Item 1. CONDENSED CONSOLIDATED

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Item 1. CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions,

except share data)

March 29,

December 28,

2025

2024

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

Accounts receivable, net of allowance for credit losses of $

and $

(1)

1,578

1,482

Inventories, net

1,842

1,810

Prepaid expenses and other

Total current assets

4,037

3,983

Property and equipment, net

Operating lease right-of-use assets

Goodwill

3,956

3,887

Other intangibles, net

1,028

1,023

Investments and other

Total assets

10,480

10,218

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND

STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

Bank credit lines

Current maturities of long-term debt

Operating lease liabilities

Accrued expenses:

Payroll and related

Taxes

Other

Total current liabilities

2,917

2,803

Long-term debt (1)

1,968

1,830

Deferred income taxes

Operating lease liabilities

Other liabilities

Total liabilities

5,761

5,381

Redeemable noncontrolling interests

Commitments and contingencies

(nil)

Stockholders' equity:

Preferred stock, $

0.01

par value,

1,000,000

shares authorized,

none

outstanding

Common stock, $

0.01

par value,

480,000,000

shares authorized,

122,243,683

outstanding on March 29, 2025 and

124,155,884

outstanding on December 28, 2024

Additional paid-in capital

Retained earnings

3,626

3,771

Accumulated other comprehensive loss

(317)

(379)

Total Henry Schein, Inc. stockholders' equity

3,310

3,393

Noncontrolling interests

Total stockholders' equity

3,954

4,031

Total liabilities, redeemable noncontrolling

interests and stockholders' equity

10,480

10,218

(1)

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

At March 29, 2025 and December

28, 2024, 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 29,

March 30,

2025

2024

Net sales

3,168

3,172

Cost of sales

2,168

2,160

Gross profit

1,000

1,012

Operating expenses:

Selling, general and administrative

Depreciation and amortization

Restructuring costs

Operating income

Other income (expense):

Interest income

Interest expense

(35)

(30)

Other, net

(1)

Income before taxes, equity in earnings of affiliates and noncontrolling interests

Income taxes

(35)

(32)

Equity in earnings of affiliates, net of tax

Net income

Less: Net income attributable to noncontrolling interests

(3)

(5)

Net income attributable to Henry Schein, Inc.

Earnings per share attributable to Henry Schein, Inc.:

Basic

0.89

0.72

Diluted

0.88

0.72

Weighted-average common

shares outstanding:

Basic

123,776,073

128,720,661

Diluted

124,848,221

129,769,580

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENTS

OF COMPREHENSIVE INCOME

(in millions)

(unaudited)

Three Months Ended

March 29,

March 30,

2025

2024

Net income

Other comprehensive income, net of tax:

Foreign currency translation gain (loss)

(54)

Unrealized gain (loss) from hedging activities

(5)

Other comprehensive income (loss), net of tax

(43)

Comprehensive income

Comprehensive income attributable to noncontrolling interests:

Net income

(3)

(5)

Foreign currency translation loss (gain)

(9)

Comprehensive loss (income) attributable to noncontrolling interests

(12)

Comprehensive income attributable to Henry Schein, Inc.

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENTS

OF CHANGES IN

STOCKHOLDERS’ EQUITY

(in millions, except share data)

(unaudited)

Accumulated

Common Stock

Additional

Other

Total

$0.01 Par Value

Paid-in

Retained

Comprehensive

Noncontrolling

Stockholders'

Amount

Capital

Earnings

Income / (Loss)

Interests

Equity

Balance, December 28, 2024

124,155,884

3,771

(379)

4,031

Net income (excluding loss $

attributable to Redeemable

noncontrolling interests)

Foreign currency translation gain (excluding gain of $

attributable to Redeemable noncontrolling interests)

Unrealized loss from hedging activities,

net of tax benefit of $

(5)

Pension adjustment gain, net of tax of $

Change in fair value of redeemable securities

(28)

Noncontrolling interests and adjustments related to

business acquisitions and contingent consideration

(60)

Repurchase and retirement of common stock

(2,255,485)

(21)

(141)

(162)

Stock issued upon exercise of stock options

10,351

Stock-based compensation expense

520,385

Shares withheld for payroll taxes

(187,493)

(11)

Settlement of stock-based compensation awards

Transfer of charges in excess of

capital

(114)

Balance, March 29, 2025

122,243,683

3,626

(317)

3,954

Accumulated

Common Stock

Additional

Other

Total

$0.01 Par Value

Paid-in

Retained

Comprehensive

Noncontrolling

Stockholders'

Amount

Capital

Earnings

Income / (Loss)

Interests

Equity

Balance, December 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)

Unrealized gain from hedging activities,

net of tax of $

Change in fair value of redeemable securities

(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)

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

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENTS

OF CASH FLOWS

(in millions)

(unaudited)

Three Months Ended

March 29,

March 30,

2025

2024

Cash flows from operating activities:

Net income

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

Depreciation and amortization

Impairment charge on intangible assets

Non-cash restructuring charges

Stock-based compensation expense

Provision for losses on trade and other accounts receivable

Provision for (benefit from) deferred income taxes

(7)

Equity in earnings of affiliates

(3)

Distributions from equity affiliates

Changes in unrecognized tax benefits

Other

(27)

(6)

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

(74)

Inventories

(14)

Other current assets

Accounts payable and accrued expenses

(112)

(290)

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of property and equipment

(31)

(41)

Payments related to equity investments and business acquisitions,

net of cash acquired

(51)

(20)

Proceeds from loan to affiliate

Capitalized software costs

(12)

(9)

Other

(5)

(3)

Net cash used in investing activities

(99)

(72)

Cash flows from financing activities:

Net change in bank credit lines

Proceeds from issuance of long-term debt

Principal payments for long-term debt

(15)

(60)

Proceeds from issuance of stock upon exercise of stock options

Payments for repurchases and retirement of common stock

(161)

(75)

Payments for taxes related to shares withheld for employee taxes

(12)

(7)

Distributions to noncontrolling shareholders

(4)

(6)

Payments for contingent consideration

(12)

Acquisitions of noncontrolling interests in subsidiaries

(73)

(94)

Net cash provided by (used in) financing activities

(151)

Effect of exchange rate changes on cash and cash equivalents

(22)

Net change in cash and cash equivalents

(12)

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 and VIE (“we”, “us” and “our”).

