Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

June 27,

December 27,

2026

2025

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

Accounts receivable, net of allowance for credit losses of $

and $

(1)

1,763

1,651

Inventories, net

2,059

2,002

Prepaid expenses and other

Total current assets

4,600

4,464

Property and equipment, net

Operating lease right-of-use assets

Goodwill

4,272

4,213

Other intangibles, net

1,018

Investments and other

Total assets

11,381

11,215

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND

STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

1,135

1,154

Bank credit lines

1,024

Current maturities of long-term debt

Operating lease liabilities

Accrued expenses:

Payroll and related

Taxes

Other

Total current liabilities

3,488

3,228

Long-term debt (1)

2,300

2,310

Deferred income taxes

Operating lease liabilities

Other liabilities

Total liabilities

6,658

6,421

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,

111,916,222

issued and outstanding on June 27, 2026 and

115,771,149

issued and outstanding on December 27, 2025

Additional paid-in capital

Retained earnings

3,200

3,293

Accumulated other comprehensive loss

(184)

(226)

Total Henry Schein, Inc. stockholders' equity

3,157

3,245

Noncontrolling interests

Total stockholders' equity

3,817

3,899

Total liabilities, redeemable noncontrolling

interests and stockholders' equity

11,381

11,215

(1)

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

At June 27, 2026 and December 27,

2025, amounts include 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

Six Months Ended

June 27,

June 28,

June 27,

June 28,

2026

2025

2026

2025

Net sales

3,458

3,240

6,826

6,408

Cost of sales

2,357

2,224

4,655

4,392

Gross profit

1,101

1,016

2,171

2,016

Operating expenses:

Selling, general and administrative

1,640

1,516

Depreciation and amortization

Restructuring and related costs

Operating income

Other income (expense):

Interest income

Interest expense

(43)

(38)

(82)

(73)

Other, net

(1)

(2)

Income before taxes, equity in earnings of affiliates and

noncontrolling interests

Income taxes

(34)

(31)

(72)

(66)

Equity in earnings (loss) of affiliates, net of tax

(1)

Net income

Less: Net income attributable to noncontrolling interests

(8)

(13)

(11)

Net income attributable to Henry Schein, Inc.

Earnings per share attributable to Henry Schein, Inc.:

Basic

0.83

0.71

1.76

1.59

Diluted

0.82

0.70

1.74

1.58

Weighted-average common

shares outstanding:

Basic

113,451,329

121,927,867

114,194,349

122,852,702

Diluted

114,390,366

122,636,948

115,238,506

123,739,381

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENTS

OF COMPREHENSIVE INCOME

(in millions)

(unaudited)

Three Months Ended

Six Months Ended

June 27,

June 28,

June 27,

June 28,

2026

2025

2026

2025

Net income

Other comprehensive income, net of tax:

Foreign currency translation gain

Unrealized gain (loss) from hedging activities

(21)

(26)

Other comprehensive income, net of tax

Comprehensive income

Comprehensive income attributable to noncontrolling interests:

Net income

(8)

(13)

(11)

Foreign currency translation gain

(1)

(22)

(4)

(31)

Comprehensive income attributable to noncontrolling

interests

(9)

(30)

(17)

(42)

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, March 28, 2026

114,424,682

3,287

(189)

3,919

Net income (excluding $

attributable to Redeemable

noncontrolling interests)

Foreign currency translation gain (excluding gain of $

attributable to Redeemable noncontrolling interests)

Unrealized gain from hedging activities,

net of tax of $

Change in fair value of redeemable securities

(16)

Noncontrolling interests and adjustments related to

business acquisitions and contingent consideration

(2)

Repurchase and retirement of common stock

(2,608,260)

(21)

(181)

(202)

Stock issued upon exercise of stock options

9,732

Stock-based compensation expense

111,705

Shares withheld for payroll taxes

(21,843)

(2)

Settlement of stock-based compensation awards

Balance, June 27, 2026

111,916,222

3,200

(184)

3,817

Accumulated

Common Stock

Additional

Other

Total

$0.01 Par Value

Paid-in

Retained

Comprehensive

Noncontrolling

Stockholders'

Amount

Capital

Earnings

Income / (Loss)

Interests

Equity

Balance, March 29, 2025

122,243,683

3,626

(317)

3,954

Net income (excluding $

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 $

(21)

Distributions to noncontrolling shareholders

(7)

Purchase of noncontrolling interests

(1)

(2)

Change in fair value of redeemable securities

(10)

Noncontrolling interests and adjustments related to

business acquisitions and contingent consideration

(1)

Issuance of common stock

3,285,152

Repurchase and retirement of common stock

(3,657,832)

(61)

(227)

(288)

Stock issued upon exercise of stock options

3,741

Stock-based compensation expense

26,096

Shares withheld for payroll taxes

(5,807)

(3)

Settlement of stock-based compensation awards

Balance, June 28, 2025

121,895,045

3,485

(227)

4,088

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 27, 2025

115,771,149

3,293

(226)

3,899

Net income (excluding $

attributable to Redeemable

noncontrolling interests)

Foreign currency translation gain (excluding gain of $

attributable to Redeemable noncontrolling interests)

Unrealized gain from hedging activities,

net of tax of $

Net distributions to noncontrolling shareholders

(7)

Change in fair value of redeemable securities

(34)

Noncontrolling interests and adjustments related to

business acquisitions and contingent consideration

Repurchase and retirement of common stock

(4,218,246)

(34)

(294)

(328)

Stock issued upon exercise of stock options

26,302

Stock-based compensation expense

494,745

Shares withheld for payroll taxes

(154,677)

(13)

