Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days.
Yes
☒
No
☐
Indicate by check mark whether the registrant has submitted electronically every
Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during
the preceding 12 months (or for such shorter period
that the registrant was required to submit such files).
Yes
☒
No
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,”
“accelerated filer,”
“smaller reporting company,”
and “emerging growth company”
in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for
complying with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes
☐
No
☒
As of April 29, 2024,
there were
128,050,943
shares of the registrant’s common stock outstanding.
HENRY SCHEIN, INC.
INDEX
Page
Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets as of March 30, 2024 and December 30, 2023
Condensed Consolidated Statements of Income for the three months ended
March 30, 2024 and April 1, 2023
Condensed Consolidated Statements of Comprehensive Income for the
three months ended March 30, 2024 and April 1, 2023
Condensed Consolidated Statement of Changes in Stockholders' Equity
for the three months ended March 30, 2024 and April 1, 2023
Condensed Consolidated Statements of Cash Flows for the
three months ended March 30, 2024 and April 1, 2023
Notes to Condensed Consolidated Financial Statements
Note 1 – Basis of Presentation
Note 2 – Significant Accounting Policies
and Recently Issued Accounting Standards
Note 4 – Net Sales from Contracts with Customers
Note 6 – Business Acquisitions
Note 7 – Fair Value Measurements
Note 10 – Plan of Restructuring
Note 12 – Stock-Based Compensation
Note 13 – Redeemable Noncontrolling Interests
Note 14 – Comprehensive Income
Note 16 – Supplemental Cash Flow Information
Note 17 – Related Party Transactions
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Unregistered Sales of Equity Securities and Use of Proceeds
See accompanying notes.
PART
I. FINANCIAL INFORMATION
Item 1. CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
HENRY SCHEIN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions,
except share data)
March 30,
December 30,
2024
2023
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
$
Accounts receivable, net of allowance for credit losses of $
and $
(1)
1,644
1,863
Inventories, net of reserves of $
and $
1,686
1,815
Prepaid expenses and other
Total current assets
4,078
4,488
Property and equipment, net
Operating lease right-of-use assets
Goodwill
3,835
3,875
Other intangibles, net
Investments and other
Total assets
$
10,145
$
10,573
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
$
1,020
Bank credit lines
Current maturities of long-term debt
Operating lease liabilities
Accrued expenses:
Payroll and related
Taxes
Other
Total current liabilities
2,334
2,683
Long-term debt (1)
2,010
1,937
Deferred income taxes
Operating lease liabilities
Other liabilities
Total liabilities
5,110
5,420
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,
128,480,909
outstanding on March 30, 2024 and
129,247,765
outstanding on December 30, 2023
Additional paid-in capital
-
-
Retained earnings
3,838
3,860
Accumulated other comprehensive loss
(239)
(206)
Total Henry Schein, Inc. stockholders' equity
3,600
3,655
Noncontrolling interests
Total stockholders' equity
4,237
4,289
Total liabilities, redeemable noncontrolling
interests and stockholders' equity
$
10,145
$
10,573
(1)
Amounts presented include balances held by our consolidated variable interest entity (“VIE”).
At March 30, 2024 and December
30, 2023, includes trade accounts receivable of $
million and $
million, respectively, and long-term debt of $
million and
$
million, respectively.
See
Note 1 – Basis of Presentation
for further information.
See accompanying notes.
HENRY SCHEIN, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF INCOME
(in millions,
except share and per share data)
(unaudited)
Three Months Ended
March 30,
April 1,
2024
2023
Net sales
$
3,172
$
3,060
Cost of sales
2,160
2,094
Gross profit
1,012
Operating expenses:
Selling, general and administrative
Depreciation and amortization
Restructuring costs
Operating income
Other income (expense):
Interest income
Interest expense
(30)
(14)
Other, net
(1)
Income before taxes, equity in earnings of affiliates and noncontrolling interests
Income taxes
(32)
(39)
Equity in earnings of affiliates, net of tax
Net income
Less: Net income attributable to noncontrolling interests
(5)
(7)
Net income attributable to Henry Schein, Inc.
$
$
Earnings per share attributable to Henry Schein, Inc.:
Basic
$
0.72
$
0.92
Diluted
$
0.72
$
0.91
Weighted-average common
shares outstanding:
Basic
128,720,661
131,365,789
Diluted
129,769,580
133,039,886
See accompanying notes.
HENRY SCHEIN, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME
(in millions)
(unaudited)
Three Months Ended
March 30,
April 1,
2024
2023
Net income
$
$
Other comprehensive income, net of tax:
Foreign currency translation gain (loss)
(54)
Unrealized gain (loss) from hedging activities
(3)
Other comprehensive income (loss), net of tax
(43)
Comprehensive income
Comprehensive income attributable to noncontrolling interests:
Net income
(5)
(7)
Foreign currency translation loss (gain)
(2)
Comprehensive loss (income) attributable to noncontrolling interests
(9)
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, December 30, 2023
129,247,765
$
$
-
$
3,860
$
(206)
$
$
4,289
Net income (excluding $
attributable to Redeemable
noncontrolling interests)
-
-
-
-
Foreign currency translation loss (excluding loss of $
attributable to Redeemable noncontrolling interests)
-
-
-
-
(44)
-
(44)
Unrealized gain from hedging activities,
net of tax of $
-
-
-
-
-
Change in fair value of redeemable securities
-
-
(42)
-
-
-
(42)
Noncontrolling interests and adjustments related to
business acquisitions
-
-
-
-
-
Repurchase and retirement of common stock
(998,728)
-
(10)
(65)
-
-
(75)
Stock issued upon exercise of stock options
20,939
-
-
-
-
Stock-based compensation expense
314,759
-
-
-
-
Shares withheld for payroll taxes
(103,865)
-
(8)
-
-
-
(8)
Settlement of stock-based compensation awards
-
-
-
-
-
-
Transfer of charges in excess of
capital
-
-
(50)
-
-
-
Balance, March 30, 2024
128,480,909
$
$
-
$
3,838
$
(239)
$
$
4,237
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, 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 $
-
-
-
-
(3)
-
(3)
Change in fair value of redeemable securities
-
-
-
-
-
Initial noncontrolling interests and adjustments related to
business acquisitions
-
-
-
-
-
Repurchases and retirement of common stock
(1,223,919)
-
(13)
(87)
-
-
(100)
Stock-based compensation expense
1,016,300
-
-
-
-
Stock issued upon exercise of stock options
10,779
-
-
-
-
Shares withheld for payroll taxes
(399,194)
-
(29)
-
-
-
(29)
Transfer of charges in excess of
capital
-
-
(28)
-
-
-
Balance, April 1, 2023
131,196,783
$
$
-
$
3,684
$
(213)
$
$
4,127
See accompanying notes.
