Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

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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 and

where we manufacture products, our dependence on third parties

for raw materials or purchased components; risks

relating to the achievement of our strategic growth objectives, including

anticipated results of restructuring and

value-optimization initiatives; risks related to the Strategic Partnership Agreement

with KKR Hawaii Aggregator

L.P.

entered into in January 2025; transitions in senior company leadership;

our ability to develop or acquire and

maintain and protect new products (particularly technology and specialty

products) and services and utilize new

technologies that achieve market acceptance with acceptable margins; transitional

challenges associated with

acquisitions 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;

risks related to activist investors;

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;

political, economic and regulatory influences on 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, and increases in fuel and energy costs; changes

in laws and policies governing

manufacturing, development and investment in territories and countries

where we do business; general global and

domestic macro-economic and political conditions, including inflation,

deflation, recession, unemployment (and

corresponding increase in under-insured populations), consumer confidence,

sovereign debt levels, fluctuations in

energy pricing and the value of the U.S. dollar as compared to foreign currencies

and changes to other economic

indicators; failure to comply with existing and future regulatory

requirements, including relating to health care;

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, changes in tax rates and availability

of certain tax deductions; 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; the threat or outbreak of war (including, without

limitation, geopolitical wars), terrorism

or public unrest (including, without limitation, the war in Ukraine, the Israel-Gaza

war and other unrest and threats

in the Middle East and the possibility of a wider European or global conflict);

changes to laws and policies

governing foreign trade, tariffs and sanctions or greater restrictions on imports and

exports, including changes to

international trade agreements and the current imposition of (and the

potential for additional) tariffs by the U.S. on

numerous countries and retaliatory tariffs; supply chain disruption; litigation

risks; new or unanticipated litigation

developments and the status of litigation matters; our dependence on

our senior management (including, without

limitation, succession planning for our Chief Executive Officer), employee hiring

and retention, increases in labor

costs or health care costs, 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 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.

Segment Reporting

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.

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.

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, 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 DSOs, GPOs, 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.

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.

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.

are focused 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

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 2025 and 2035, the 45 and older

population is expected to grow by approximately 10%.

Between 2025 and 2045, this age group is expected to grow

by approximately 17%.

This compares with expected total U.S. population growth

rates of approximately 4%

between 2025 and 2035 and approximately 6% between 2025 and 2045.

According to the U.S. Census Bureau’s International Database, in 2025 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 increase to approximately

17 million.

The population aged

65 to 84 years is projected to increase by approximately 15% during

the same period.

As a result of these market dynamics, annual expenditures for health care services

continue to increase in the

United States.

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,

or CMS, published “National Health Expenditure Data” indicating that

total national health care spending reached

approximately $4.9 trillion in 2023, or 17.6% 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 $8.6 trillion by 2033, or 20.3% of the nation’s projected gross domestic product.

believe similar demographic changes are also occurring in other

markets we serve outside the U.S.

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 supplies

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 orthopaedic, in vitro

diagnostic devices, software regulated as a medical device, and sales of

medical equipment and supplies directly to

patients, that are paid for by third parties and/or patients 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 health care 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.

Laws and

regulations are subject to change and their evolving implementation may impact

our operations and our financial

performance.

Certain of our businesses also maintain contracts with governmental agencies

and are subject to certain regulatory

requirements specific to government contractors.

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 few

noteworthy items that have come into effect recently are noted below:

●

Regulation (EU) 2023/1182 of June 14, 2023, entered into force on January 1, 2025, under the conditions

set out in Article 14.

This regulation lays down specific rules relating to medicinal

products for human use

intended to be placed on the market in Northern Ireland in accordance with

Article 6 of

Directive 2001/83/EC.

●

Directive No. 2025/794 of April 14, 2025, known as the “Stop-the-Clock”

Directive, amended Directives

(EU) 2022/2464 (CSRD) and (EU) 2024/1760 (CSDDD) by introducing

a uniform two-year postponement

of the sustainability reporting and due diligence requirements for financial

years beginning on or after

January 1, 2025 and on or after January 1, 2026.

●

Regulation (EU) 2025/327 of February 11, 2025 on the European Health Data Space and amending

Directive 2011/24/EU and Regulation (EU) 2024/2847 establishes the European Health Data Space

(EHDS) by providing for common rules, standards and infrastructures and

a governance framework, with a

view to facilitating access to electronic health data for the purpose of primary

use and secondary use of this

data.

