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What changed in Henry Schein's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Henry Schein's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+565 added−479 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-28)

Top changes in Henry Schein's 2024 10-K

565 paragraphs added · 479 removed · 381 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

142 edited+69 added−41 removed109 unchanged
Biggest changeTo help ensure TSMs who are joining the Company in a remote or hybrid working environment feel connected to our values-based culture, we launched a Culture Ambassador Program, which provides new hires with a mentor for 90 days to walk through how we live our values and how they can engage. • Caring: Build a world we want to live in by supporting each other and the communities in which we live and work. • Continued to offer a variety of opportunities to volunteer for team-building and engaging in local communities in which TSMs live and work, such as through Carry the Load, the We Care Global Challenge, Back to School and Holiday Cheer. • Launched a new quarterly campaign to provide opportunities for TSMs to engage in meaningful ways that connect back to their own personal purpose, such as helping the community through corporate social responsibility activities virtually or in-person. • Enhanced our strategic partnerships with industry associations, customers and suppliers that support access to quality health care through various key programs and initiatives (e.g., Gives Kids A Smile, Alpha Omega-Henry Schein Cares Holocaust Survivors Oral Health Program and Release Table of Contents 21 the Pressure). • Expanded our Steps for Suicide Prevention campaign, which brings TSMs together to walk for a cause and provide education. • We also understand the importance of driving a culture of wellness for our own team members through our Mental Wellness Committee, which is supported by our CEO, Executive Management Committee and Board.
Biggest changeOur CEO engages directly in many of our ERG programs. • Certified over 200 TSMs through our Culture Ambassador Program, which educates TSMs on our culture and certifies TSMs as mentors to new hires during their first 90 days to ensure new TSMs understand how we live our values day to day, and how they can engage in the Team Schein Culture. • Caring: Build a world we want to live in by supporting each other and the communities in which we live and work. • Continued to offer a variety of opportunities to volunteer to drive purpose and engage in local communities in which TSMs live and work, such as through Carry the Load, the We Care Global Challenge, Back to School and Holiday Cheer. • Continued to strengthen our strategic partnerships with industry associations, customers and suppliers that support access to quality health care through various key programs and initiatives (e.g., Gives Kids A Smile, Cares Package Program, Global Student Outreach Program, and Prepare to Care). • Expanded our global and highly rated Steps for Suicide Prevention campaign, which brings TSMs together to walk for a cause and provide education, partnering with the American Foundation for Suicide Prevention, Suicide Awareness and Remembrance (for Veterans) and other local organizations. • We also understand the importance of driving a culture of wellness for our own team members through our Mental Wellness Committee, which is supported by our CEO, Executive Management Committee and Board.
We are committed to providing customized solutions to our customers that are driven by our understanding of the end markets we serve and reflect the technology-driven products and services best suited for their practice needs.
We are committed to providing customized solutions to our customers that are driven by our understanding of the end markets we serve and that reflect the technology-driven products and services best suited for their practice needs.
Affordable Care Act and Other Insurance Reform The ACA increased federal oversight of private health insurance plans and included a number of provisions designed to reduce Medicare expenditures and the cost of health care generally, to reduce fraud and abuse, and to provide access to increased health coverage.
Affordable Care Act (ACA) and Other Insurance Reform The ACA increased federal oversight of private health insurance plans and included a number of provisions designed to reduce Medicare expenditures and the cost of health care generally, to reduce fraud and abuse, and to provide access to increased health coverage.
South has been our Senior Vice President and Chief Financial Officer (and principal financial officer and principal accounting officer) since 2022. Prior to holding his current position, Mr. South was our Vice President Corporate Finance, and Chief Accounting Officer from 2013 until 2022. Prior to joining us in 2008 as our Vice President, Corporate Finance, Mr.
South has been our Senior Vice President and Chief Financial Officer (and principal financial officer and principal accounting officer) since 2022. Prior to holding his current position, Mr. South was our Vice President Corporate Finance since 2008, and Chief Accounting Officer from 2013 until 2022. Prior to joining us in 2008 as our Vice President, Corporate Finance, Mr.
Available Information We make available free of charge through our Internet website, www.henryschein.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, statements of beneficial ownership of securities on Forms 3, 4 and 5 and amendments to these reports and statements filed or furnished pursuant to Section 13(a) and Section 16 of the Securities Exchange Act of 1934 as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the United States Securities and Exchange Commission, or SEC.
Available Information We make available free of charge through our website, www.henryschein.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, statements of beneficial ownership of securities on Forms 3, 4 and 5 and amendments to these reports and statements filed or furnished pursuant to Section 13(a) and Section 16 of the Securities Exchange Act of 1934 as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the United States Securities and Exchange Commission, or SEC.
Government Certain of our businesses involve the distribution, manufacturing, importation, exportation, marketing, sale and promotion of pharmaceuticals and/or medical devices, and in this regard, we are subject to extensive local, state, federal and foreign governmental laws and regulations, including as applicable to our wholesale distribution of pharmaceuticals and medical devices, manufacturing activities, and as part of our specialty home medical supply businesses that distribute and sell medical equipment and supplies directly to patients.
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.
The FDC Act, the Controlled Substances Act, their implementing regulations, and similar foreign laws generally regulate the introduction, manufacture, advertising, marketing and promotion, sampling, pricing and reimbursement, labeling, packaging, storage, handling, returning or recalling, reporting, and distribution of, and record keeping for, pharmaceuticals and medical devices shipped in interstate commerce, and states may similarly regulate such activities within the state.