HENRY SCHEIN, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(in millions)
(unaudited)
Three Months Ended
March 30,
April 1,
2024
2023
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
Provision for deferred income taxes
Equity in earnings of affiliates
(3)
(4)
Distributions from equity affiliates
Changes in unrecognized tax benefits
Other
(6)
(1)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable
(20)
Inventories
Other current assets
Accounts payable and accrued expenses
(290)
(243)
Net cash provided by operating activities
Cash flows from investing activities:
Purchases of property and equipment
(41)
(31)
Payments related to equity investments and business acquisitions,
net of cash acquired
(20)
(1)
Proceeds from loan to affiliate
Capitalized software costs
(9)
(9)
Other
(3)
-
Net cash used in investing activities
(72)
(39)
Cash flows from financing activities:
Net change in bank credit lines
-
Proceeds from issuance of long-term debt
Principal payments for long-term debt
(60)
(1)
Proceeds from issuance of stock upon exercise of stock options
Payments for repurchases and retirement
Showing the first 8K of 76K characters. Open the full section
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Cautionary Note Regarding Forward-Looking Statements
In accordance with the “Safe Harbor” provisions of the Private Securities
Litigation Reform Act of 1995, we
provide the following cautionary remarks regarding important factors
that, among others, could cause future results
to differ materially from the forward-looking statements, expectations and assumptions
expressed or implied
herein.
All forward-looking statements made by us are subject to
risks and uncertainties and are not guarantees of
future performance.
These forward-looking statements involve known and unknown
risks, uncertainties and other
factors that may cause our actual results, performance and achievements
or industry results to be materially
different from any future results, performance or achievements expressed or implied by such
forward-looking
statements.
These statements are generally identified by the use of such
terms as “may,” “could,” “expect,”
“intend,” “believe,” “plan,” “estimate,” “forecast,” “project,” “anticipate,”
“to be,” “to make” or other comparable
terms.
Factors that could cause or contribute to such differences include, but are not limited
to, those discussed in
the documents we file with the Securities and Exchange Commission
(SEC), including our Annual Report on Form
10-K.
Risk factors and uncertainties that could cause actual results to differ materially from
current and historical results
include, but are not limited to: our dependence on third parties for
the manufacture and supply of our products; our
ability to develop or acquire and maintain and protect new products (particularly
technology products) and
technologies that achieve market acceptance with acceptable margins; transitional
challenges associated with
acquisitions, dispositions and joint ventures, including the failure
to achieve anticipated synergies/benefits, as well
as significant demands on our operations, information systems,
legal, regulatory, compliance, financial and human
resources functions in connection with acquisitions, dispositions and
joint ventures; certain provisions in our
governing documents that may discourage third-party acquisitions of us; adverse
changes in supplier rebates or
other purchasing incentives; risks related to the sale of corporate brand products;
security risks associated with our
information systems and technology products and services, such as
cyberattacks or other privacy or data security
breaches (including the October 2023 incident); effects of a highly competitive (including, without
limitation,
competition from third-party online commerce sites) and consolidating
market; changes in the health care industry;
risks from expansion of customer purchasing power and multi-tiered
costing structures; increases in shipping costs
for our products or other service issues with our third-party shippers; general
global and domestic macro-economic
and political conditions, including inflation, deflation, recession, ongoing
wars, fluctuations in energy pricing and
the value of the U.S. dollar as compared to foreign currencies, and changes
to other economic indicators,
international trade agreements, potential trade barriers and terrorism; geopolitical
wars; failure to comply with
existing and future regulatory requirements; risks associated with the EU Medical
Device Regulation; failure to
comply with laws and regulations relating to health care fraud or other
laws and regulations; failure to comply with
laws and regulations relating to the collection, storage and processing of
sensitive personal information or standards
in electronic health records or transmissions; changes in tax legislation;
risks related to product liability, intellectual
property and other claims; risks associated with customs policies
or legislative import restrictions; risks associated
with disease outbreaks, epidemics, pandemics (such as the COVID-19
pandemic), or similar wide-spread public
health concerns and other natural or man-made disasters; risks associated with our
global operations; litigation
risks; new or unanticipated litigation developments and the status
of litigation matters; our dependence on our
senior management, employee hiring and retention, and our relationships
with customers, suppliers and
manufacturers; and disruptions in financial markets.
The order in which these factors appear should not be
construed to indicate their relative importance or priority.
We caution that these factors may not be exhaustive and that many of these factors are beyond our ability to control
or predict.
Accordingly, any forward-looking statements contained herein should not be relied upon as a prediction
of actual results.
We undertake no duty and have no obligation to update forward-looking statements except as
required by law.
Where You
Can Find Important Information
We may disclose important information through one or more of the following channels: SEC filings, public
conference calls and webcasts, press releases, the investor relations
page of our website (www.henryschein.com)
and the social media channels identified on the About Media Center page
of our website.