This could potentially affect Henry Schein or its customers.

●

In the United States, as noted above, the OBBBA includes a number

of provisions that are expected to

result in substantial reductions in the number of Medicaid enrollees,

as well as reductions in federal funding

to state Medicaid programs, resulting in potentially adverse impacts

on utilization of services and coverage

of products.

The OBBBA also includes significant changes to corporate

tax rates, limitations on certain

deductions and modifications to international tax provisions.

are currently assessing the impact of the

OBBBA on our consolidated financial statements.

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 28, 2024, filed with the SEC on February 25, 2025.

Results of Operations

The following tables summarize the significant components of our operating

results for the three and six months

ended June 28, 2025 and June 29, 2024 and cash flows for the six months

ended June 28, 2025 and June 29, 2024

(in millions):

Three Months Ended

Six Months Ended

June 28,

June 29,

June 28,

June 29,

2025

2024

2025

2024

Operating results:

Net sales

3,240

3,136

6,408

6,308

Cost of sales

2,224

2,118

4,392

4,278

Gross profit

1,016

1,018

2,016

2,030

Operating expenses:

Selling, general and administrative

1,516

1,572

Depreciation and amortization

Restructuring costs

Operating income

Other expense, net

(30)

(27)

(60)

(50)

Income taxes

(31)

(33)

(66)

(65)

Net income

Net income attributable to Henry Schein, Inc.

Six Months Ended

June 28,

June 29,

2025

2024

Cash flows:

Net cash provided by operating activities

Net cash used in investing activities

(197)

(281)

Net cash provided by (used in) financing activities

(265)

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 and six months ended June 28, 2025, we

recorded restructuring charges associated with the 2024 Plan of $23 million and $48

million, respectively, which

primarily related to severance and employee-related costs, accelerated amortization

of right-of-use assets and fixed

assets, and other exit 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 and six months ended June 29, 2024, in connection

with our

2022 Plan, we recorded restructuring costs of $15 million and $25 million, respectively, which primarily related to

severance and employee-related costs, accelerated amortization of right-of-use

assets and fixed assets, and other

exit costs.

Three Months Ended June 28, 2025 Compared to Three Months Ended June 29, 2024

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.

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.

All prior comparative segment information has been recast

to reflect our new segment structure.

Net Sales

Net sales by reportable segment and by major product or service type were

as follows:

June 28,

% of

June 29,

% of

Increase

2025

Total

2024

Total

Global Distribution and Value

-Added Services

Global Dental Merchandise

(1)

1,218

37.6

1,214

38.7

0.3

Global Dental Equipment

(2)

13.5

13.6

3.0

Global Value

-Added Services

(3)

1.8

3.6

Global Dental

1,715

52.9

1,696

54.1

1.1

Global Medical

(4)

1,016

31.4

30.5

6.1

Total Global Distribution and Value

-Added Services

2,731

84.3

2,654

84.6

2.9

Global Specialty Products

(5)

11.9

11.8

4.2

Global Technology

(6)

5.2

5.0

7.4

Eliminations

(44)

(1.4)

(44)

(1.4)

n/a

Total

3,240

100.0

3,136

100.0

3.3

(1)

Includes infection-control products, handpieces, preventatives, impression materials, composites, anesthetics, teeth, gypsum,

acrylics, articulators, abrasives, PPE products and our own corporate brand of consumable merchandise.

(2)

Includes dental chairs, delivery units and lights, digital dental laboratories, X-ray supplies and equipment, equipment repair

services and high-tech and digital restoration equipment.

(3)

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

(4)

Includes branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products, X-ray

products, equipment, PPE products and vitamins.

(5)

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.

(6)

Consists of development and distribution of practice management software, e-services and other products, which are distributed to

health care providers.

The components of our sales growth/(decline) were as follows:

Constant Currency

Growth/(Decline)

Total Constant

Currency

Growth/(Decline)

Foreign

Exchange

Impact

Total Sales

Growth

Local Internal

Growth/(Decline)

Acquisition

Growth

Global Distribution and Value

-Added Services

Global Dental Merchandise

(0.8)

0.4

(0.4)

0.7

0.3

Global Dental Equipment

0.7

0.9

1.6

1.4

3.0

Global Value

-Added Services

(1.9)

5.6

3.7

(0.1)

3.6

Global Dental

(0.4)

0.7

0.3

0.8

1.1

Global Medical

4.4

1.6

6.0

0.1

6.1

Total Global Distribution and Value

-Added Services

1.3

1.1

2.4

0.5

2.9

Global Specialty Products

3.6

(0.3)

3.3

0.9

4.2

Global Technology

6.6

0.8

7.4

Total

1.9

0.8

2.7

0.6

3.3

Global Sales

Global net sales for the three months ended June 28, 2025 increased

3.3%.