All intercompany accounts and transactions are eliminated

in consolidation.

Investments in unconsolidated affiliates for which we have the ability to influence

the operating

or financial decisions are accounted for under the equity method.

Certain prior period amounts have been

reclassified to conform to the current period presentation.

These reclassifications, individually and in the

aggregate, did not have a material impact on our 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 28, 2024 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 consolidated financial statements in conformity with

accounting principles generally accepted in

the United States requires us to make estimates and assumptions that

affect the reported amounts of assets and

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

the financial statements and the reported

amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

The results of operations for the three months ended March 29, 2025 are

not necessarily indicative of the results to

be expected for any other interim period or for the year ending December 27, 2025.

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 credit losses; hedging activity; supplier

rebates; measurement of compensation

cost for certain share-based performance awards and cash bonus plans; and

pension plan assumptions.

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

liabilities of the VIE.

We are deemed to

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

that most significantly affect its

economic performance and have the obligation to absorb the majority of

its losses or the right to receive benefits

that could potentially be significant to the VIE.

In determining whether we are the primary beneficiary, we

consider factors such as ownership interest, debt investments, management

representation, authority to control

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

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

accounts receivable securitization as discussed in

Note 8 – Debt

the trade accounts receivable transferred to the

VIE are pledged as collateral to the related debt.

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

accounts receivable.

At March 29, 2025 and December 28, 2024, certain trade accounts

receivable that can only be

used to settle obligations of this VIE were $

million and $

million, respectively, and the liabilities of this

VIE where the creditors have recourse to us were $

million and $

million, respectively.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 2 – Significant Accounting Policies and Recently Issued Accounting

Standards

Significant Accounting Policies

There have been no material changes in our significant accounting policies during

the three months ended March

29, 2025, as compared to the significant accounting policies described in Item

8 of our Annual Report on Form 10-

K for the year ended December 28, 2024.

Recently Issued Accounting Standards

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update

(“ASU”) 2024-03, “

Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure

(Subtopic 220-40)

Disaggregation of Income Statement Expenses

,” which requires additional disclosure about the

specific expense categories in the notes to financial statements at interim and

annual reporting periods.

The

amendments in this ASU do not change or remove current expense

disclosure requirements but affect where this

information appears in the notes to financial statements.

This ASU is effective for annual reporting periods

beginning after December 15, 2026, and interim reporting periods beginning

after December 15, 2027, with early

adoption permitted.

Upon adoption, the guidance can be applied prospectively or

retrospectively.

We are currently

evaluating the impact that ASU 2024-03 will have on our condensed consolidated

financial statements.

In December 2023, the FASB issued ASU 2023-09, “

Income Taxes (Topic

740): Improvements to Income Tax

Disclosures

,” which requires public business entities to disclose additional

information in specified categories with

respect to the reconciliation of the effective tax rate to the statutory rate for federal, state and

foreign income taxes.

It also requires greater detail about individual reconciling items in

the rate reconciliation to the extent the impact of

those items exceeds a specified threshold.

In addition to new disclosures associated with the rate reconciliation,

the

ASU requires information pertaining to taxes paid (net of refunds received)

to be disaggregated for federal, state,

and foreign taxes and further disaggregated for specific jurisdictions

to the extent the related amounts exceed a

quantitative threshold.

The ASU also describes items that need to be disaggregated

based on their nature, which is

determined by reference to the item’s fundamental or essential characteristics, such as the transaction or event

that

triggered the establishment of the reconciling item and the activity with which

the reconciling item is associated.

The ASU eliminates the historic requirement that entities disclose information

concerning unrecognized tax

benefits having a reasonable possibility of significantly increasing

or decreasing in the 12 months following the

reporting date.

This ASU is effective for annual periods beginning after December 15, 2024.

We are currently

evaluating the impact that ASU 2023-09 will have on our consolidated

financial statements.

Note 3 – Cyber Incident

In October 2023 Henry Schein experienced a cyber incident that primarily

affected the operations of our North

American and European dental and medical distribution businesses.

Henry Schein One, our practice management

software, revenue cycle management and patient relationship management

solutions business, was not affected, and

our manufacturing businesses were mostly unaffected.

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

ecommerce platform and related applications, which was remediated.

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

million insurance policy, following a $

million

retention.

During the three months ended March 30, 2024, we did

t receive any insurance proceeds.

During the

year ended December 28, 2024, we received insurance proceeds of $

million under this policy.

During the three

months ended March 29, 2025 we received insurance proceeds of $

million under this policy, representing the

remaining insurance recovery of losses related to the cyber incident.

During the three months ended March 29,

2025 and March 30, 2024, we incurred

zero

and $

million expenses, respectively, directly related to the cyber

incident, mostly consisting of professional fees.

The expenses and insurance recoveries related to the cyber

incident are included in the selling, general and administrative line in 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 4 – 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 28, 2024.

Disaggregation of Net Sales

As noted further in

Note 5 – Segment Data

during the fourth quarter of our fiscal year ended December 28,

2024, we revised our reportable segments to align with how the Chairman and

Chief Executive Officer manages

the business, assesses performance and allocates resources.

All prior comparative segment information has

been recast to reflect our new segment structure.