Settlement of stock-based compensation awards

(3,051)

Balance, June 27, 2026

111,916,222

3,200

(184)

3,817

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 of $

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 $

(26)

Pension adjustment gain, net of tax of $

Distributions to noncontrolling shareholders

(7)

Purchase of noncontrolling interests

(1)

(2)

Change in fair value of redeemable securities

(38)

Noncontrolling interests and adjustments related to

business acquisitions and contingent consideration

(60)

(1)

(61)

Issuance of common stock

3,285,152

Repurchase and retirement of common stock

(5,913,317)

(82)

(368)

(450)

Stock issued upon exercise of stock options

14,092

Stock-based compensation expense

546,481

Shares withheld for payroll taxes

(193,300)

(14)

Settlement of stock-based compensation awards

Transfer of charges in excess of

capital

(114)

Balance, June 28, 2025

121,895,045

3,485

(227)

4,088

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENTS

OF CASH FLOWS

(in millions)

(unaudited)

Six Months Ended

June 27,

June 28,

2026

2025

Cash flows from operating activities:

Net income

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization

Impairment charge on intangible assets

Non-cash restructuring and related charges

Stock-based compensation expense

Provision for losses on trade and other accounts receivable

Benefit from deferred income taxes

(8)

(7)

Equity in (earnings) losses of affiliates

(7)

Distributions from equity affiliates

Changes in unrecognized tax benefits

(4)

(1)

Other

(21)

(31)

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

(116)

(100)

Inventories

(49)

(29)

Other current assets

Accounts payable and accrued expenses

(79)

(94)

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of property and equipment

(55)

(63)

Payments related to equity investments and business acquisitions,

net of cash acquired

(30)

(101)

Proceeds from loan to affiliate

Capitalized software costs

(30)

(26)

Other

(15)

(9)

Net cash used in investing activities

(128)

(197)

Cash flows from financing activities:

Net change in bank credit lines

Proceeds from issuance of long-term debt

Principal payments for long-term debt

(50)

(21)

Debt issuance costs

(2)

Issuance of common stock

Proceeds from issuance of stock upon exercise of stock options

Payments for repurchases and retirement of common stock

(325)

(447)

Payments for taxes related to shares withheld for employee taxes

(12)

(14)

Distributions to noncontrolling shareholders

(22)

(18)

Payments for contingent consideration

(4)

(19)

Acquisitions of noncontrolling interests in subsidiaries

(42)

(77)

Net cash provided by (used in) financing activities

(48)

Effect of exchange rate changes on cash and cash equivalents

(82)

Net change in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 1 – Basis of Presentation

Our condensed consolidated financial statements include the accounts of Henry

Schein, Inc. and all of our

controlled subsidiaries 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.

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 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 27, 2025 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 and six months ended June 27,

2026 are not necessarily indicative of the

results to be expected for any other interim period or for the year ending

December 26, 2026.

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; fair value of contingent

consideration; 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 7 – 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 June 27, 2026 and December 27, 2025, 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,

Accounting Pronouncements Recently Adopted and Recently

Issued

Accounting Pronouncements

Significant Accounting Policies

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

the three and six months ended

June 27, 2026, as compared to the significant accounting policies described

in Item 8 of our Annual Report on

Form 10-K for the year ended December 27, 2025.

Accounting Pronouncements Recently Adopted

In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2025-05, “

Financial Instruments - Credit Losses (Subtopic 326): Measurement of Credit Losses for Accounts

Receivable and Contract Assets,

” which introduces a practical expedient permitting an entity

to assume that

conditions at the balance sheet date remain unchanged throughout the

remaining life of the asset when estimating

expected credit losses on current accounts receivable and current contract

assets under Topic 606 -

Revenue from

Contracts with Customers

We adopted this ASU during fiscal year 2026 and elected to apply the practical

expedient.

The adoption did not have a material impact on our consolidated financial

statements.

Recently Issued Accounting Pronouncements

In May 2026, the FASB issued ASU 2026-02, “

Environmental Credits and Environmental Credit Obligations

(Topic 818)

,” which establishes recognition, measurement, presentation, and disclosure

requirements for

environmental credits and related environmental credit obligations.

This ASU is effective for annual reporting

periods beginning after December 15, 2027, and interim reporting periods

within those annual reporting periods,

with early adoption permitted.

Upon adoption, the guidance will be applied retrospectively.

We do not expect the

adoption of this ASU to have a material impact on our consolidated

financial statements.

In December 2025, the FASB issued ASU 2025-11, “

Interim Reporting (Topic 270): Narrow-Scope

Improvements

,” which is intended to improve navigability of the guidance in Topic 270, Interim Reporting, and

clarify when it applies.

The ASU also addresses the form and content of such financial

statements and interim

disclosure requirements, and establishes a principle under which an entity

must disclose events since the end of the

last annual reporting period that have a material impact on the entity.

This ASU is effective for annual reporting

periods beginning after December 15, 2027, and interim reporting periods

within those annual reporting periods,

with early adoption permitted.

We are currently evaluating the impact that ASU 2025-11 will have on our

consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-10, “

Government Grants (Topic 832) - Accounting for Government

Grants Received by Business Entities,

” which establishes guidance on the recognition, measurement, and

presentation of government grants received by business entities.

This ASU is effective for annual reporting periods

beginning after December 15, 2028, and interim reporting periods within

those annual reporting periods, with early

adoption permitted.

We do not believe that ASU 2025-10 will have a material impact on our consolidated financial

statements and related disclosures.