Foreign exchange and acquisitions

contributed 0.6% and 0.8% to sales growth, respectively.

The components of our sales increase are presented in the

table above.

The 1.9% increase in our internally generated local currency sales was

primarily attributable to sales growth in

certain of our international dental markets, and medical sales growth attributable

to increased patient traffic, growth

of our Home Solutions business, partially offset by the impact of lower pricing in

U.S. dental merchandise markets,

and the impact on U.S. dental equipment from market uncertainty related

to tariffs.

For the three months ended

June 28, 2025, the estimated increase in internally generated local currency

sales, excluding PPE products and

COVID-19 test kits, was 2.1%.

Global Distribution and Value-Added Services Sales

Global Distribution and Value-Added Services net sales for the three months ended June 28, 2025 increased 2.9%.

The components of our sales increase are presented in the table

above.

The 0.4% decrease in internally generated local currency dental sales was primarily

due to the impact of lower

glove pricing as well as time-limited targeted sales initiatives for U.S. dental merchandise and

the impact on U.S.

dental equipment from market uncertainty related to tariffs.

The decrease was partially offset by dental

merchandise and dental equipment sales growth in certain of our international

markets.

The 4.4% increase in internally generated local currency medical sales was

attributable to increased patient traffic,

growth of our Home Solutions business,

and growth in medical products and pharmaceuticals.

The decrease in internally generated local currency value-added services

sales was attributable primarily to lower

sales in our practice transitions business,

which can fluctuate from quarter to quarter.

We estimate that sales of PPE products (including gloves) and COVID-19 test kits were approximately $138

million for the three months ended June 28, 2025,

as compared to $139 million for the three months ended June 29,

2024, representing an estimated decrease of $1 million.

The estimated $1 million net decrease in sales of PPE

products and COVID-19 test kits represents 0.1% of Global Distribution

and Value

-Added Services

net sales for

the three months ended June 28, 2025, and was primarily due to lower glove prices.

The estimated increase in the

segment’s internally generated local currency sales, excluding PPE products and COVID-19 test kits, was 1.5%.

Global Specialty Products

Global Specialty Products net sales for the three months ended June 28, 2025

increased 4.2%.

The components of

our sales increase are presented in the table above.

The 3.6% increase in internally generated local currency sales was attributable

to growth in dental implants and

biomaterials, and endodontic merchandise,

partially offset by a decline in orthodontics.

Global Technology

Global Technology net sales for the three months ended June 28, 2025 increased 7.4%.

The components of sales

growth are presented in the table above.

The internally generated local currency increase of 6.6% in Global Technology sales was 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 solutions, partially offset by lower revenues of certain legacy products.

Gross Profit

Gross profit and gross margin percentages by segment and in total were as follows:

June 28,

Gross

June 29,

Gross

Increase / (Decrease)

2025

Margin %

2024

Margin %

Global Distribution and Value

-Added Services

25.2

26.4

(13)

(1.9)

Global Specialty Products

54.9

55.5

3.1

Global Technology

67.9

67.6

7.8

Corporate

n/a

(4)

n/a

Total

1,016

31.4

1,018

32.5

(2)

(0.2)

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.

Gross margin

percentages vary between our segments.

We realize substantially higher gross margin from sales of products that

we develop and manufacture within our Global Specialty Products segment

compared to gross margin from sales of

products that we distribute within our Global Distribution and Value-Added Services segment.

Within our Global

Technology segment, higher gross margins result from us being both the developer and seller of software products

and services.

Within our Global Distribution and Value

-Added Services 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.

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, which

normally purchase

lower volumes.

The decrease in Global Distribution and Value-Added Services gross profit for the three months ended June 28,

2025 compared to the prior-year-period is due to lower glove pricing as well as time-limited

targeted initiatives to

accelerate growth in market share, lower dental equipment sales in the U.S. and

lower sales in our practice

transitions business.