Recent Developments
While the U.S. economy has recently experienced inflationary
pressures and strengthening of the U.S. dollar, their
impacts have not been material to our results of operations.
Though inflation impacts both our revenues and costs,
the depth and breadth of our product portfolio often allows us to offer lower-cost
national brand solutions or
corporate brand alternatives to our more price-sensitive customers who
are unwilling to absorb price increases, thus
positioning us to protect our gross profit.
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.
Cyber Incident
In October 2023 Henry Schein experienced a cyber incident that primarily
affected the operations of our North
American and European dental and medical distribution businesses.
Henry Schein One, our practice management
software, revenue cycle management and patient relationship management
solutions business, was not affected, and
our manufacturing businesses were mostly unaffected.
On November 22, 2023, we experienced a disruption of our
ecommerce platform and related applications, which has since been
remediated.
During the three months ended March 30, 2024, we continued
to experience a residual impact of the cyber events
noted above relating primarily to decreased sales to episodic customers (customers
that had generally registered a
less continuous level of demand pre-incident).
We have a number of programs planned and underway focused on
re-establishing these customers.
We maintain cyber insurance, subject to certain retentions and policy limitations.
With respect to the October 2023
cyber incident, we have a $60 million insurance policy, following a $5 million retention.
Executive-Level Overview
Henry Schein, Inc. is a solutions company for health care professionals powered
by a network of people and
technology.
We
believe we are the world’s largest provider of health care products and services primarily to office-
based dental and medical practitioners, as well as alternate sites of care.
We
serve more than one million customers
worldwide including dental practitioners, laboratories, physician practices and
ambulatory surgery centers, as well
as government, institutional health care clinics and other alternate care clinics.
We
believe that we have a strong
brand identity due to our more than 91 years of experience distributing health
care products.
We are headquartered in Melville, New York,
employ approximately 25,000 people (of which approximately
13,000 are based outside of the United States) and have operations or
affiliates in 33 countries and territories.
Our
broad global footprint has evolved over time through our organic success as well as
through contribution from
strategic acquisitions.
We
have established strategically located distribution centers around
the world to enable us to better serve our
customers and increase our operating efficiency.
This infrastructure, together with broad product and service
offerings at competitive prices, and a strong commitment to customer service, enables
us to be a single source of
supply for our customers’ needs.
While our primary go-to-market strategy is in our capacity as a distributor, we also market and sell our own
corporate brand portfolio of cost-effective, high-quality consumable merchandise products,
including in vitro
diagnostic devices, manufacture certain dental specialty products in
the areas of implants, orthodontics and
endodontics, manufacture drug products, and repackage/relabel prescription drugs
and/or devices.
We
have
achieved scale in these global businesses primarily through acquisitions, as
manufacturers of these products
typically do not utilize a distribution channel to serve customers.
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.
The health care distribution reportable segment, combining our global dental and
medical operating segments,
distributes 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, vitamins and
orthopedic implants.
Our global technology and value-added services business provides software, technology
and other value-added
services to health care practitioners.
Our technology business 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 consulting, and continuing education services for
practitioners.
A key element to grow closer to our customers is our One Schein initiative, which
is a unified go-to-market
approach that enables practitioners to work synergistically with our supply chain,
equipment sales and service and
other value-added services, allowing our customers to leverage the
combined value that we offer through a single
program.
Specifically, One Schein provides customers with streamlined access to our comprehensive offering of
national brand products, our corporate brand products and proprietary specialty
products and solutions (including
implant, orthodontic and endodontic products).
In addition, customers have access to a wide range of services,
including software and other value-added services.
Industry Overview
In recent years, the health care industry has increasingly focused on cost containment.
This trend has benefited
distributors capable of providing a broad array of products and services at low
prices.
It also has accelerated the
growth of HMOs, group practices, other managed care accounts and collective buying
groups, which, in addition to
their emphasis on obtaining products at competitive prices, tend to favor distributors
capable of providing
specialized management information support.
We
believe that the trend towards cost containment has the potential
to favorably affect demand for technology solutions, including software, which can
enhance the efficiency and
facilitation of practice management.
Our operating results in recent years have been significantly affected by strategies
and transactions that we
undertook to expand our business, domestically and internationally, in part to address significant changes in the
health care industry, including consolidation of health care distribution companies, health care reform, trends
toward managed care, cuts in Medicare and collective purchasing arrangements.
Industry Consolidation
The health care products distribution industry, as it relates to office-based health care practitioners, is fragmented
and diverse.
The industry ranges from sole practitioners working out of
relatively small offices to group practices
or service organizations ranging in size from a few practitioners to a large number of practitioners who have
combined or otherwise associated their practices.
Due in part to the inability of office-based health care practitioners to store and manage
large quantities of supplies
in their offices, the distribution of health care supplies and small equipment to office-based health
care practitioners
has been characterized by frequent, small quantity orders, and a need for rapid,
reliable and substantially complete
order fulfillment.
The purchasing decisions within an office-based health care practice are typically
made by the
practitioner or an administrative assistant.
Supplies and small equipment are generally purchased from more
than
one distributor, with one generally serving as the primary supplier.
The trend of consolidation extends to our customer base.
Health care practitioners are increasingly seeking to
partner, affiliate or combine with larger entities such as hospitals, health systems, group practices or physician
hospital organizations.
In many cases, purchasing decisions for consolidated groups
are made at a centralized or
professional staff level; however, orders are delivered to the practitioners’ offices.
We
believe that consolidation within the industry will continue to
result in a number of distributors, particularly
those with limited financial, operating and marketing resources, seeking to
combine with larger companies that can
provide growth opportunities.
This consolidation also may continue to result in distributors seeking
to acquire
companies that can enhance their current product and service offerings or provide
opportunities to serve a broader
customer base.