In November 2025, the FASB issued ASU 2025-09, “

Derivatives and Hedging (Topic 815): Hedge Accounting

Improvements,

” which is intended to more closely align financial reporting with

the economics of entities’ risk

management activities, including expanded eligibility of forecasted

transactions, additional flexibility in measuring

hedge effectiveness, and clarifications related to hedging non-financial items.

This ASU is effective for annual

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

periods within those annual reporting

periods, with early adoption permitted, and should be applied prospectively.

We are currently evaluating the

impact that ASU 2025-09 will have on our consolidated financial statements

and related disclosures.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

In September 2025, the FASB issued ASU 2025-06, “

Intangibles - Goodwill and Other - Internal-Use Software

(Subtopic 350-40): Targeted Improvements

to the Accounting for Internal-Use Software

,” which removes all

references to software development project stages.

The ASU requires entities to begin capitalizing software costs

when management authorizes and commits to funding the software project,

and it is probable that the project will

be completed and the software will be used for its intended purpose.

This ASU is effective for annual reporting

periods beginning after December 15, 2027, and interim reporting periods

within those annual reporting periods,

with early adoption permitted.

Upon adoption, the guidance can be applied prospectively, retrospectively, or with a

modified transition approach.

We are currently evaluating the impact that ASU 2025-06 will have on our

consolidated financial statements.

In November 2024, the FASB issued 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

retrospectively.

We are currently evaluating the impact that ASU 2024-03 will have on our consolidated financial

statements.

Note 3 – Net Sales from Contracts with Customers

Net sales are recognized in accordance with policies disclosed in Item

8 of our Annual Report on Form 10-K for

the year ended December 27, 2025.

Disaggregation of Net Sales

The following table disaggregates our net sales by reportable segment:

Three Months Ended

Six Months Ended

June 27,

June 28,

June 27,

June 28,

2026

2025

2026

2025

Net Sales:

Global Distribution and Value

-Added Services

Global Dental merchandise

1,337

1,218

2,629

2,403

Global Dental equipment

Global Value

-added services

Global Dental

1,854

1,715

3,620

3,336

Global Medical

1,057

1,016

2,130

2,071

Total Global Distribution

and Value

-Added Services

2,911

2,731

5,750

5,407

Global Specialty Products

Global Technology

Eliminations

(53)

(44)

(94)

(81)

Total

3,458

3,240

6,826

6,408

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Contract Liabilities

The following table presents our contract liabilities:

As of

June 27,

December 27,

June 28,

December 28,

Description

2026

2025

2024

Current contract liabilities

Non-current contract liabilities

Total contract

liabilities

During the six months ended June 27, 2026, we recognized $

million in net sales that had been previously

deferred at December 27, 2025.

During the six months ended June 28, 2025, we recognized $

million in net sales

that were previously deferred at December 28, 2024.

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.

Note 4

–

Segment Data

We conduct our business through

three

reportable segments

: (i) Global Distribution and Value-Added Services; (ii)

Global Specialty Products; and (iii) Global Technology.

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 Chief Executive

Officer (“CEO”).

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, (c) organizational

restructuring and related

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

contingent consideration, (f) litigation

settlements, and (g) costs associated with shareholder advisory

matters and select implementation related value

creation consulting costs.

These adjustments are: (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 income.

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

Six Months Ended

June 27,

June 28,

June 27,

June 28,

2026

2025

2026

2025

Gross Sales:

Global Distribution and Value

-Added Services

(1)

2,911

2,731

5,750

5,407

Global Specialty Products

(2)

Global Technology

(3)

Total Gross Sales

3,511

3,284

6,920

6,489

Less: Eliminations:

Global Distribution and Value

-Added Services

(6)

(4)

(9)

(8)

Global Specialty Products

(47)

(40)

(85)

(73)

Global Technology

Total Eliminations

(53)

(44)

(94)

(81)

Net Sales:

Global Distribution and Value

-Added Services

2,905

2,727

5,741

5,399

Global Specialty Products

Global Technology

Total Net Sales

3,458

3,240

6,826

6,408

Segment Cost of Sales:

(4)

Global Distribution and Value

-Added Services

2,167

2,043

4,274

4,038

Global Specialty Products

Global Technology

Segment Operating Expenses:

(5)

Global Distribution and Value

-Added Services

1,112

1,043

Global Specialty Products

Global Technology

Operating Income:

Global Distribution and Value

-Added Services

Global Specialty Products

Global Technology

Total Segment Operating Income

Corporate, net

(42)

(31)

(76)

(66)

Adjustments

(6)

(79)

(74)

(150)

(129)

Total Operating Income

Three Months Ended

Six Months Ended

June 27,

June 28,

June 27,

June 28,

2026

2025

2026

2025

Depreciation and Amortization:

Global Distribution and Value

-Added Services

Global Specialty Products

Global Technology

Total Segment Depreciation and Amortization

Corporate

Acquisition intangible amortization within

adjustments

(6)

Total Depreciation and Amortization

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

(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)

Cost of goods sold in our Global Distribution and Value-Added Services segment and our Global Specialty Products segment

includes product cost and inbound and outbound freight charges.

Cost of goods sold in our Global Technology segment consists

primarily of software development and third-party provider costs, including technology use and hosting fees.

(5)

Significant segment operating expenses for our reportable segments and Corporate include primarily compensation costs, and to a

lesser extent, rent, depreciation and maintenance costs related to operating our facilities.