The increase in Global Specialty Products gross profit reflects increased

internally generated sales volume.

The

decrease in gross margin rates was due to product mix.

The increase in Global Technology gross profit is the result of the shift to higher margin products within the

product mix and improved gross margin rates.

Operating Expenses

Operating expenses (consisting of selling, general and administrative

expenses; depreciation and amortization; and

restructuring costs) by segment were as follows:

% of

June 28,

Respective

June 29,

Respective

Increase / (Decrease)

2025

Gross Sales

2024

Gross Sales

Global Distribution and Value

-Added Services

19.4

19.8

0.7

Global Specialty Products

41.4

44.4

(6)

(2.9)

Global Technology

41.0

45.9

(2)

(3.9)

Corporate

n/a

24.4

24.7

2.0

Adjustments

(1)

n/a

(9)

n/a

Total operating expenses

26.7

27.4

0.8

(1)

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

These

items may vary independently of business performance.

Please see

Note 5 – Segment Data

These adjustments (current quarter vs. prior

quarter) consist of (i) acquisition intangible amortization ($44 million vs. $47 million), (ii) restructuring costs ($23 million vs. $15

million),

(iii) change in contingent consideration ($0 million vs. $23 million), (iv) cyber incident-insurance proceeds, net of third-party

advisory expenses (no activity vs. $(7) million net proceeds), (v) litigation settlements ($1 million vs. $5 million), and (vi) costs

associated with shareholder advisory matters and select value creation consulting costs ($6 million vs. $0 million).

The net increase in operating expenses is attributable to the following:

Operating Costs

(excluding

acquisitions)

Acquisitions

Adjustments

Total

Global Distribution and Value

-Added Services

(3)

Global Specialty Products

(6)

Global Technology

(2)

Corporate

Adjustments

(9)

Total operating expenses

(9)

The components of the net increase in total operating expenses are presented

in the table above.

The increase in

operating costs (excluding acquisitions) during the three months

ended June 28, 2025 included an increase in

Corporate investments in technology in anticipation of the launch of our Global

E-Commerce Platform

(www.henryschein.com) and timing of certain non-income tax credits.

Other Expense, Net

Other expense, net was as follows:

June 28,

June 29,

Variance

2025

2024

Interest income

54.5

Interest expense

(38)

(32)

(6)

(19.9)

Other, net

(1)

(15.5)

Other expense, net

(30)

(27)

(3)

(12.3)

Interest income increased primarily due to increased interest rates.

Interest expense increased primarily due to

increased borrowings.

Income Taxes

Our effective tax rate was 24.4% for the three months ended June 28, 2025, compared

to 24.9% 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.

On July 4, 2025, after the end of the second quarter (June 28, 2025), President

Trump signed the reconciliation tax

bill, commonly known as the OBBBA,

into law.

This includes significant changes to corporate tax rates,

limitations on certain deductions and modifications to international tax

provisions.

are currently assessing the

impact of the OBBBA on our consolidated financial statements.

The 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 June

28, 2025, the impact of the Pillar Two rules to our financial statements was immaterial.

Six Months Ended June 28, 2025 Compared to Six Months Ended June 29, 2024

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.

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.

All prior comparative segment information has been recast

to reflect our new segment structure.

Net Sales

Net sales by reportable segment and by major product or service type were

as follows:

June 28,

% of

June 29,

% of

Increase / (Decrease)

2025

Total

2024

Total

Global Distribution and Value

-Added Services

Global Dental Merchandise

(1)

2,403

37.5

2,424

38.4

(21)

(0.9)

Global Dental Equipment

(2)

12.9

13.1

(5)

(0.6)

Global Value

-Added Services

(3)

1.7

1.8

(2)

(2.3)

Global Dental

3,336

52.1

3,364

53.3

(28)

(0.9)

Global Medical

(4)

2,071

32.3

1,983

31.4

4.4

Total Global Distribution and Value

-Added Services

5,407

84.4

5,347

84.7

1.1

Global Specialty Products

(5)

11.8

11.6

3.1

Global Technology

(6)

5.1

5.0

5.1

Eliminations

(81)

(1.3)

(82)

(1.3)

n/a

Total

6,408

100.0

6,308

100.0

1.6

(1)

Includes infection-control products, handpieces, preventatives, impression materials, composites, anesthetics, teeth, gypsum,

acrylics, articulators, abrasives, PPE products and our own corporate brand of consumable merchandise.