Our approach to acquisitions and joint ventures has been to expand our role as
a provider of products and services
to the health care industry.
This trend has resulted in our expansion into service areas that complement
our existing
operations and provide opportunities for us to develop synergies with, and thus strengthen, the acquired
businesses.
As industry consolidation continues, we believe that we are positioned to
capitalize on this trend, as we believe we
have the ability to support increased sales through our existing infrastructure, although
there can be no assurances
that we will be able to successfully accomplish this.
We
also have invested in expanding our sales/marketing
infrastructure to include a focus on building relationships with decision
makers who do not reside in the office-
based practitioner setting.
As the health care industry continues to change, we continually evaluate possible
candidates for joint venture or
acquisition and intend to continue to seek opportunities to expand our
role as a provider of products and services to
the health care industry.
There can be no assurance that we will be able to successfully pursue
any such
opportunity or consummate any such transaction, if pursued.
If additional transactions are entered into or
consummated, we would incur merger and/or acquisition-related costs, and there
can be no assurance that the
integration efforts associated with any such transaction would be successful.
Aging Population and Other Market Influences
The health care products distribution industry continues to experience growth
due to the aging population,
increased health care awareness, the proliferation of medical technology
and testing, new pharmacological
treatments, and expanded third-party insurance coverage, partially offset by the effects of unemployment
on
insurance coverage.
In addition, the physician market continues to benefit from the
shift of procedures and
diagnostic testing from acute care settings to alternate-care sites, particularly
physicians’ offices.
According to the U.S. Census Bureau’s International Database, between 2024
and 2034, the 45 and older
population is expected to grow by approximately 11%.
Between 2024 and 2044, this age group is expected to grow
by approximately 20%.
This compares with expected total U.S. population growth
rates of approximately 6%
between 2024 and 2034
and approximately 11% between 2024 and 2044.
According to the U.S. Census Bureau’s International Database, in 2024
there are approximately seven million
Americans aged 85 years or older, the segment of the population most in need of long-term care
and elder-care
services.
By the year 2050, that number is projected to nearly triple to approximately
19 million.
The population
aged 65 to 84 years is projected to increase by approximately 20% during
the same period.
As a result of these market dynamics, annual expenditures for health
care services continue to increase in the
United States.
We believe that demand for our products and services will grow while continuing to be impacted by
current and future operating, economic, and industry conditions.
The Centers for Medicare and Medicaid Services
(“CMS”) published “National Health Expenditure Data” indicating that total
national health care spending reached
approximately $4.5 trillion in 2022, or 17.3% of the nation’s gross domestic product, the benchmark
measure for
annual production of goods and services in the United States.
Health care spending is projected to reach
approximately $7.2 trillion by 2031, or 19.6% of the nation’s projected gross domestic product.
Government
Certain of our businesses involve the distribution, manufacturing, importation,
exportation, marketing, sale and
promotion of pharmaceuticals and/or medical devices, and in this regard, we
are subject to extensive local, state,
federal and foreign governmental laws and regulations, including as applicable
to our wholesale distribution of
pharmaceuticals and medical devices, manufacturing activities, and as part of
our specialty home medical supply
businesses that distribute and sell medical equipment and supplies directly
to patients.
Federal, state and certain
foreign governments have also increased enforcement activity in the health care
sector, particularly in areas of fraud
and abuse, anti-bribery and anti-corruption, controlled substances handling,
medical device regulations and data
privacy and security standards.
Certain of our businesses involve pharmaceuticals and/or medical devices,
including in vitro diagnostic devices,
that are paid for by third parties and must operate in compliance with a variety of
burdensome and complex coding,
billing and record-keeping requirements in order to substantiate claims for
payment under federal, state and
commercial healthcare reimbursement programs.
Government and private insurance programs fund a large portion of the total cost of medical care,
and there have
been efforts to limit such private and government insurance programs, including efforts, thus far
unsuccessful, to
seek repeal of the entire United States Patient Protection and Affordable Care Act,
as amended by the Health Care
and Education Reconciliation Act, each enacted in March 2010.
Certain of our businesses are subject to various additional federal, state,
local and foreign laws and regulations,
including with respect to the sale, transportation, importation, storage, handling
and disposal of hazardous or
potentially hazardous substances; “forever chemicals” such as per-and
polyfluoroalkyl substances; amalgam bans;
pricing disclosures; supply chain transparency around labor practices; and safe working
conditions.
In addition,
activities to control medical costs, including laws and regulations lowering
reimbursement rates for
pharmaceuticals, medical devices, medical supplies and/or medical treatments
or services, are ongoing.
CMS
recently released the 2024 durable medical equipment, prosthetics, orthotics
and supplies (“DMEPOS”)
reimbursement schedule, which, effective January 1, 2024, reduced the DMEPOS reimbursement
rates for non-
rural suppliers, such as us, by removing the Coronavirus Aid, Relief,
and Economic Security (aka CARES) Act
relief rates in effect during the COVID-19 pandemic.
This and other laws and regulations are subject to change and
their evolving implementation may impact our operations and our
financial performance.
Our businesses are generally subject to numerous laws and regulations that could
impact our financial performance,
and failure to comply with such laws or regulations could have a material adverse
effect on our business.
A more detailed discussion of governmental laws and regulations
is included in Management’s Discussion &
Analysis of Financial Condition and Results of Operations, contained
in our Annual Report on Form 10-K for the
fiscal year ended December 30, 2023, filed with the SEC on February 28, 2024.
Results of Operations
The following tables summarize the significant components of our operating
results and cash flows for the three
months ended March 30, 2024 and April 1, 2023:
Three Months Ended
March 30,
April 1,
2024
2023
Operating results:
Net sales
$
3,172
$
3,060
Cost of sales
2,160
2,094
Gross profit
1,012
Operating expenses:
Selling, general and administrative
Depreciation and amortization
Restructuring costs
Operating income
$
$
Other expense, net
$
(23)
$
(12)
Net income
Net income attributable to Henry Schein, Inc.