(6)

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:

Three Months Ended

Six Months Ended

June 27,

June 28,

June 27,

June 28,

2026

2025

2026

2025

Adjustments:

Restructuring and related costs

(29)

(23)

(41)

(48)

Acquisition intangible amortization

(46)

(44)

(91)

(87)

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

expenses

Change in contingent consideration

Litigation settlements

(1)

Impairment of intangible assets

(1)

Costs associated with shareholder advisory matters and select

implementation related value creation consulting costs

(6)

(19)

(14)

Total adjustments

(79)

(74)

(150)

(129)

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 5

–

Business Acquisitions

Our acquisition strategy is focused on investments in companies, including

high growth high margin businesses

aligned with our BOLD+1 strategy, 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.

2026 Acquisitions

During the six months ended June 27, 2026, we acquired companies

within the Global Distribution and Value-

Added Services and Global Specialty Products segments.

Our acquired ownership interest in these companies

ranged from

% to

The following table aggregates the preliminary estimated fair value, as of

the date of the acquisition, of

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

ended June 27, 2026:

Preliminary

Allocation as of

June 27, 2026

Acquisition consideration:

Cash

Deferred consideration

Subsidiary common equity issued to sellers

Fair value of previously held equity method investments

Redeemable noncontrolling interests

Total consideration

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

Other noncurrent assets

Current liabilities

(4)

Deferred income taxes

(6)

Other noncurrent liabilities

(1)

Total identifiable

net assets

Goodwill

Total net assets acquired

The accounting for acquisitions in the six months ended June 27, 2026 has not been

completed in several areas,

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

liabilities, primarily including

deferred income taxes.

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.

The following table summarizes the intangible assets acquired during the six

months ended June 27, 2026:

Weighted Average

2026

Useful Lives (in years)

Customer relationships and lists

Trademarks / Tradenames

Total

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

During the six months ended June 27, 2026, in connection with acquisitions

of controlling interests of affiliates, we

recognized a gain of approximately $

million related to the remeasurement to fair value of our previously

held

equity investment,

recognized during the first quarter.

Such gain was calculated using a discounted cash flow

model based on Level 3 inputs, as defined in

Note 6 – Fair Value Measurements

which was recorded in

selling, general and administrative

in the condensed consolidated statements of income.

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, individually and in the aggregate, was immaterial to our

condensed consolidated financial statements.

2025 Acquisitions

During the year ended December 27, 2025, we acquired companies within

the Global Distribution and Value-

Added Services,

Global Specialty Products and Global Technology segments.

Our acquired ownership interest in

these companies range from

% to

The following table aggregates the preliminary estimated fair value, as of

the date of the acquisition, of

consideration paid and net assets acquired for acquisitions during the year ended

December 27, 2025:

Preliminary

Allocation as of

June 27, 2026

Acquisition consideration:

Cash

Deferred consideration

Estimated fair value of contingent consideration payable

Fair value of previously held equity method investments

Redeemable noncontrolling interest

Total consideration

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

Other noncurrent assets

Current liabilities

(27)

Long-term debt

(2)

Deferred income taxes

(23)

Other noncurrent liabilities

(7)

Total identifiable

net assets

Goodwill

Total net assets acquired

The accounting for certain acquisitions in the year ended December 27,

2025 has not been completed in several

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

assets and certain liabilities, primarily including

deferred income taxes.

Measurement period adjustments recorded through June 27,

2026 were immaterial and

primarily related to certain intangible assets.

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.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

The following table summarizes the intangible assets acquired during the year

ended December 27, 2025:

Weighted Average

2025

Useful Lives (in years)

Customer relationships and lists

Trademarks / Tradenames

Product development

Non-compete agreements

Total

Pro forma financial information for our 2025 acquisitions has not been

presented because the impact of these

acquisitions, individually and in the aggregate, was immaterial to our

condensed consolidated financial statements.

Acquisition Costs

During the three and six months ended June 27, 2026, we incurred $

million and $

million in acquisition costs,

respectively.

During the three and six months ended June 28, 2025, 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 6 – Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or

paid to transfer a liability in an orderly

transaction between market participants at the measurement date.

The fair value hierarchy distinguishes between

(1) market participant assumptions developed based on market data obtained

from independent sources (observable

inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best

information available in the circumstances (unobservable inputs).

The fair value hierarchy consists of three broad levels, which gives the

highest priority to unadjusted quoted prices

in active markets for identical assets or liabilities (Level 1) and the lowest priority

to unobservable inputs (Level 3).

The three levels of the fair value hierarchy are described as follows:

Level 1— Unadjusted quoted prices in active markets for identical assets

or liabilities that are accessible at the

measurement date.

Level 2— Inputs other than quoted prices included within Level 1 that are

observable for the asset or liability,

either directly or indirectly.

Level 2 inputs include: quoted prices for similar assets or liabilities

in active markets;

quoted prices for identical or similar assets or liabilities in markets

that are not active; inputs other than quoted

prices that are observable for the asset or liability; and inputs that are

derived principally from or corroborated by

observable market data by correlation or other means.

Level 3— Inputs that are unobservable for the asset or liability.

The following section describes the fair values of our financial instruments

and the methodologies that we used to

measure their fair values.

Investments and notes receivable

There are no quoted market prices available for investments in unconsolidated

affiliates and notes receivable.

Certain of our notes receivable contain variable interest rates.

We believe the carrying amounts 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 June 27, 2026 and December 27, 2025 was

estimated at $

3,462

million and $

3,107

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.

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

exchange traded funds of the swap

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

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 12 – 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 certain of our non-U.S. 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 sheets.

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 5 – Business Acquisitions

)

For transactions involving changes in our ownership in

consolidated 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 sheets.