(2)

Includes dental chairs, delivery units and lights, digital dental laboratories, X-ray supplies and equipment, equipment repair

services and high-tech and digital restoration equipment.

(3)

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

(4)

Includes branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products, X-ray

products, equipment, PPE products and vitamins.

(5)

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.

(6)

Consists of development and distribution of practice management software, e-services and other products, which are distributed to

health care providers.

The components of our sales growth/(decline) were as follows:

Constant Currency

Growth/(Decline)

Total Constant

Currency

Growth/(Decline)

Foreign

Exchange

Impact

Total Sales

Growth/

(Decline)

Local Internal

Growth/(Decline)

Acquisition

Growth

Global Distribution and Value

-Added Services

Global Dental Merchandise

(0.4)

0.4

(0.9)

Global Dental Equipment

(1.2)

0.9

(0.3)

(0.6)

Global Value

-Added Services

(8.2)

6.4

(1.8)

(0.5)

(2.3)

Global Dental

(0.8)

0.7

(0.1)

(0.8)

(0.9)

Global Medical

3.1

1.4

4.5

(0.1)

4.4

Total Global Distribution and Value

-Added Services

0.6

1.0

1.6

(0.5)

1.1

Global Specialty Products

2.0

1.8

3.8

(0.7)

3.1

Global Technology

5.0

0.1

5.1

Total

1.1

1.0

2.1

(0.5)

1.6

Global Sales

Global net sales for the six months ended June 28, 2025 increased 1.6%,

attributable to acquisition growth of 1.0%,

partially offset by a decrease in foreign exchange of 0.5%.

The components of our sales increase are presented in

the table above.

The 1.1% increase in our internally generated local currency sales was

primarily attributable to sales growth in

certain of our international dental equipment markets, and medical sales growth

attributable to increased patient

traffic, growth of our Home Solutions business, partially offset by the impact of lower pricing

in U.S. dental

merchandise markets, lower glove pricing, the impact of the deferral of

sales of U.S. dental equipment from the

fourth quarter of 2023 into the first quarter of 2024 as a result of the cyber

incident, and the impact on U.S. dental

equipment from market uncertainty related to tariffs.

For the six months ended June 28, 2025, the estimated increase in internally

generated local currency sales,

excluding PPE products and COVID-19 test kits, was 1.4%.

Global Distribution and Value-Added Services Sales

Global Distribution and Value-Added Services net sales for the six months ended June 28, 2025 increased 1.1%.

The components of our sales increase are presented in the table

above.

The 0.8% decrease in internally generated local currency dental sales was primarily

due to the impact of lower

pricing for U.S. dental merchandise markets, resulting from lower glove

pricing as well as time-limited targeted

sales initiatives, the impact of the deferral of sales of U.S. dental equipment

from the fourth quarter of 2023 into the

first quarter of 2024 as a result of the cyber incident,

and the impact on U.S. dental equipment from market

uncertainty related to tariffs.

The decrease was partially offset by dental equipment sales growth in certain of

our

international markets.

The 3.1% increase in internally generated local currency medical sales was

attributable to increased patient traffic

and growth of our Home Solutions business.

The decrease in internally generated local currency value-added services

sales was attributable primarily to lower

sales in our practice transitions business, which can fluctuate from quarter

to quarter.

We estimate that sales of PPE products (including gloves) and COVID-19 test kits were approximately $302

million for the six months ended June 28, 2025, as compared to $320

million for the six months ended June 29,

2024, representing an estimated decrease of $18 million.

The estimated $18 million net decrease in sales of PPE

products and COVID-19 test kits represents 0.3% of Global Distribution

and Value

-Added Services net sales for

the six months ended June 28, 2025, and was primarily due to lower glove

prices.

The estimated increase in the

segment’s internally generated local currency sales, excluding PPE products and COVID-19 test kits, was 1.0%.

Global Specialty Products

Global Specialty Products net sales for the six months ended June 28, 2025

increased 3.1%.

The components of

our sales increase are presented in the table above.

The 2.0% increase in internally generated local currency sales was attributable

to growth in our implant and

biomaterial businesses in certain of our international markets, partially

offset by a decline in endodontic and

orthodontic sales.

The increase in constant currency Global Specialty Products

sales was also attributable to the

acquisition of TriMed Inc. during the year ended December 28, 2024.