Three Months Ended
March 30,
April 1,
2024
2023
Cash flows:
Net cash provided by operating activities
$
$
Net cash used in investing activities
(72)
(39)
Net cash provided by (used in) financing activities
(151)
Plan of Restructuring
On August 1, 2022, we committed to a restructuring plan focused on
funding the priorities of the BOLD+1 strategic
plan, streamlining operations and other initiatives to increase efficiency.
We revised our previous expectations of
completion and we have extended this initiative through the end of 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 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 March 30, 2024 and April 1, 2023, we
recorded restructuring costs of $10 million
and $30 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.
Three Months Ended March 30, 2024 Compared to Three Months Ended April 1, 2023
Note: Percentages for Net Sales; Gross Profit; Operating Expenses; Other Expense,
Net; and Income Taxes are
based on actual values and may not recalculate due to rounding.
Net Sales
Net sales were as follows:
March 30,
% of
April 1,
% of
Increase
2024
Total
2023
Total
$
%
Health care distribution
(1)
Dental
$
1,914
60.3
%
$
1,898
62.0
%
$
0.8
%
Medical
1,041
32.9
31.8
7.3
Total health care distribution
2,955
93.2
2,869
93.8
3.0
Technology and value-added services
(2)
6.8
6.2
13.8
Total
$
3,172
100.0
%
$
3,060
100.0
%
$
3.7
%
The components of our sales growth were as follows:
Total Local
Currency
Growth
Foreign
Exchange
Impact
Total Sales
Growth
Local Currency Growth
Local Internal
Growth
Acquisition
Growth
Health care distribution
(1)
Dental Merchandise
(3.7)
%
3.8
%
0.1
%
0.7
%
0.8
%
Dental Equipment
0.2
-
0.2
0.6
0.8
Total Dental
(2.9)
3.0
0.1
0.7
0.8
Medical
(0.7)
8.0
7.3
-
7.3
Total Health Care Distribution
(2.1)
4.6
2.5
0.5
3.0
Technology and value-added services
(2)
3.2
10.2
13.4
0.4
13.8
Total
(1.8)
%
5.0
%
3.2
%
0.5
%
3.7
%
(1)
Consists of consumable products, dental specialty products (including implant, orthodontic and endodontic products), small
equipment, laboratory products, large equipment, equipment repair services, branded and generic pharmaceuticals, vaccines, surgical
products, diagnostic tests, infection-control products, PPE products, vitamins, and orthopedic implants.
(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, practice technology, network and hardware services, and other services.
Global Sales
Global net sales for the three months ended March 30, 2024 increased 3.7%.
The components of our sales growth
are presented in the table above.
The 1.8% decrease in our internally generated local currency sales was primarily
attributable to the residual impact
of the cyber incident related to decreased sales to episodic customers
(customers that had generally registered a less
continuous level of demand pre-incident) and lower sales of PPE products and
COVID-19 test kits.
For the three
months ended March 30, 2024, the estimated decrease in internally
generated local currency sales, excluding PPE
products and COVID-19 test kits, was 1.2%.
We estimate that sales of PPE products and COVID-19 test kits were approximately $181 million and $201 million
for the three months ended March 30, 2024 and April 1, 2023, respectively, representing an estimated decrease of
$20 million, or 10.0% versus the prior year, with the $20 million net decrease year-over-year representing 0.6% of
global net sales for the three months ended March 30, 2024.
Dental
Dental net sales for the three months ended March 30, 2024 increased 0.8%.
The components of our sales growth
are presented in the table above.
The increase in local currency sales was attributable to the acquisitions of
Biotech Dental and S.I.N. during the year
ended December 30, 2023.
The decrease in internally generated local currency sales for dental
merchandise was
primarily attributable to the residual impact of the cyber incident.
Our sales increase in internally generated local
currency for dental equipment was primarily attributable to some sales shifting
into the first quarter of 2024 due to
the delay of equipment installations during the fourth quarter of 2023
resulting from the impact of the cyber
incident.
We estimate that sales of PPE products were approximately $79 million and $92 million for the three months ended
March 30, 2024 and April 1, 2023, respectively, representing an estimated decrease of $13 million, or 14.5% versus
the prior year, with the $13 million net decrease year-over-year representing 0.7% of dental net sales for
the three
months ended March 30, 2024.
The decrease in sales of PPE products is primarily due to lower
market prices and
reduced demand following the cyber incident.
The estimated decrease in internally generated local currency
sales,
excluding PPE products,
was 2.2%.
Medical
Medical net sales for the three months ended March 30, 2024 increased
7.3%.
The components of our sales growth
are presented in the table above.
The increase in local currency sales was attributable to the acquisition
of Shield
Healthcare during the year ended December 30, 2023.
The internally generated local currency decrease in medical
sales is primarily attributable to the residual impact of the cyber incident as well
as the conversion of certain
pharmaceutical product sales to lower priced
generics, partially offset by strong sales of point-of-care diagnostics
including flu and multi-assay flu/COVID combination tests.
We estimate that sales of PPE products and COVID-19 test kits were approximately $102 million and $109 million
for the three months ended March 30, 2024 and April 1, 2023, respectively, representing an estimated decrease of
$7 million, or 6.2% versus the prior year, with the $7 million net decrease year-over-year representing 0.6%
of
medical net sales for the three months ended March 30, 2024.
The decrease in sales of these products is primarily
due to lower market prices of PPE products.
The estimated increase in internally generated local currency
sales,
excluding PPE products and COVID-19 test kits, was 0.1%.
Technology and value-added services
Technology and value-added services net sales for the three months ended March 30, 2024 increased 13.8%.