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 and six months ended June

27, 2026 and June 28, 2025 are presented in the following table:

Three Months Ended

Six Months Ended

June 27,

June 28,

June 27,

June 28,

2026

2025

2026

2025

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

(4)

(7)

(4)

(19)

Change in fair value of contingent consideration in

connection with business acquisitions

(1)

(2)

(1)

(2)

Change in fair value of contingent consideration in

connection with changes in ownership in consolidated

subsidiaries

(2)

(34)

Balance, end of period

(1)

Amounts are recorded in selling, general and administrative in the condensed consolidated statements of income.

(2)

Amounts are recorded in additional paid-in capital in the condensed consolidated balance sheets.

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

June 27, 2026 and December 27, 2025:

June 27, 2026

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 27, 2025

Level 1

Level 2

Level 3

Total

Assets:

Derivative contracts designated as hedges

Derivative contracts undesignated

Total return

swap

Total assets

Liabilities:

Derivative contracts designated as hedges

Derivative contracts undesignated

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 7 – Debt

Bank Credit Lines

Bank credit lines consisted of the following:

June 27,

December 27,

2026

2025

Revolving credit agreement

Other short-term bank credit lines

Total

1,024

Revolving Credit Agreement

August 20, 2021

, we entered into a $

1.0

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

which was 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.

On June 6, 2025, we

amended and restated the Revolving Credit Agreement to, among other

things, modify certain financial definitions

and covenants.

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 June 27, 2026 the interest rate on this revolving credit

facility was

3.63

plus

1.08

%, for a combined rate of

4.71

As of December 27, 2025, the interest rate on this revolving credit

facility was

3.78

% plus

1.08

%, for a combined rate of

4.86

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 June 27,

2026 and December 27, 2025, we had $

million and $

million in borrowings, respectively, under this

revolving credit facility.

During the six months ended June 27, 2026, the average

outstanding balance under the

Revolving Credit Agreement was approximately $

million.

As of June 27, 2026 and December 27, 2025, 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 June 27, 2026 and December 27, 2025, 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 June 27,

2026 and December 27, 2025, $

million and $

million, respectively, were outstanding.

During the six

months ended June 27, 2026, the average outstanding balance under our

various other short-term bank credit lines

was approximately $

million.

As of June 27, 2026 and December 27, 2025, borrowings under other

short-term

bank credit lines had weighted average interest rates of

4.53

% and

4.68

%, 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:

June 27,

December 27,

2026

2025

Private placement facilities

1,199

1,149

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

6.25

% at June 27, 2026 and

from

0.00

% to

6.75

% at December 27, 2025

Finance lease obligations

Total

2,438

2,343

Less current maturities

(138)

(33)

Total long-term debt

2,300

2,310

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

December 19, 2028

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.

On December 19, 2025, we amended and restated our private placement

facilities to, among

other things, (i) extend the scheduled facility termination dates to

December 19, 2028

and (ii) modify certain

financial definitions and covenants.

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

June 27, 2026, which have a weighted average

interest rate of

3.99

%, 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

December 15, 2025

5.23

December 15, 2032

December 15, 2025

5.28

December 15, 2032

February 24, 2026

5.40

February 24, 2034

Less: Deferred debt issuance costs

(1)

Total

1,199

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

27, 2025, which have a weighted

average interest rate of

3.93

%, 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

December 15, 2025

5.23

December 15, 2032

December 15, 2025

5.28

December 15, 2032

Less: Deferred debt issuance costs

(1)

Total

1,149

Term Loan

On July 11, 2023, we entered into a

three-year

million term loan credit agreement (the “Term Credit

Agreement”), which was originally scheduled to mature on

July 11, 2026

On June 6, 2025, this agreement was

amended and restated to, among other things, (i) extend the maturity date

June 6, 2030

, and (ii) modify certain

financial definitions and covenants.

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.

Beginning in June 2026 and continuing

through June 2027, we are required to make quarterly payments of $

million.

In September 2027, the quarterly

payment amount increases to $

million, continuing through June 2030 with the remaining balance due June

As of June 27, 2026, the borrowings outstanding under this

term loan were $

million.

At June 27, 2026,

the interest rate under the Term Credit Agreement was

3.62

% plus

1.25

%, for a combined rate of

4.87

As of

December 27, 2025, the borrowings outstanding under this term loan were

million.

At December 27, 2025,

the interest rate under the Term Credit Agreement was

3.76

% plus

1.25

%, for a combined rate of

5.01

After

renewing the Term Credit Agreement in June of 2025, our hedged portion of the Term Credit Agreement is now

approximately

% of the notional total.

As of June 27, 2026, the effective fixed rate was

5.69

% and the floating

rate was

4.87

%, resulting in a weighted average rate of

5.59

As of December 27, 2025, the effective fixed rate

was

5.69

% and the floating rate was

5.01

%, resulting in a weighted average rate of

5.62

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

This facility agreement has a purchase limit of $

million with

two

banks as agents.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

As of June 27, 2026 and December 27, 2025, the borrowings outstanding

under this securitization facility were

million and $

million, respectively.

At June 27, 2026, the interest rate on borrowings under

this facility

was based on the

asset-backed commercial paper rate

3.92

% plus

0.75

%, for a combined rate of

4.67

December 27, 2025, the interest rate on borrowings under this facility was

based on the

asset-

backed commercial paper rate

4.06

% plus

0.75

%, for a combined rate of

4.81

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.

Note 8 – Income Taxes

For the three months ended June 27, 2026, our effective tax rate was

24.8

%, compared to

24.4

% 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.

For the six months ended June 27, 2026, our effective tax rate was

25.2

%, compared to

24.7

% for the prior year

period.

The difference between our effective and federal statutory tax rates primarily relates to

state and foreign

income taxes and interest expense.

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

“other liabilities” within our condensed

consolidated balance sheets, as of June 27, 2026 and December 27, 2025

was $

million and $

million,

respectively, of which $

million and $

million, respectively, would affect the effective tax rate if recognized.