Global Technology

Global Technology net sales for the six months ended June 28, 2025 increased 5.1%.

The components of sales

growth are presented in the table above.

The internally generated local currency increase of 5.0% in Global Technology sales was 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 solutions, partially offset by lower revenues of certain legacy products.

Gross Profit

Gross profit and gross margin percentages by segment and in total were as follows:

June 28,

Gross

June 29,

Gross

Increase / (Decrease)

2025

Margin %

2024

Margin %

Global Distribution and Value

-Added Services

1,369

25.3

1,408

26.3

(39)

(2.8)

Global Specialty Products

55.4

55.3

3.4

Global Technology

67.9

67.4

5.9

Corporate

n/a

(1)

n/a

Total

2,016

31.5

2,030

32.2

(14)

(0.7)

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.

Gross margin

percentages vary between our segments.

We realize substantially higher gross margin from sales of products that

we develop and manufacture within our Global Specialty Products segment

compared to gross margin from sales of

products that we distribute within our Global Distribution and Value-Added Services segment.

Within our Global

Technology segment, higher gross margins result from us being both the developer and seller of software products

and services.

Within our Global Distribution and Value

-Added Services 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.

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, which

normally purchase

lower volumes.

The decrease in Global Distribution and Value-Added Services gross profit for the six months ended June 28, 2025

compared to the prior-year-period is due to lower glove pricing as well as time-limited targeted initiatives to

accelerate growth in market share, lower sales of dental equipment in the U.S.

and lower sales in our practice

transitions business.

The increase in Global Specialty Products gross profit reflects increased

internally generated sales volume and

gross profit from acquisitions.

Gross margin rates were relatively flat.

The increase in Global Technology gross profit is the result of higher internally generated sales and improved gross

margin rates.

Operating Expenses

Operating expenses (consisting of selling, general and administrative

expenses; depreciation and amortization; and

restructuring costs) by segment were as follows:

% of

June 28,

Respective

June 29,

Respective

Increase / (Decrease)

2025

Gross Sales

2024

Gross Sales

Global Distribution and Value

-Added Services

1,043

19.3

1,061

19.8

(18)

(1.7)

Global Specialty Products

41.1

43.8

(12)

(3.4)

Global Technology

41.5

45.8

(6)

(4.7)

Corporate

n/a

1,561

24.4

1,562

24.8

(1)

Adjustments

(1)

n/a

(30)

n/a

Total operating expenses

1,690

26.4

1,721

27.3

(31)

(1.8)

(1)

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

These

items may vary independently of business performance.

Please see

Note 5 – Segment Data

These adjustments (current year-to-date vs.

prior year-to-date) consist of (i) acquisition intangible amortization ($87 million vs. $93 million), (ii) restructuring costs ($48 million vs.

$25 million), (iii) change in contingent consideration ($(2) million vs. $38 million), (iv) litigation settlements ($1 million vs. $5

million), (v) cyber incident-insurance proceeds, net of

third-party advisory expenses ($(20) million net proceeds vs. $(2) million net

proceeds), (vi) impairment of intangible assets ($1 million vs. $0 million), and (vii) costs associated with shareholder advisory matters

and select value creation consulting costs ($14 million vs. $0 million).

The net decrease in operating expenses is attributable to the following:

Operating Costs

(excluding

acquisitions)

Acquisitions

Adjustments

Total

Global Distribution and Value

-Added Services

(32)

(18)

Global Specialty Products

(10)

(2)

(12)

Global Technology

(6)

Corporate

(13)

(1)

Adjustments

(30)

Total operating expenses

(13)

(30)

(31)

The components of the net decrease in total operating expenses are presented

in the table above.

The decrease in

operating costs (excluding acquisitions) during the six months ended

June 28, 2025 included cost savings from our

restructuring activities, certain changes in estimates and other operating

cost efficiencies, partially offset by an

increase in Corporate investments in technology in anticipation of

the launch of our Global E-Commerce Platform

(www.henryschein.com)

and timing of certain non-income tax credits.

Other Expense, Net

Other expense, net was as follows:

June 28,

June 29,

Variance

2025

2024

Interest income

34.8

Interest expense

(73)

(62)

(11)

(17.8)

Other, net

(2)

(3)

(538.2)

Other expense, net

(60)

(50)

(10)

(20.8)

Interest income increased primarily due to increased interest rates.

Interest expense increased primarily due to

increased borrowings.