The
components of our sales growth are presented in the table above.
The internally generated local currency increase
in technology and value-added services sales is primarily attributable
to a continued increase in the number of
cloud-based users of our practice management software and an increase
in revenue cycle management services.
We
also experienced increased demand for our revenue cycle management solutions
and our analytical products.
Gross Profit
Gross profit and gross margin percentages by segment and in total were as follows:
March 30,
Gross
April 1,
Gross
Increase
2024
Margin %
2023
Margin %
$
%
Health care distribution
$
29.3
%
$
29.2
%
$
3.5
%
Technology and value-added services
66.8
67.4
12.7
Total
$
1,012
31.9
$
31.6
$
4.7
As a result of different practices of categorizing costs associated with distribution networks
throughout our
industry, our gross margins may not necessarily be comparable to other distribution companies.
Additionally, we
realize substantially higher gross margin percentages in our technology and value-added services
segment than in
our health care distribution segment.
These higher gross margins result from being both the developer and seller of
software products and services, as well as certain financial services.
The software industry typically realizes higher
gross margins to recover investments in research and development.
Within our health care distribution segment, gross profit margins may vary between the periods as a result of
the
changes in the mix of products sold as well as changes in our customer
mix.
For example, sales of our corporate
brand and certain specialty products achieve gross profit margins that are higher than
average total gross profit
margins of all products.
With respect to customer mix, sales to our large-group customers are typically completed
at lower gross margins due to the higher volumes sold as opposed to the gross margin on sales to office-based
practitioners, who normally purchase lower volumes.
Health care distribution gross profit for the three months ended March
30, 2024 increased compared to the prior-
year-period due to gross profit from acquisitions and gross margin expansion as a result of a favorable
impact of
sales mix of higher-margin products, partially offset by the decrease in sales resulting from
the residual impact of
the cyber incident and a reduction in sales of PPE products and COVID-19
test kits.
Technology and value-added services gross profit increased as a result of a higher gross profit from internally
generated sales and gross profit from acquisitions.
The slight decrease in gross margin rates was primarily due to
amortization expense.
Operating Expenses
Operating expenses (consisting of selling, general and administrative
expenses; depreciation and amortization; and
restructuring costs) by segment and in total were as follows:
% of
% of
March 30,
Respective
April 1,
Respective
Increase
2024
Net Sales
2023
Net Sales
$
%
Health care distribution
$
25.1
%
$
24.1
%
$
7.0
%
Technology and value-added services
55.8
51.6
23.1
Total
$
27.2
$
25.8
$
9.0
The net increase in operating expenses is attributable to the following:
Operating Costs
Restructuring Costs
Acquisitions
Total
Health care distribution
$
$
(17)
$
$
Technology and value-added services
(6)
(3)
Total
$
$
(20)
$
$
The increase in operating costs during the three months ended March 30, 2024
includes increases in payroll and
payroll related costs, travel, and convention expenses in both of our reportable
segments and increased acquisition
expenses in our healthcare distribution segment and an increase in accrued contingent
consideration related to a
2023 acquisition in our technology and value-added services segment.
During the three months ended March 30,
2024, we also incurred $5 million of expenses directly related to the cyber
incident, mostly consisting of
professional fees.
Other Expense, Net
Other expense, net was as follows:
March 30,
April 1,
Variance
2024
2023
$
%
Interest income
$
$
$
127.1
%
Interest expense
(30)
(14)
(16)
(114.8)
Other, net
(1)
(363.5)
Other expense, net
$
(23)
$
(12)
$
(11)
(81.5)
Interest income increased primarily due to increased interest rates.
Interest expense increased primarily due to
increased borrowings and increased interest rates.
Income Taxes
Our effective tax rate was 25.6% for the three months ended March 30, 2024 compared
to 23.8% for the prior year
period.
The difference between our effective and federal statutory tax rates primarily relates to state
and foreign
income taxes and interest expense.
The Organization of Economic Co-Operation and Development (OECD) issued
technical and administrative
guidance on Pillar Two Model Rules in December 2021, which provides for a global minimum tax rate on the
earnings of large multinational businesses on a country-by-country basis.
Effective January 1, 2024, the minimum
global tax rate is 15% for various jurisdictions pursuant to the Pillar Two framework.
Future tax reform resulting
from these developments may result in changes to long-standing tax principles,
which may adversely impact our
effective tax rate going forward or result in higher cash tax liabilities.
As of March 30, 2024, the impact of the
Pillar Two Rules to our financial statements was immaterial.
As we operate in jurisdictions which have adopted
Pillar Two, we are continuing to analyze the implications to effectively manage the impact for 2024 and beyond.
Liquidity and Capital Resources
Our principal capital requirements have included funding of acquisitions, purchases
of additional noncontrolling
interests, repayments of debt principal, the funding of working capital needs,
purchases of fixed assets and
repurchases of common stock.
Working capital requirements generally result from increased sales, special
inventory forward buy-in opportunities and payment terms for receivables
and payables.
Historically, sales have
tended to be stronger during the second half of the year and special inventory
forward buy-in opportunities have
been most prevalent just before the end of the year, and have caused our working capital requirements
to be higher
from the end of the third quarter to the end of the first quarter of
the following year.
We finance our business primarily through cash generated from our operations, revolving credit facilities and debt
placements.
Please see
for further information.
Our ability to generate sufficient cash flows from
operations is dependent on the continued demand of our customers
for our products and services, and access to
products and services from our suppliers.
Our business requires a substantial investment in working capital, which
is susceptible to fluctuations during the
year as a result of inventory purchase patterns and seasonal demands.
Inventory purchase activity is a function of
sales activity, special inventory forward buy-in opportunities and our desired level of inventory.
We anticipate
future increases in our working capital requirements.