All tax returns audited by the IRS are officially closed through 2021.

The tax years subject to examination by the

IRS include years 2022 and forward.

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

to IRS

examination.

During the three months ended June 27, 2026 and June 28, 2025, the

amount of tax interest income included as a

component of the provision for taxes was $

million and $

million, respectively.

During the six months ended

June 27, 2026 and June 28, 2025, the amount of tax interest income/(expense)

included as a component of the

provision for taxes was $

million and $

(1)

million, respectively.

The total amount of accrued interest is included

in other liabilities within our condensed consolidated balance sheets, and

was $

million as of June 27, 2026 and

million as of December 27, 2025.

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 9 – Plan of Restructuring and Related Costs

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

Plan”) to integrate our acquisitions, right-size

operations and further increase efficiencies.

We expect to record restructuring and related charges associated with

the 2024 Plan through the end of 2027; however,

an estimate of the amount of these charges for 2026 through 2027

has not yet been determined.

During the quarter ended March 28, 2026 and the six months ended June

27, 2026, in connection with the 2024

Plan, we recorded a loss of $

million related to the disposal of businesses in the Global Specialty

Products

segment.

This amount is included in the $

million of restructuring and related charges discussed above.

Restructuring and related costs recorded for the three and six months ended

June 27, 2026 and June 28, 2025 in

connection with the 2024

Plan consisted of the following:

Three Months Ended June 27, 2026

Global Distribution

and Value-Added

Services

Global

Specialty

Products

Global

Technology

Corporate

Total

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 and related costs

Three Months Ended June 28, 2025

Global Distribution

and Value-Added

Services

Global

Specialty

Products

Global

Technology

Corporate

Total

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

Loss on disposal of a business

Restructuring and related costs

Six Months Ended June 27, 2026

Global Distribution

and Value-Added

Services

Global

Specialty

Products

Global

Technology

Corporate

Total

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

Loss on disposal of a business

Restructuring and related costs

Six Months Ended June 28, 2025

Global Distribution

and Value-Added

Services

Global

Specialty

Products

Global

Technology

Corporate

Total

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

Loss on disposal of a business

Restructuring and related costs

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

The following table summarizes the activity related to the liabilities associated

with our restructuring initiatives

for

the six months ended June 27, 2026.

The remaining accrued balance of restructuring and related costs as

of June

27, 2026, 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.

Total

Balance, December 27, 2025

Restructuring and related costs

Non-cash impairment, accelerated depreciation and amortization

(2)

Non-cash impairment related to disposal of a business

(2)

Cash payments and other adjustments

(43)

Balance, June 27, 2026

Note 10 – Legal Proceedings

From time to time, Henry Schein, Inc. may become a party to

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 pending matters are currently anticipated to have a material adverse

effect on our consolidated financial position, liquidity or results of operations.

As of June 27, 2026, 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 11 – Stock-Based Compensation

Plan Administration and Award Types

Stock-based awards are granted to certain employees under the 2024 Stock

Incentive Plan and to our non-employee

directors under the 2023 Non-Employee Director Stock Incentive Plan (collectively, the “Plans”), which are

administered by the Compensation Committee of the Board of Directors.

●

Non-Employee Directors:

Receive awards exclusively in the form of time-based restricted stock units

(“RSUs”) with

-month cliff vesting.

An RSU entitles the holder to receive

one

share of Company

common stock upon vesting.

●

Employees:

Historically, awards were granted in varying forms, including RSUs, performance-based

restricted stock units (“PSUs”) and non-qualified stock options.

Beginning in the 2023 plan year, employee

awards consist of:

RSUs:

Vest

based on the recipient’s continued service over time.

PSUs:

A PSU entitles the holder to receive

one

share of Company common stock upon vesting,

contingent on the achievement of specified performance targets and the recipient’s continued

service.

The number of shares that ultimately vest and are received by

the recipient may range

above or below the target award based on the Company’s performance against pre-determined

specified targets over the applicable performance period, as determined by the Compensation

Committee.

Non-Qualified Stock Options (granted solely to our CEO in 2026):

Non-qualified stock options

(“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 are issued at an exercise price equal

to our closing stock price on the date of grant and have a contractual

term of

ten years

from the

grant date, subject to earlier expiration upon certain termination events and

accelerated vesting

upon certain events.

Allocation and Vesting Schedules

The following table summarizes

the allocation and vesting structure for our annual long-term incentive

(“LTI”)

equity awards to employee groups during the 2025 and 2026 plan years,

and for our CEO’s 2026 sign-on equity

award:

Employee Group

Plan Year

Award Allocation

Vesting Structure

CEO

2026

RSU (time)

-year graded

(

%/year)

PSU (performance)

-year cliff

Stock Options

-year graded

(

%/year)

2026 (Sign-On)

RSU (time)

-year graded

(

-1/3%/year)

2025

RSU (time)

-year cliff

PSU (performance)

-year cliff

Executive Management Committee

(succeeded by the Henry Schein

Leadership Team

in July 2026)

2026

RSU (time)

-year graded

(

%/year)

PSU (performance)

-year cliff

2025

RSU (time)

-year cliff

PSU (performance)

-year cliff

Vice Presidents

2026

RSU (time)

-year graded

(

%/year)

PSU (performance)

-year cliff

2025

RSU (time)

% at 3rd year /

% at 4th year

PSU (performance)

-year cliff

Director Level

2026

RSU (time)

-year graded

(

%/year)

2025

RSU (time)

% at 3rd year /

% at 4th year

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Accounting Policy Change

Effective in the first quarter of 2026, we updated our accounting policy for recognizing

stock-based compensation

expense for awards with service conditions only, transitioning from the graded-vesting method to the straight-line

method.