The following table disaggregates our net sales by reportable segment:

Three Months Ended

March 29,

March 30,

2025

2024

Net Sales:

Global Distribution and Value

-Added Services

Global Dental merchandise

1,185

1,210

Global Dental equipment

Global Value

-added services

Global Dental

1,621

1,668

Global Medical

1,055

1,025

Total Global Distribution

and Value

-Added Services

2,676

2,693

Global Specialty Products

Global Technology

Eliminations

(37)

(38)

Total

3,168

3,172

Contract Liabilities

The following table presents our contract liabilities:

As of

March 29,

December 28,

March 30,

December 30,

Description

2025

2024

2023

Current contract liabilities

Non-current contract liabilities

Total contract

liabilities

During the three months ended March 29, 2025, we recognized, in net sales,

million of the amount that was

previously deferred at December 28, 2024.

During the three months ended March 30, 2024, we recognized

in net

sales $

million of the amount that was previously deferred at December 30, 2023.

Current contract liabilities are

included in accrued expenses: other and the non-current contract liabilities

are included in other liabilities within

our condensed consolidated balance sheets.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 5

–

Segment Data

During the fourth quarter of our fiscal year ended December 28, 2024,

we revised our reportable segments to align

with how the Chairman and Chief Executive Officer manages the business, assesses

performance and allocates

resources.

Our revised reportable segments now consist of: (i) Global Distribution

and Value

-Added Services; (ii)

Global Specialty Products; and (iii) Global Technology.

These segments offer different products and services to

the same customer base.

All prior comparative segment information has been recast

to reflect our new segment

structure.

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

products, customer base, and methods of distribution.

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

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

technical services.

This segment

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

education services, consulting and other

services.

This segment also markets and sells under our own corporate brand,

a portfolio of cost-effective, high-

quality consumable merchandise.

Global Specialty Products includes manufacturing, marketing

and sales of dental

implant and biomaterial products; and endodontic, orthodontic and orthopedic

products and other health care-

related products and services.

Global Technology includes development and distribution of practice management

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

care providers.

Our organizational structure also includes Corporate, which consists primarily of

income and expenses associated

with support functions and projects.

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

and Chief Executive Officer.

Our CODM uses

adjusted operating income as the profitability metric for purposes of making

decisions about allocation of resources

to each segment and assessing performance of each segment.

Adjusted operating income provides a measure of our

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

management.

We define

adjusted operating income as operating income adjusted to exclude

(a) direct cybersecurity costs and related

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

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

and (f) costs associated

with shareholder advisory matters.

These adjustments are either: (i) non-cash or non-recurring in

nature; (ii) not

allocable or controlled by the segment; or (iii) not tied to the operational

performance of the segment.

Assets by

segment are not a measure used to assess the performance of the Company

by CODM and thus are not reported in

our disclosures.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Segment adjusted operating income is presented in the following

table to reconcile to operating income as

presented on the condensed consolidated statement of operations.

The reconciliation from operating income to

income before taxes and equity in earnings of affiliates is presented on our condensed consolidated

statements of

income.

Three Months Ended

March 29,

March 30,

2025

2024

Gross Sales:

Global Distribution and Value

-Added Services

(1)

2,676

2,693

Global Specialty Products

(2)

Global Technology

(3)

Total Gross Sales

3,205

3,210

Less: Eliminations:

Global Distribution and Value

-Added Services

(4)

(8)

Global Specialty Products

(33)

(30)

Total eliminations

(37)

(38)

Net Sales

Global Distribution and Value

-Added Services

2,672

2,685

Global Specialty Products

Global Technology

Total Net Sales

3,168

3,172

Three Months Ended

March 29,

March 30,

2025

2024

Operating Income

Global Distribution and Value

-Added Services

Global Specialty Products

Global Technology

Total Segment Operating Income

Corporate

(35)

(22)

Adjustments

(4)

(55)

(76)

Total Operating Income

Depreciation and Amortization

Global Distribution and Value

-Added Services

Global Specialty Products

Global Technology

Total Depreciation and Amortization

(1)

Global Distribution and Value

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

impression materials, composites, anesthetics, teeth, gypsum, acrylics, articulators, abrasives, personal protective equipment

(“PPE”) products,

branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, dental chairs, delivery units

and lights, digital dental laboratories, X-ray supplies and equipment, high-tech and digital restoration equipment, equipment repair

services, financial services on a non-recourse basis, continuing education services for practitioners, consulting and other services.

This segment also markets and sells under our own corporate brand, a portfolio of cost-effective, high-quality consumable

merchandise.

(2)

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

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

(3)

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

are distributed to health care providers.

(4)

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

The following table presents a breakdown of such adjustments:

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Three Months Ended

March 29,

March 30,

2025

2024

Adjustments:

Restructuring costs

(25)

(10)

Acquisition intangible amortization

(43)

(46)

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

(5)

Changes in contingent consideration

(15)

Impairment of intangible assets

(1)

Costs associated with shareholder advisory matters

(8)

Total adjustments

(55)

(76)

Note 6

–

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.

2025 Acquisitions

During the three months ended March 29, 2025, we acquired companies

within the Global Distribution and Value-

Added Services segment.

We acquired a

% interest in these companies.

Total consideration for these

acquisitions was $

million (including cash paid of $

million, estimated fair value of contingent consideration

payable of $

million, and deferred consideration of $

million).

Net assets acquired primarily consisted of $

million of goodwill and $

million of intangible assets.

The intangible assets acquired consisted of customer

relationships and lists of $

million, trademarks and tradenames of $

million and non-compete agreements of $

million.

Weighted average useful lives for these acquired intangible assets were

years,

years and

years,

respectively.

The accounting for acquisitions in the three months ended March 29, 2025

has not been completed in several areas,

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

and liabilities.

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

are expected to provide

for us, as well as the expected growth potential.

The majority of the acquired goodwill is deductible for

tax

purposes.

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

not considered material to our condensed

consolidated financial statements.

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

because the impact of these

acquisitions was immaterial to our condensed consolidated

financial statements.