We finance our business to provide adequate funding for at least 12 months.
Funding requirements are based on
forecasted profitability and working capital needs, which, on occasion, may
change.
Consequently, we may change
our funding structure to reflect any new requirements.
We believe that our cash and cash equivalents, our ability to access private debt markets and public equity markets,
and our available funds under existing credit facilities provide us with
sufficient liquidity to meet our currently
foreseeable short-term and long-term capital needs.
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.
Net cash provided by operating activities was $197 million for the
three months ended March 30, 2024, compared
to net cash provided by operating activities of $27 million for the prior
year.
The net change of $170 million was
primarily attributable to changes in working capital accounts, primarily
accounts receivable and accounts payable
and accrued expenses; and lower cash net income.
During the quarter ended March 30, 2024, the cyber incident
had several residual impacts to the operating cash flows from our working
capital, net of acquisitions, including an
increase in operating cash flows from accounts receivable due to improved
collection levels and decreased cash
flows from accounts payable and accrued expenses resulting from previously delayed
payments.
Net cash used in investing activities was $72 million for the three
months ended March 30, 2024, compared to net
cash used in investing activities of $39 million for the prior year.
The net change of $33 million was primarily
attributable to increased payments for equity investments and business acquisitions,
and increased purchases of
fixed assets resulting from our continued investment in our facilities and operations.
Net cash used in financing activities was $151 million for the
three months ended March 30, 2024, compared to net
cash provided by financing activities of $21 million for the prior year.
The net change of $172 million was
primarily due to increased net borrowings from debt to finance our investments
and increased acquisitions of
noncontrolling interests in subsidiaries, partially offset by decreased repurchases of
common stock.
The following table summarizes selected measures of liquidity and capital
resources:
March 30,
December 30,
2024
2023
Cash and cash equivalents
$
$
Working
capital
(1)
1,744
1,805
Debt:
Bank credit lines
$
$
Current maturities of long-term debt
Long-term debt
2,010
1,937
Total debt
$
2,377
$
2,351
Leases:
Current operating lease liabilities
$
$
Non-current operating lease liabilities
(1)
Includes $497 million and $284 million of certain accounts receivable which serve as security for U.S. trade accounts receivable
securitization at March 30, 2024 and December 30, 2023, respectively.
Our cash and cash equivalents consist of bank balances and investments
in money market funds representing
overnight investments with a high degree of liquidity.
Accounts receivable days sales outstanding and inventory turns
Our accounts receivable days sales outstanding from operations
increased to 50.4 days as of March 30, 2024 from
43.4 days as of April 1, 2023, which was primarily attributable to
the impact of the cyber incident.
During the three
months ended March 30, 2024, we wrote off approximately $2 million of fully reserved accounts
receivable against
our trade receivable reserve.
Our inventory turns from operations increased to 4.9 as of March 30, 2024
from 4.3 as
of April 1, 2023.
Our working capital accounts may be impacted by current and
future economic conditions.
Leases
We
have operating and finance leases for corporate offices, office space, distribution and other facilities,
vehicles
and certain equipment.
Our leases have remaining terms of less than one month
to approximately 17 years, some of
which may include options to extend the leases for up to 15 years.
As of March 30, 2024, our right-of-use assets
related to operating leases were $314 million and our current and non-current
operating lease liabilities were $75
million and $266 million, respectively.
Stock Repurchases
On February 8, 2023, our Board of Directors authorized the repurchase
of up to an additional $400 million in shares
of our common stock.
From March 3, 2003 through March 30, 2024, we repurchased $4.8 billion,
or 91,393,533 shares, under our
common stock repurchase programs, with $190 million available
as of March 30, 2024 for future common stock
share repurchases.
Redeemable Noncontrolling Interests
Some minority stockholders in certain of our consolidated subsidiaries have
the right, at certain times, to require us
to acquire their ownership interest in those entities.
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.
As of March 30, 2024 and April 1, 2023, our balance for
redeemable noncontrolling
interests was $798 million and $864 million, respectively.
Please see
Note 13 – Redeemable Noncontrolling
for further information.
Critical Accounting Policies and Estimates
There have been no material changes in our critical accounting policies and
estimates from those disclosed in Item
7 of our Annual Report on Form 10-K for the year ended December 30, 2023.
Accounting Standards Update
For a discussion of accounting standards updates that have been adopted
or will be adopted, see
Accounting Policies and Recently Issued Accounting Standards
of the Notes to the Condensed Consolidated
Financial Statements included under Item 1.
Item 3. QUANTITATIVE
QUANTITATIVE
AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our exposure to market risk
from that disclosed in Item 7A of our Annual
Report on Form 10-K for the year ended December 30, 2023.
Item 4. CONTROLS AND PROCEDURES
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of management, including
our principal executive officer and
principal financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this quarterly report
as such term is defined in Rules 13a-15(e)
and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”).
Based
on this evaluation, our management, including our principal executive
officer and principal financial officer,
concluded that our disclosure controls and procedures were effective as of March
30, 2024, to ensure that all
material information required to be disclosed by us in reports that we file
or submit under the Exchange Act is
accumulated and communicated to them as appropriate to allow timely
decisions regarding required disclosure and
that all such information is recorded, processed, summarized and reported
within the time periods specified in the
SEC’s rules and forms, and the rules of the Nasdaq stock exchange.
Changes in Internal Control over Financial Reporting
The combination of continued acquisition integrations and systems
implementation activity undertaken during the
quarter and carried over from prior quarters when considered in the aggregate,
represents a material change in our
internal control over financial reporting.
During the quarter ended March 30, 2024, post-acquisition integration related
activities continued for our medical
and dental businesses acquired during prior quarters.
These acquisitions, the majority of which utilize separate
information and financial accounting systems, have been included
in our condensed consolidated financial
statements since their respective dates of acquisition.