Income Taxes

Our effective tax rate was 24.7% for the six months ended June 28, 2025, compared to 25.2%

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.

On July 4, 2025, after the end of the second quarter (June 28, 2025), President

Trump signed the reconciliation tax

bill, commonly known as the OBBBA,

into law.

This includes significant changes to corporate tax rates,

limitations on certain deductions and modifications to international tax

provisions.

are currently assessing the

impact of the OBBBA on our consolidated financial statements.

The 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 June

28, 2025, the impact of the Pillar Two rules to our financial statements was immaterial.

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

Note 8 – Debt

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 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 $157 million for the

six months ended June 28, 2025, compared to

net cash provided by operating activities of $493 million for the

prior year.

The net change of $336 million was

primarily attributable to changes in working capital accounts (primarily

accounts receivable, inventory, and

accounts payable and accrued expenses).

Our operating cash flows during the six months ended June

29, 2024

were affected by the residual impacts of the 2023 cyber incident and included a higher-than-normal

level of cash

collections.

Our cash collections normalized during the six months ended

June 28, 2025.

Net cash used in investing activities was $197 million for the

six months ended June 28, 2025, compared to net

cash used in investing activities of $281 million for the prior year.

The net change of $84 million was primarily

attributable to reduced payments for equity investments and business acquisitions.

Net cash provided by financing activities was $145 million for the

six months ended June 28, 2025, compared to

net cash used in financing activities of $265 million for the prior year.

The net change of $410 million was

primarily due to increased net borrowings from debt to finance our investments

and proceeds received from the

issuance of common stock, partially offset by increased repurchases of common stock.

The following table summarizes selected measures of liquidity and capital

resources:

June 28,

December 28,

2025

2024

Cash and cash equivalents

Working

capital

(1)

1,236

1,180

Debt:

Bank credit lines

Current maturities of long-term debt

Long-term debt

2,090

1,830

Total debt

3,018

2,536

Leases:

Current operating lease liabilities

Non-current operating lease liabilities

(1)

Includes $440 million and $241 million of certain accounts receivable, which serve as security for U.S. trade accounts receivable

securitization at June 28, 2025 and December 28, 2024, 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 decreased

to 44.7 days as of June 28, 2025 from

48.9 days as of June 29, 2024, which was primarily attributable to impact

that the cyber incident had on the cash

collections during the three months ended March 30, 2024.

During the six months ended June 28, 2025, we wrote

off approximately $5 million of fully reserved accounts receivable against our trade

receivable reserve.

Our

inventory turns from operations decreased to 4.7 as of June 28, 2025

from 5.0 as of June 29, 2024.

Our working

capital accounts may be impacted by current and future economic conditions.

Leases

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 year to approximately

16 years, some of

which may include options to extend the leases for up to 15 years.

As of June 28, 2025, our right-of-use assets

related to operating leases were $300 million and our current and non-current

operating lease liabilities were $81

million and $259 million, respectively.

Stock Repurchases

On January 27, 2025, our Board of Directors authorized the repurchase

of up to an additional $500 million in shares

of our common stock.

On May 19, 2025, we executed an accelerated share repurchase program

to repurchase a total of $250 million of

our outstanding common stock based on volume-weighted average

prices.

As of June 28, 2025, we received

3,122,832 shares at an estimated fair value of $223

million, which were recorded in treasury stock.

In July 2025,

we received an additional 368,651 shares at an estimated fair value of

$27 million, representing the final amount of

shares to be received under this accelerated share repurchase program.

From March 3, 2003 through June 28, 2025, we repurchased $5.6 billion,

or 101,727,771 shares (including shares

delivered after June 28, 2025), under our common stock repurchase programs,

with $432 million available as of

June 28, 2025 for future common stock share repurchases.

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.

As of June 28, 2025 and December 28, 2024, our balance

for

redeemable noncontrolling interests was $811 million and $806 million, respectively.

Please see

Note 13 –

Redeemable Noncontrolling Interests

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 28, 2024.

Accounting Standards Update

For a discussion of accounting standards updates that have been adopted

or will be adopted, see

Note 2 - Significant

Accounting Policies and Recently Issued Accounting Standards

of the Notes to the Condensed Consolidated

Financial Statements included under Item 1.

Previous: Item 1. CONDENSED CONSOLIDATED · Next: Item 3. QUANTITATIVE