2024 Acquisitions

Acquisition of TriMed

On April 1, 2024, we acquired a

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

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

in California, for consideration

of $

million.

This acquisition is reported in our Global Specialty Products segment.

During the year ended

December 28, 2024, we completed the accounting for this acquisition.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

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

of consideration paid and net

assets acquired in the TriMed acquisition:

Final Allocation

Acquisition consideration:

Cash

Deferred consideration

Redeemable noncontrolling interests

Total consideration

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

Other noncurrent assets

Current liabilities

(7)

Deferred income taxes

(62)

Other noncurrent liabilities

(6)

Total identifiable

net assets

Goodwill

Total net assets acquired

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

the expected growth

potential of TriMed.

The acquired goodwill is not deductible for tax purposes.

The intangible assets acquired consisted of product development of $

million, trademarks and tradenames of $

million, and in-process research and development of $

million.

Weighted average useful lives for these acquired

intangible assets were

years,

years and indefinite-lived respectively.

Except for in-process research and

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

TriMed acquisition are being amortized over

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

IPR&D is accounted for as an

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

abandonment of the associated research

and development efforts.

IPR&D is tested for impairment annually or periodically if

an indicator of impairment

exists during the period until completion.

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

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

financial

statements.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Other 2024 Acquisitions

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

the Global Distribution and Value-

Added Services and Global Specialty Products segments.

Our acquired ownership interest in these companies

range from

% to

Total consideration for these acquisitions was $

million (including cash paid of $

million, fair value of previously held equity investment of $

million, noncontrolling interest of $

million,

estimated fair value of contingent consideration payable of $

million, and deferred consideration of $

million).

Net assets acquired primarily consisted of $

million of goodwill and $

million of intangible assets.

The

intangible assets acquired consisted of customer relationships and lists of

million, trademarks and tradenames

of $

million, product development of $

million and non-compete agreements of $

million.

Weighted average

useful lives for these acquired intangible assets were

years,

years and

years, respectively.

During the three months ended March 29, 2025 we completed the accounting

for certain acquisitions that occurred

in the year ended December 28, 2024.

We did not record material adjustments in our condensed consolidated

financial statements relating to changes in estimated values of assets

acquired, liabilities assumed or contingent

consideration assets and liabilities in respect to these acquisitions.

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

are expected to provide

for us, as well as the expected growth potential.

The majority of the acquired goodwill is not deductible

for tax

purposes.

Pro forma financial information for our 2024 acquisitions has not been

presented because the impact of the

acquisitions was immaterial to our condensed consolidated

financial statements.

Acquisition Costs

During the three months ended March 29, 2025 and March 30, 2024, we incurred

million and $

million in

acquisition costs, respectively.

These costs are included in selling, general and administrative

in 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 7 – 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 of the notes

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

in the applicable markets.

Our notes

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

hierarchy.

Debt

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

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

based on Level 3 inputs within the fair value hierarchy, and as of March 29, 2025 and December 28, 2024 was

estimated at $

2,891

million and $

2,536

million, respectively.

Factors that we considered when estimating the fair

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

spreads.

Derivative contracts

Derivative contracts are valued using quoted market prices and

significant other observable inputs.

Our derivative

instruments primarily include foreign currency forward contracts, interest

rate swaps,

and total return swaps.

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

are obtained by comparing our contract

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

are based on market rates for comparable

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

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

of the fair value hierarchy, is determined

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

valuation date.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

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

exchange traded funds of the swap

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

date that are classified within Level 2 of the

fair value hierarchy.

Redeemable noncontrolling interests

The values for redeemable noncontrolling interests are based on recent

transactions and/or implied multiples of

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

See

Note 13 – Redeemable Noncontrolling

Interests

for additional information.

Intangible Assets

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

Inputs for measuring intangibles are

classified as Level 3 within the fair value hierarchy.

Defined Benefit Plans

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

and are classified as Level 1 within the fair

value hierarchy.

Contingent Consideration

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

estimated fair value of contingent consideration as a liability on our

condensed consolidated balance sheet.

For

transactions accounted for as business combinations, subsequent changes

in the estimated fair value of contingent

consideration payments are included in selling, general, and administrative

expenses in our condensed consolidated

statements of income

(see

Note 6 – Business Acquisitions

)

For transactions involving changes in our ownership in

subsidiaries without a change in our control, subsequent changes

in the estimated fair value of contingent

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

condensed consolidated balance sheet.

During the three months ended March 29, 2025, we recognized

contingent consideration related to the acquisition

of noncontrolling interest in a subsidiary of $

million and a change in fair value of $

million.

We measure contingent consideration at the fair value on a recurring basis using significant unobservable inputs

classified as Level 3 of the fair value hierarchy.

We use various valuation techniques, including the Monte Carlo

simulation and probability-weighted scenarios, to determine the fair value

of the contingent consideration liabilities

on the acquisition date and at each reporting period.

Our fair value measurement inputs include expected operating

performance, discount and risk-free rates, and credit spread.

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

for the three months ended March 29,

2025 and March 30, 2024 are presented in the following table:

March 29,

March 30,

2025

2024

Balance, beginning of period

Increase in contingent consideration due to business acquisitions and acquisitions of

noncontrolling interests in subsidiaries

Decrease in contingent consideration due to payments

(12)

Change in fair value of contingent consideration

Balance, end of period

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

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

March 29, 2025 and December 28,

2024:

March 29, 2025

Level 1

Level 2

Level 3

Total

Assets:

Derivative contracts designated as hedges

Derivative contracts undesignated

Total assets

Liabilities:

Derivative contracts designated as hedges

Derivative contracts undesignated

Total return

swap

Contingent consideration

Total liabilities

Redeemable noncontrolling interests

December 28, 2024

Level 1

Level 2

Level 3

Total

Assets:

Derivative contracts designated as hedges

Derivative contracts undesignated

Total assets

Liabilities:

Derivative contracts designated as hedges

Derivative contracts undesignated

Total return

swap

Contingent consideration

Total liabilities

Redeemable noncontrolling interests

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 8 – Debt

Bank Credit Lines

Bank credit lines consisted of the following:

March 29,

December 28,

2025

2024

Revolving credit agreement

Other short-term bank credit lines

Total

Revolving Credit Agreement

August 20, 2021

, we entered into a $

1.0

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

which was subsequently amended and restated on

July 11, 2023

to extend the maturity date to

July 11, 2028

and

update the interest rate provisions to reflect the current market approach

for a multicurrency facility.