In addition, we completed systems implementation activities related
to a new ERP system for two of our dental
businesses in Brazil.
Finally, we continued systems implementation activities in the US for two of our dental
businesses.
All continued acquisition integrations and systems implementation activity
involve necessary and appropriate
change-management controls that are considered in our quarterly assessment of
the design and operating
effectiveness of our internal control over financial reporting.
The deficiencies in internal control over financial reporting identified
as of December 30, 2023 at the application
control level related to logical and user access management and segregation
of duties have been the subject of
ongoing review and the development and implementation of specific
remediation action plans, including the testing
and validation of control operating effectiveness, which is expected to be completed
prior to year-end.
Limitations of the Effectiveness of Internal Control
A control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance
that the objectives of the internal control system are met.
Because of the inherent limitations of any internal control
system, no evaluation of controls can provide absolute assurance that
all control issues, if any, within a company
have been detected.
PART
II.
OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
For a discussion of Legal Proceedings, see
of the Notes to the Condensed Consolidated
Financial Statements included under Item 1.
Item 1A. RISK FACTORS
There have been no material changes from the risk factors disclosed in
Part 1, Item 1A, of our Annual Report on
Form 10-K for the year ended December 30, 2023.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES
AND USE OF PROCEEDS
Purchases of equity securities by the issuer
Our share repurchase program, announced on March 3, 2003, originally
allowed us to repurchase up to two million
shares pre-stock splits (eight million shares post-stock splits) of our common
stock, which represented
approximately 2.3% of the shares outstanding at the commencement
of the program.
Subsequent additional
increases totaling $4.9
billion, authorized by our Board of Directors, to the repurchase program
provide for a total
of $5.0 billion (including $400 million authorized on February 8, 2023) of shares
of our common stock to be
repurchased under this program.
As of March 30, 2024, we had repurchased approximately $4.8 billion of
common stock (91,393,533 shares) under
these initiatives, with $190 million available for future common stock
share repurchases.
The following table summarizes repurchases of our common stock
under our stock repurchase program during the
fiscal quarter ended March 30, 2024:
Total Number
Maximum Number
Total
of Shares
of Shares
Number
Average
Purchased as Part
that May Yet
of Shares
Price Paid
of Our Publicly
Be Purchased Under
Fiscal Month
Purchased (1)
Per Share
Announced Program
Our Program (2)
12/31/2023 through 2/3/2024
478,429
$
74.28
478,429
3,012,674
2/4/2024 through 3/2/2024
464,966
75.75
464,966
2,525,517
3/3/2024 through 3/30/2024
55,333
76.57
55,333
2,514,895
998,728
998,728
(1)
All repurchases were executed in the open market under our existing publicly announced authorized program.
(2)
The maximum number of shares that may yet be purchased under this program is determined at the end of each month based on the
closing price of our common stock at that time.
This table excludes shares withheld from employees to satisfy minimum tax withholding
requirements for equity-based transactions.
Item 5. OTHER INFORMATION
OTHER INFORMATION
Rule 10b5-1 Trading Arrangements
During the three months ended March 30, 2024, (i)
Michael S. Ettinger
, the Company’s
Executive Vice President
and Chief Operating Officer
, and (ii)
Walter Siegel
, the Company’s
Senior Vice President and Chief Legal Officer
,
each
adopted
a Rule10b5-1 trading arrangement which is a trading plan for
the future sale of securities that is
intended to satisfy the affirmative defense of Exchange Act
Rule
10b5
-1(c), as well as the requirements of the
Company’s insider trading policy. Each plan is subject to an initial “cooling off” period during which there may be
no transactions between the adoption date and a date that is the later of 90 days
or two business days following the
Company’s filing of its next quarterly report on Form 10-Q or Annual Report on form 10-K.
On
March 4, 2024
,
Mr. Ettinger adopted the trading plan to sell a total of
12,240
shares based on limit orders at a specified price, with
a term through
March 4, 2025
.
On
March 7, 2024
, Mr. Siegel adopted the trading plan to sell
4,134
shares based on
a limit order at a specified price, with a term through
March 7, 2025
.
Item 6. EXHIBITS
EXHIBITS
Henry Schein, Inc. Incentive Plan and Plan Summary, effective as of January 1,
Form of 2024 Restricted Stock Unit Agreement for time-based restricted stock
unit awards pursuant to the Henry Schein, Inc. 2020 Stock Incentive Plan (as
amended and restated effective as of May 21, 2020).**+
Form of 2024 Restricted Stock Unit Agreement for performance-based
restricted stock unit awards pursuant to the Henry Schein, Inc. 2020 Stock
Incentive Plan (as amended and restated effective as of May 21, 2020).**+
Form of 2024 Restricted Stock Unit Agreement for time-based restricted stock
unit awards pursuant to the Henry Schein, Inc. 2023 Non-Employee Director
Stock Incentive Plan (as amended and restated effective as of May 23,
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.+
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.+
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.+
101.INS
Inline XBRL Instance Document - the instance document does not appear
in the
Interactive Data File because its XBRL tags are embedded within the
Inline
XBRL document+
101.SCH
Inline XBRL Taxonomy Extension Schema Document+
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document+
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document+
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document+
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document+
The cover page of Henry Schein, Inc.’s Quarterly Report on Form 10-Q for the
quarter ended March 30, 2024, formatted in Inline XBRL (included within
Exhibit 101 attachments).+
** Indicates management contract or compensatory plan or agreement.
+ Filed or furnished herewith.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to
be signed on its behalf by the undersigned thereunto duly authorized.
Henry Schein, Inc.
(Registrant)
By: /s/ Ronald N. South
Ronald N. South
Senior Vice President and
Chief Financial Officer
(Authorized Signatory and Principal Financial
and Accounting Officer)
Dated: May 7, 2024