We adopted this change as we believe the straight-line method is the predominant practice in our industry.

The effect of this change in accounting policy and its impact on our consolidated

financial statements was

immaterial for retrospective application.

Valuation

and Performance Measurements

●

RSUs and PSUs: For RSUs and PSUs, fair value is estimated based on the

closing stock price on the grant

date.

For PSUs, the number of shares that ultimately vest and are received by

the recipient and related

compensation cost recognized as an expense may range above or below

the target based on the Company’s

performance against pre-determined specified targets over the applicable performance

period, as

determined by the Compensation Committee.

●

Stock Options: Compensation expense is recognized on a straight-line

basis, and grant-date fair value is

estimated using the Black-Scholes valuation model.

Performance Adjustments

The equity awards under the Plans are subject to certain pre-determined

adjustments to the performance

measurements to the extent that related activities were not contemplated

in the original goals.

With respect to PSUs

granted under the 2024 Stock Incentive Plan, for the 2025, and 2026 PSUs,

these adjustments may include, but are

not limited to:

●

Impact of acquisitions, divestitures, and new business ventures.

●

Changes in the fair value of contingent consideration and remeasurement

gains related to acquisitions.

●

Certain capital transactions, including share repurchases.

●

Impact of differences in budgeted average outstanding shares (other than those resulting

from capital

transactions referred to above).

●

Restructuring and related 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.

●

Intangible impairment charges.

●

Costs related to shareholder advisory matters (for 2025 and 2026 PSU

grants only).

●

Implementation-related value creation consulting costs (for 2026 PSU

grants only).

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

expense of $

million

and $

million for the three and six months ended June 27, 2026, respectively.

For the three and six months ended

June 28, 2025, we recorded pre-tax share-based compensation expense of

million and $

million, respectively.

Total unrecognized compensation cost related to unvested awards as of June 27, 2026 was $

million, which is

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

2.7

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 six

months ended June 27, 2026 and June 28, 2025.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

The following weighted-average assumptions were used in determining

the most recent fair values of stock options

using the Black-Scholes valuation model:

2026

Expected dividend yield

0.0

Expected stock price volatility

29.00

Risk-free interest rate

3.82

Expected life of options (years)

6.00

We have not declared cash dividends on our stock in the past and we do not anticipate declaring cash dividends in

the foreseeable future.

The expected stock price volatility is based on implied volatilities

from traded options on

our stock, historical volatility of our stock and other factors.

The risk-free interest rate is based on the U.S.

Treasury yield curve in effect at the time of grant that most closely aligns to the expected life of options.

The

six

year expected life of the options was determined using the simplified

method for estimating the expected term as

permitted under Staff Accounting Bulletin Topic 14.

The grant date fair value for stock options granted during the

six months ended June 27, 2026 was $

28.23

per share.

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

ended June 27, 2026:

Stock Options

Weighted Average

Aggregate

Weighted Average

Remaining Contractual

Intrinsic

Exercise Price

Life (in years)

Value

Outstanding at beginning of period

922,715

72.26

Granted

177,116

77.60

Exercised

(31,086)

64.94

Forfeited

(7,121)

84.38

Outstanding at end of period

1,061,624

73.28

5.9

Options exercisable at end of period

884,508

72.42

The following tables summarize the activity of our unvested RSUs and PSUs for

the six months ended June 27,

2026:

RSUs (Time-Based)

PSUs (Performance-Based)

Weighted Average

Grant Date Fair

Shares/Units

Value Per Share

Shares/Units

Value Per Share

Outstanding at beginning of period

1,606,542

75.69

387,960

75.89

Granted

657,664

77.84

229,001

74.30

Performance adjustment

n/a

375,566

74.87

Vested

(412,836)

78.56

(82,102)

81.45

Forfeited

(99,380)

76.01

(319,225)

76.48

Outstanding at end of period

1,751,990

75.79

591,200

74.83

The fair value of vested RSUs and PSUs was $

million and $

million, respectively, for the six months ended

June 27, 2026; and $

million and $

million, respectively, for the six months ended June 28, 2025.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 12 – Redeemable Noncontrolling Interests

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

at certain times, to require us to acquire

their ownership interest in those entities at fair value.

Accounting Standards Codification Topic 480-10 is

applicable for noncontrolling interests where we are or may be required

to purchase all or a portion of the

outstanding interest in a consolidated subsidiary from the noncontrolling

interest holder under the terms of a put

option contained in contractual agreements.

The components of the change in the redeemable noncontrolling

interests for the six months ended June 27, 2026 and June 28, 2025 are

presented in the following table:

June 27,

June 28,

2026

2025

Balance, beginning of period

Decrease in redeemable noncontrolling interests due to acquisitions of noncontrolling

interests in subsidiaries

(42)

(76)

Increase in redeemable noncontrolling interests due to business acquisitions

Net loss attributable to redeemable noncontrolling interests

(1)

Distributions declared

(14)

(10)

Effect of foreign currency translation gain attributable to redeemable noncontrolling

interests

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 13 – 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:

June 27,

December 27,

2026

2025

Attributable to redeemable noncontrolling interests:

Foreign currency translation adjustment

(22)

(26)

Attributable to noncontrolling interests:

Foreign currency translation adjustment

Attributable to Henry Schein, Inc.:

Foreign currency translation adjustment

(163)

(196)

Unrealized loss from hedging activities

(15)

(24)

Pension adjustment loss

(6)

Accumulated other comprehensive loss

(184)

(226)

Total Accumulated

other comprehensive loss

(205)

(251)

The following table summarizes the components of comprehensive income, net

of applicable taxes as follows:

Three Months Ended

Six Months Ended

June 27,

June 28,

June 27,

June 28,

2026

2025

2026

2025

Net income

Foreign currency translation gain

Tax effect

Foreign currency translation gain

Unrealized gain (loss) from hedging activities

(29)

(35)

Tax effect

(3)

Unrealized gain (loss) from hedging activities

(21)

(26)

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 during the six months ended June 27, 2026 and

six months ended June 28, 2025 was primarily due

to changes in foreign currency exchange rates of the Brazilian Real, Euro, British

Pound, Israel Shekel, Canadian

Dollar, Singapore Dollar, and Swiss Franc.