The interest

rate on this revolving credit facility is based on Term Secured Overnight Financing Rate (“

Term SOFR

”) plus a

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

quarter.

As of March 29, 2025 the interest

rate on this revolving credit facility was

4.25

% plus

1.17

% for a combined rate of

5.42

As of December 28,

2024 the interest rate on this revolving credit facility was

4.45

% plus

1.18

% for a combined rate of

5.63

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

maintain certain maximum leverage ratios.

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

covenants as well as customary negative covenants, subject to negotiated

exceptions, on liens, indebtedness,

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

agreements.

As of March 29,

2025 and December 28, 2024, we had $

million and $

million in borrowings, respectively, under this revolving

credit facility.

During the three months ended March 29, 2025, the average

outstanding balance under the

Revolving Credit Agreement was approximately $

million.

As of March 29, 2025 and December 28, 2024, there

were $

million and $

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

Credit Agreement.

Other Short-Term Bank Credit

Lines

As of March 29, 2025 and December 28, 2024, we had various other short-term

bank credit lines available, in

various currencies, with a maximum borrowing capacity of $

million and $

million, respectively.

As of

March 29, 2025 and December 28, 2024, $

million and $

million, respectively, were outstanding.

During

the three months ended March 29, 2025, the average outstanding balances

under our various other short-term bank

credit lines was approximately $

million.

As of March 29, 2025 and December 28, 2024, borrowings under

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

5.17

% and

5.35

%, 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:

March 29,

December 28,

2025

2024

Private placement facilities

Term loan

U.S. trade accounts receivable securitization

Various

collateralized and uncollateralized loans payable with interest,

in varying installments through 2031 at interest rates

from

0.00

% to

9.42

% at March 29, 2025 and

from

0.00

% to

9.42

% at December 28, 2024

Finance lease obligations

Total

2,024

1,886

Less current maturities

(56)

Total long-term debt

1,968

1,830

Private Placement Facilities

Our private placement facilities provided by

four

insurance companies have a total facility amount of $

1.5

billion,

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

to be agreed upon at the time of issuance,

from time to time through

October 20, 2026

The facilities allow us to issue senior promissory notes to the

lenders

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

notes at the time of issuance.

The term of

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

five

15 years

(with an average life no longer

than

12 years

The proceeds of any issuances under the facilities will be used

for general corporate purposes,

including working capital and capital expenditures, to refinance existing

indebtedness, and/or to fund potential

acquisitions.

The agreements provide, among other things, that we maintain

certain maximum leverage ratios, and

contain restrictions relating to subsidiary indebtedness, liens, affiliate transactions,

disposal of assets and certain

changes in ownership.

These facilities contain make-whole provisions in the event that we

pay off the facilities

prior to the applicable due dates.

The components of our private placement facility borrowings as of

March 29, 2025, which have a weighted average

interest rate of

3.70

% are presented in the following table:

Amount of

Date of

Borrowing

Outstanding

Rate

Due Date

June 16, 2017

3.42

June 16, 2027

September 15, 2017

3.52

September 15, 2029

January 2, 2018

3.32

January 2, 2028

September 2, 2020

2.35

September 2, 2030

June 2, 2021

2.48

June 2, 2031

June 2, 2021

2.58

June 2, 2033

May 4, 2023

4.79

May 4, 2028

May 4, 2023

4.84

May 4, 2030

May 4, 2023

4.96

May 4, 2033

May 4, 2023

4.94

May 4, 2033

Total

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

The components of our private placement facility borrowings as of December

28, 2024, which have a weighted

average interest rate of

3.70

% are presented in the following table:

Amount of

Date of

Borrowing

Outstanding

Rate

Due Date

June 16, 2017

3.42

June 16, 2027

September 15, 2017

3.52

September 15, 2029

January 2, 2018

3.32

January 2, 2028

September 2, 2020

2.35

September 2, 2030

June 2, 2021

2.48

June 2, 2031

June 2, 2021

2.58

June 2, 2033

May 4, 2023

4.79

May 4, 2028

May 4, 2023

4.84

May 4, 2030

May 4, 2023

4.96

May 4, 2033

May 4, 2023

4.94

May 4, 2033

Total

Term Loan

On July 11, 2023, we entered into a

three-year

million term loan credit agreement (the “Term Credit

Agreement”).

The interest rate on this term loan is based on the

Term SOFR

plus a spread based on our leverage

ratio at the end of each financial reporting quarter.

This term loan matures on

July 11, 2026

We are required to

make quarterly payments of $

million from September 2024 through June 2026, with the remaining

balance due in

July 2026.

Previously, we had been required to make quarterly payments of $

million from September 2023

through June 2024.

As of March 29, 2025, the borrowings outstanding under this

term loan were $

million.

March 29, 2025, the interest rate under the Term Credit Agreement was

4.20

% plus

1.60

% for a combined rate of

5.80

As of December 28, 2024, the borrowings outstanding under

this term loan were $

million.

December 28, 2024, the interest rate under the Term Credit Agreement was

4.45

% plus

1.60

% for a combined rate

6.05

However, we have a hedge in place that ultimately creates an effective fixed rate of

5.91

% and

6.04

% at

March 29, 2025 and December 28, 2024, respectively.

The Term Credit Agreement requires, among other things,

that we maintain certain maximum leverage ratios.

Additionally, the Term

Credit Agreement contains customary

representations, warranties and affirmative covenants as well as customary negative

covenants, subject to

negotiated exceptions, on liens, indebtedness, significant corporate changes

(including mergers), dispositions and

certain restrictive agreements.

U.S. Trade Accounts Receivable Securitization

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

securitization program with pricing committed for up to

three years

On December 6, 2024, we extended the

expiration date of this facility agreement to

December 6, 2027

(the previous maturity date was

December 15, 2025

This facility agreement has a purchase limit of $

million with

two

banks as agents.

As of March 29, 2025 and December 28, 2024, the borrowings outstanding

under this securitization facility were

million and $

million, respectively.

At March 29, 2025, the interest rate on borrowings under

this facility

was based on the

asset-backed commercial paper rate

4.49

% plus

0.75

%, for a combined rate of

5.24

December 28, 2024, the interest rate on borrowings under this facility was

based on the asset-backed commercial

paper rate of

4.73

% plus

0.75

%, for a combined rate of

5.48

If our accounts receivable collection pattern changes due to customers

either paying late or not making payments,

our ability to borrow under this facility may be reduced.

We are required to pay a commitment fee of

basis

points depending upon program utilization.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 9 – Income Taxes

For the three months ended March 29, 2025, our effective tax rate was

24.9

% compared to

25.6

% for the prior year

period.

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

due 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 rules in December 2021, which provides for a global minimum tax rate on the earnings of

large multinational businesses on a country-by-country basis.

Effective January 1, 2024, the minimum global tax

rate is 15% for various jurisdictions pursuant to the Pillar Two rules.

Future tax reform resulting from these

developments may result in changes to long-standing tax principles, which

may adversely impact our effective tax

rate going forward or result in higher cash tax liabilities.

As of March 29, 2025, the impact of the Pillar Two rules

to our financial statements was immaterial.

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

“other liabilities” within our condensed

consolidated balance sheets, as of March 29, 2025 and December 28, 2024

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 2020.

The tax years subject to examination by the

IRS include years 2021 and forward.

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

to IRS

examination.

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

for taxes was $

million and $

million for the three months ended March 29, 2025 and March 30, 2024,

respectively.

The total amount of accrued

interest is included in other liabilities within our consolidated balance sheets,

and was $

million as of March 29,

2025 and $

million as of December 28, 2024.

The amount of penalties accrued for during the periods presented

was not material to our condensed consolidated financial statements.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 10 – Plans of Restructuring

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

Plan”) to integrate recent acquisitions,

right-size operations and further increase efficiencies.

During the three months ended March 29, 2025, we recorded

restructuring charges associated with the 2024 Plan of $

million, which primarily related to severance and

employee-related costs.

We expect to record restructuring charges associated with the 2024 Plan through the end of

2025; however, an estimate of the amount of these charges has not yet been determined.

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

Plan”) focused on funding the priorities of the

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

increase efficiency.

The 2022 Plan has

been completed as of July 31, 2024.

During the three months ended March 30, 2024, in connection

with our 2022

Plan, we recorded restructuring costs of $

million, which primarily related to severance and employee-related

costs, accelerated amortization of right-of-use assets and fixed assets,

and other exit costs.

Restructuring costs recorded for the three months ended March 29, 2025

and March 30, 2024, in connection with

the 2024

Plan and 2022 Plan,

respectively, consisted of the following:

Three Months Ended March 29, 2025

Global Distribution

and Value-Added

Services

Global

Specialty

Products

Global

Technology

Corporate

Total

2024 Plan

Severance and employee-related costs

Impairment and accelerated depreciation and amortization

of right-of-use lease assets and other long-lived assets

Exit and other related costs

Restructuring costs-2024 Plan

Three Months Ended March 30, 2024

Global Distribution

and Value-Added

Services

Global

Specialty

Products

Global

Technology

Corporate

Total

2022 Plan

Severance and employee-related costs

Accelerated depreciation and amortization

(3)

Exit and other related costs

Restructuring costs-2022 Plan

(1)

The following table summarizes,

by plan year the activity related to the liabilities associated with

our restructuring

initiatives under the 2022 Plan and the 2024 Plan for the three

months ended March 29, 2025.

The remaining

accrued balance of restructuring costs as of March 29, 2025, which primarily

relates to severance and employee-

related costs, is included in accrued expenses: other within our condensed consolidated

balance sheets.

Liabilities

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

operating lease liabilities within

our condensed consolidated balance sheets.

2022 Plan

2024 Plan

Total

Balance, December 28, 2024

Restructuring costs

Non-cash accelerated depreciation and amortization

(1)

Cash payments and other adjustments

(6)

(16)

(22)

Balance, March 29, 2025

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 (

); 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.

On March 19, 2025, the court

granted our motion to dismiss the purported class action filed by San

Miguel Hospital Corporation d/b/a Alta Vista

Regional Hospital,

et al. in the United States District Court for the District of New

Mexico and dismissed all claims

against Henry Schein with prejudice.

Plaintiff has filed a motion to amend the judgment and for leave to file

second amended complaint, which is pending.

Twenty

other cases filed by legal guardians of children who were

allegedly exposed to opioids in utero have been voluntarily dismissed.

At this time, the following case is set for

trial: 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

2024 net sales of approximately $

12.7

billion, sales of opioids represented less than

four

-tenths of 1

percent.

Opioids represent a negligible part of our business.

We intend to defend ourselves vigorously against

these actions.

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

including, without limitation, product

liability claims, employment matters, commercial disputes, governmental

inquiries and investigations (which may

in some cases involve our entering into settlement arrangements or consent

decrees), and other matters arising out

of the ordinary course of our business.

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

in our opinion none of these other pending matters are currently

anticipated to have a material adverse effect on our

consolidated financial position, liquidity or results of operations.