The hedging gain (loss) during the three and six months ended June 27, 2026

and June 28, 2025 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

Six Months Ended

June 27,

June 28,

June 27,

June 28,

2026

2025

2026

2025

Comprehensive income attributable to

Henry Schein, Inc.

Comprehensive income attributable to

noncontrolling interests

Comprehensive income attributable to

Redeemable noncontrolling interests

Comprehensive income

Note 14

–

Earnings Per Share

Basic earnings per share is computed by dividing net income attributable

to Henry Schein, Inc. by the weighted-

average number of common shares outstanding for the period.

Our diluted earnings per share is computed similarly

to basic earnings per share, except that it reflects the effect of common shares issuable

for unvested RSUs and upon

exercise of stock options using the treasury stock method in periods

in which they have a dilutive effect.

A reconciliation of shares used in calculating earnings per basic and

diluted share follows:

Three Months Ended

Six Months Ended

June 27,

June 28,

June 27,

June 28,

2026

2025

2026

2025

Basic

113,451,329

121,927,867

114,194,349

122,852,702

Effect of dilutive securities:

Stock options and restricted stock units

939,037

709,081

1,044,157

886,679

Diluted

114,390,366

122,636,948

115,238,506

123,739,381

The number of antidilutive securities that were excluded from the calculation

of diluted weighted average common

shares outstanding are as follows:

Three Months Ended

Six Months Ended

June 27,

June 28,

June 27,

June 28,

2026

2025

2026

2025

Stock options

543,468

397,490

479,680

399,768

Restricted stock units

2,214

784,602

21,107

489,854

Total anti-dilutive

securities excluded from earnings per

share computation

545,682

1,182,092

500,787

889,622

Note 15 – Supplemental Cash Flow Information

Cash paid for interest and income taxes was:

Six Months Ended

June 27,

June 28,

2026

2025

Cash paid for interest

Cash paid for income taxes, net of refunds

For the six months ended June 27, 2026 and June 28, 2025, we had $

million and $

(35)

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 16 – 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 and six months ended June 27, 2026, 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.

During the three and six months ended June 28,

2025, 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

June 27, 2026 and December 27, 2025, 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 and six months ended June 27, 2026, we recorded

net sales of $

million and $

million,

respectively, to such entities.

During the three and six months ended June 28, 2025, we recorded net

sales of $

million and $

million, respectively, to such entities.

During the three and six months ended June 27, 2026, we

purchased $

million and $

million, respectively, from such entities.

During the three and six months ended June

28, 2025, we purchased $

million and $

million, respectively, from such entities.

At June 27, 2026 and

December 27, 2025, 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

11 years

As of June 27, 2026, current and non-current liabilities associated with

related party

operating leases were $

million and $

million, respectively.

At June 27, 2026, related party leases represented

7.0

% and

7.0

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

At December 27, 2025,

current and non-current liabilities associated with related party operating

leases were $

million and $

million,

respectively.

At December 27, 2025, related party leases represented

6.6

% and

8.7

% of the total current and non-

current operating lease liabilities, respectively.

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 17 – KKR Investment and Accelerated Share Repurchase Program

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

by investment funds and other entities

affiliated with Kohlberg Kravis Roberts & Co. L.P. (“KKR”),

pursuant to the terms of a Strategic Partnership

Agreement with KKR (the “Agreement”).

Under the Agreement,

two

independent directors, Max Lin and William

K. “Dan” Daniel (each, and any replacement thereof, a “KKR Designee”),

joined our Board of Directors.

On May

16, 2025, we issued

3,285,152

shares of common stock to funds affiliated with KKR for an investment of $

million, at approximately $

76.10

per share.

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

to repurchase a total of $

million of

our outstanding common stock based on volume-weighted average prices.

In May 2025 we received

3,122,832

shares at an estimated fair value of $

million.

In July 2025, we received an additional

368,651

shares at an

estimated fair value of $

million, representing the final amount of shares to be received under

this accelerated

share repurchase program.

Pursuant to the Agreement, KKR also had the ability to purchase additional

shares via open market purchases up to

a total equity stake of

14.9

% of the outstanding shares of common stock of the Company.

On November 4, 2025,

the Company and KKR entered into an amendment to the Agreement

that increased the beneficial ownership limit

from

14.9

% to

19.9

% of the outstanding shares of the Company’s common stock that KKR is permitted to acquire

during the standstill period.

The standstill provisions, including the increased ownership limit, continue

in effect

for a period of six months following the later of the expiration of the term of

the Agreement and the date on which

no director appointed pursuant to the Agreement is serving on the Board

of Directors.

On December 7, 2025,

pursuant to the Agreement, KKR notified the Company of its election

to exercise the Extension Election (as defined

in the Agreement) whereby the Company’s Board of Directors has accordingly renominated the KKR Designees for

a term expiring at the Company’s 2027 annual meeting of stockholders.

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