As of March 29, 2025,

we had accrued our best estimate of potential losses relating

to claims that were probable to

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

loss.

This accrued amount, as well as related

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

or cash flows.

Our method for

determining estimated losses considers currently available

facts, presently enacted laws and regulations and other

factors, including probable recoveries from third parties.

HENRY SCHEIN, INC.

NOTES TO 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 our 2024 Stock Incentive

Plan (formerly known as our

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

Director Stock Incentive

Plan (together, the “Plans”).

The Plans are administered by the Compensation Committee of the Board

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 and in 2022, when we

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

stock options.

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

in the form of

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

RSUs (which vest based on achieving specified performance

measurements and the recipient’s continued service

over time).

Our non-employee directors receive equity-based awards solely in

the form of time-based RSUs.

Starting with our 2025 plan year, we began granting only time-based RSU awards to our eligible director

level

employees.

Our director level time-based RSU awards will vest

% on the third anniversary of the grant date with

the remaining

% vesting on the fourth anniversary of the grant date.

Stock-based awards issued in the 2025 plan

year to our eligible vice-presidents will be allocated

% to time-based RSU awards and

% to performance-

based RSU awards.

Our vice-president level time-based awards will vest

% on the third anniversary of the grant

date with the remaining

% vesting on the fourth anniversary of the grant date.

Our vice-president level

performance-based awards will vest based on achieving specified performance

measurements and the recipient’s

continued service over time, primarily with

three-year

cliff vesting.

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 for RSU

awards granted prior to 2025 and with vesting upon third and forth

anniversary of the grant date for RSU awards

granted in 2025 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

include

-month cliff vesting.

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

(issued in 2022-2024 plan years), we recognize the cost as compensation

expense on a straight-line basis.

For the

time-based RSUs with graded vesting (issued in the 2025 plan year), we recognize

the cost as compensation

expense on an accelerated basis.

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

price on the grant date.

With respect to

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

are received by the recipient is based upon

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

determined by the Compensation

Committee.

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

estimate the fair value of

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

Each of the Plans provide for certain adjustments to the performance

measurement in connection with awards under

the Plans.

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

performance measurement adjustments relate to significant events, including,

without limitation, acquisitions,

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

consideration (solely with respect to

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

certain capital transactions (including share

repurchases), differences in budgeted average outstanding shares (other

than those resulting from capital

transactions referred to above), restructuring costs, amortization

expense recorded for acquisition-related intangible

assets, certain litigation settlements or payments, changes in accounting

principles or in applicable laws or

regulations, changes in income tax rates in certain markets, foreign exchange

fluctuations, the financial impact

either positive or negative, of the difference in projected earnings generated by COVID-19

test kits (solely with

respect to performance-based RSUs granted in the 2023 plan year), intangibles

impairment charges, costs related to

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

shareholder advisory matters (solely with respect to performance-based

RSUs granted in the 2025 plan year) and

unforeseen events or circumstances affecting us.

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

ultimately vest and be issued and

the related compensation expense is adjusted upward or downward based upon

our estimation of achieving such

performance targets.

The ultimate number of shares delivered to recipients and

the related compensation cost

recognized as an expense is based on our actual performance against the

pre-determined performance metrics (in

each case as adjusted).

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

stock after vesting at a fixed

price set at the time of grant.

Stock options were granted at an exercise price equal to our

closing stock price on the

date of grant.

Stock options issued in 2021 and 2022 vest

one-third

per year based on the recipient’s continued

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

are fully vested

three years

from the

grant date and have a contractual term of

ten years

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

term acceleration upon certain events.

Compensation expense for stock options is recognized on

an accelerated

basis.

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

During the

three months ended March 29, 2025, we did

t grant any stock options.

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

expense of $

million

and $

million for the three months ended March 29, 2025 and March 30, 2024.

Total unrecognized compensation cost related to unvested awards as of March 29, 2025 was $

million, which is

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

3.2

years.

Our condensed consolidated statements of cash flows present our

stock-based compensation expense as a

reconciling adjustment between net income and net cash provided by operating

activities for all periods presented.

There were no cash benefits associated with tax deductions in excess of

recognized compensation for the three

months ended March 29, 2025 and March 30, 2024.

The following table summarizes the stock option activity for the three

months ended March 29, 2025:

Stock Options

Weighted Average

Aggregate

Exercise

Remaining Contractual

Intrinsic

Price

Life (in years)

Value

Outstanding at beginning of period

963,491

72.16

Granted

Exercised

(10,587)

62.71

Forfeited

(4,755)

80.25

Outstanding at end of period

948,149

72.22

6.3

Options exercisable at end of period

942,256

72.19

Weighted Average

Aggregate

Number of

Exercise

Remaining Contractual

Intrinsic

Options

Price

Life (in years)

Value

Expected to vest

5,893

78.26

7.3

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 three months ended March 29, 2025:

Time-Based Restricted Stock Units

Performance-Based Restricted Stock Units

Weighted

Average

Intrinsic

Average

Intrinsic

Grant Date Fair

Value

Grant Date Fair

Value

Shares/Units

Value Per Share

Per Share

Shares/Units

Value Per Share

Per Share

Outstanding at beginning of period

1,685,550

72.90

389,111

75.98

Granted

551,610

75.45

98,068

75.54

Vested

(507,463)

65.50

(13,541)

84.27

Forfeited

(34,518)

77.18

(18,634)

78.77

Outstanding at end of period

1,695,179

75.85

68.62

455,004

75.88

68.62

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

million and $

million, respectively, for the three

months ended March 29, 2025; and $

million and $

million, respectively, for the three months ended March 30,

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.

Accounting Standards Codification Topic 480-10 is

applicable for noncontrolling interests where we are or may be required

to purchase all or a portion of the

outstanding interest in a consolidated subsidiary from the noncontrolling

interest holder under the terms of a put

option contained in contractual agreements.

The components of the change in the redeemable noncontrolling

interests for the three months ended March 29, 2025 and March 30, 2024

are presented in the following table:

March 29,

March 30,

2025

2024

Balance, beginning of period

Decrease in redeemable noncontrolling interests due to acquisitions of

noncontrolling interests in subsidiaries

(73)

(94)

Net income (loss) attributable to redeemable noncontrolling interests

(2)

Distributions declared, net of capital contributions

(2)

(6)

Effect of foreign currency translation gain (loss) attributable to

redeemable noncontrolling interests

(10)

Change in fair value of redeemable securities

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 and

are recorded directly to stockholders’ equity.

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

applicable taxes as of:

March 29,

December 28,

2025

2024

Attributable to redeemable noncontrolling interests:

Foreign currency translation adjustment

(48)

(56)

Attributable to noncontrolling interests:

Foreign currency translation adjustment

(1)

Attributable to Henry Schein, Inc.:

Foreign currency translation adjustment

(304)

(371)

Unrealized loss from hedging activities

(5)

Pension adjustment loss

(8)

Accumulated other comprehensive loss

(317)

(379)

Total Accumulated

other comprehensive loss

(365)

(436)

The following table summarizes the components of comprehensive income, net

of applicable taxes as of:

Three Months Ended

March 29,

March 30,

2025

2024

Net income

Foreign currency translation gain (loss)

(54)

Tax effect

Foreign currency translation gain (loss)

(54)

Unrealized gain (loss) from hedging activities

(6)

Tax effect

(4)

Unrealized gain (loss) from hedging activities

(5)

Pension adjustment gain

Tax effect

(1)

Pension adjustment gain

Comprehensive income

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

Fluctuations in the value of foreign currencies as

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

comprehensive income.

The foreign currency

translation gain (loss) during the three months ended March 29, 2025 and

three months ended March 30, 2024 was

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

Real, British Pound, Euro, New

Zealand Dollar, Australian Dollar, Swiss Franc, and Canadian Dollar.

The hedging gain (loss) during the three months ended March 29, 2025, and

March 30, 2024 was attributable to a

net investment hedge.

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

March 29,

March 30,

2025

2024

Comprehensive income attributable to

Henry Schein, Inc.

Comprehensive income attributable to

noncontrolling interests

Comprehensive income (loss) attributable to

Redeemable noncontrolling interests

(8)

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 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

March 29,

March 30,

2025

2024

Basic

123,776,073

128,720,661

Effect of dilutive securities:

Stock options and restricted stock units

1,072,148

1,048,919

Diluted

124,848,221

129,769,580

The number of antidilutive securities that were excluded from the calculation

of diluted weighted average common

shares outstanding are as follows:

Three Months Ended

March 29,

March 30,

2025

2024

Stock options

402,268

419,139

Restricted stock units

200,568

245,667

Total anti-dilutive

securities excluded from earnings per share computation

602,836

664,806

Note 16 – Supplemental Cash Flow Information

Cash paid for interest and income taxes was:

Three Months Ended

March 29,

March 30,

2025

2024

Interest

Income taxes

For the three months ended March 29, 2025 and March 30, 2024, we

had $

(6)

million and $

million of non-cash

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

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 17 – Related Party Transactions

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

Schein One, LLC.

Internet

Brands initially held a

% noncontrolling interest, which has since increased to a

33.6

% noncontrolling interest in

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

to put its noncontrolling interest to

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

formation of the joint

venture.

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

with Internet Brands to

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

and to pause the exercise by Internet

Brands of its put option for a period of

four years

, to January 29, 2029.

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

into a

ten-year

royalty agreement with

Internet Brands whereby we will pay Internet Brands approximately $

million annually for the use of their

intellectual property.

During the three months ended March 29, 2025 and March

30, 2024, we recorded $

million

and $

million, respectively, within selling, general and administrative in our condensed consolidated statements of

income, in connection with costs related to this royalty agreement.

As of March 29, 2025 and December 28, 2024,

Henry Schein One, LLC had a net payable balance to Internet Brands of $

million and $

million, respectively,

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

The components of this payable

are recorded within accrued expenses: other within our condensed consolidated

balance sheets.

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

In our normal course of

business, during the three months ended March 29, 2025 and March 30, 2024, we

recorded net sales of $

million

and $

million respectively, to such entities.

During the three months ended March 29, 2025 and March 30,

2024,

we purchased $

million and $

million respectively, from such entities.

At March 29, 2025 and December 28,

2024, we had an aggregate $

million and $

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

million

and $

million, respectively, due to our equity affiliates.

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

and minority shareholders.

These

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

ranging from less than

year to

approximately

12 years

As of March 29, 2025, current and non-current liabilities

associated with related party

operating leases were $

million and $

million, respectively.

At March 29, 2025, related party leases represented

6.8

% and

7.8

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

At December 28, 2024,

current and non-current liabilities associated with related party operating

leases were $

million and $

million,

respectively.

At December 28, 2024, related party leases represented

7.6

% and

7.8

% of the total current and non-

current operating lease liabilities, respectively.

Note 18 – KKR Investment

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

by funds affiliated with KKR, a leading

global investment firm.

In addition to KKR’s current holdings, KKR will make an additional $

million

investment in the Company’s common stock.

As a result, KKR will own approximately

% of the Company’s

stock.

KKR will also have the ability to purchase additional shares via

open market purchases up to a total equity

stake of

14.9

% of the outstanding common shares of the Company.

In addition, under the agreement

between Henry Schein and KKR,

two

independent directors will join our Board of Directors.

Upon consummation

of this strategic investment, we will issue new shares of common stock

to funds affiliated with KKR for an

investment of $

million, at approximately $

76.10

per share.

Consummation of these transactions is subject to

customary closing conditions, including certain foreign regulatory approvals.

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