The FDC Act, the Controlled Substances Act, their implementing regulations, and similar foreign laws generally regulate the introduction, manufacture, advertising, marketing and promotion, sampling, pricing and reimbursement, labeling, packaging, storage, handling, returning or recalling, reporting, and distribution of, and record keeping for, pharmaceuticals and medical devices shipped in interstate commerce or internationally, and states may similarly regulate such activities within the state.
Our primary competitors in the U.S. medical market, which accounts for the large majority of our global medical sales, are McKesson Corporation and Medline Industries, Inc., which are national distributors. We also compete with a number of regional and local medical distributors, as well as a number of manufacturers that sell directly to physicians and patients in their homes.
Our primary competitors in the U.S. medical distribution market, which accounts for the large majority of our global medical sales, are McKesson Corporation and Medline Industries, Inc., which are national distributors. We also compete with a number of regional and local medical distributors, as well as a number of manufacturers that sell directly to physicians and patients in their homes.
Certain of our businesses involve the development and sale of software and related products to support physician and dental practice management, and it is possible that the FDA or foreign government authorities could determine that one or more of our products is a medical device, which could subject us or one or more of our businesses to substantial additional requirements with respect to these products.
Certain of our businesses involve the development and sale of software and related products, including to support physician and dental practice management, and it is possible that the FDA or foreign government authorities could determine that one or more of our products is a medical device, which could subject us or one or more of our businesses to substantial additional requirements with respect to these products.
Trinh Clark has been our Senior Vice President and Chief Global Customer Experience Officer since August 2022. Ms. Clark joined us in 2007 and has served as Vice President, Technology Enablement, North American Distribution Group. Prior to joining Henry Schein, Ms. Clark held various positions of increasing responsibility at eSurg.
Trinh Clark has been our Senior Vice President and Chief Global Customer Experience Officer since 2022. Ms. Clark joined us in 2007 and has served as Vice President, Technology Enablement, North American Distribution Group. Prior to joining Henry Schein, Ms. Clark held various positions of increasing responsibility at eSurg.
As settings of health care shift, we remain committed to serving these practitioners and providing them with the products and services they need. • Leverage our value-added products and services. We continue to increase cross-selling efforts for key product lines utilizing a consultative selling process.
As health care settings shift, we remain committed to serving these practitioners and providing them with the products and services they need. • Leverage our value-added products and services. We continue to increase cross-selling efforts for key product lines utilizing a consultative selling process.
In the dental market, our primary competitors in the U.S. are the Patterson Dental division of Patterson Companies, Inc. and Benco Dental Supply Company. In addition, we compete against a number of other distributors that operate on a national, regional and local level.
In the dental distribution market, our primary competitors in the U.S. are the Patterson Dental division of Patterson Companies, Inc. and Benco Dental Supply Company. In addition, we compete against a number of other distributors that operate on a national, regional and local level.
FDA issued a proposed rule establishing wholesaler and 3PL national standards for licensing and other requirements in February 2022, but that rule has not yet been finalized.
The FDA issued a proposed rule establishing wholesaler and 3PL national standards for licensing and other requirements in February 2022, but that rule has not yet been finalized.
Penalties under fraud and abuse laws may be severe, including treble damages and substantial civil penalties under the federal False Claims Act, as well as potential loss of licenses and the ability to participate in federal and state health care programs, criminal penalties, or imposition of a corporate integrity agreement or corporate compliance monitor which could have a material adverse effect on our business.
Penalties under fraud and abuse laws may be severe, including treble damages and substantial civil penalties under the federal False Claims Act, as well as potential loss of licenses and the ability to participate in federal and state health care programs, criminal penalties, or imposition of a corporate integrity agreement or corporate compliance monitoring which could have a material adverse effect on our business.
Noncompliance can result in penalties of up to the greater of EUR 20 million, or 4% of global company revenues (sanction that may be public), and Data Subjects may seek damages. Member states may individually impose additional requirements and penalties regarding certain limited matters (for which the GDPR let some room of flexibility), such as employee personal data.
Noncompliance can result in penalties of up to the greater of EUR 20 million, or 4% of global company revenues (sanction that may be public), and Data Subjects may seek damages. Member states may individually impose additional requirements and penalties regarding certain limited matters (for which the GDPR left some room of flexibility), such as employee personal data.
Certain of our information systems generally allow for centralized management of key functions, including accounts receivable, inventory, accounts payable, payroll, purchasing, sales, order fulfillment and financial and operational reporting. These systems allow us to manage our growth, deliver superior customer service, properly target customers, manage financial performance and monitor daily operational statistics. Cost-effective purchasing .
Certain of our information systems generally allow for centralized management of key functions, including accounts receivable, inventory, accounts payable, payroll, purchasing, sales, order fulfillment and financial and operational reporting. These systems allow us to manage our growth, deliver superior customer service, properly target customers, manage financial performance and monitor daily operational statistics.
Our BOLD+1 Strategic Plan consists of the following: • Build (“B”) Complementary software, specialty, and services businesses for high growth • Operationalize (“O”) One Distribution to deliver exceptional customer experience, increased efficiency, and growth • Leverage (“L”) One Schein to broaden and deepen relationships with our customers • Drive (“D”) Drive digital transformation for our customers and for Henry Schein • +1 Create Value for our stakeholders Table of Contents 8 To accomplish this, we apply our competitive strengths in executing the following strategies: • Increase penetration of our existing customer base.
Our BOLD+1 Strategic Plan consists of the following: • Build (“B”) Complementary software, specialty, and services businesses for high growth • Operationalize (“O”) One Distribution to deliver exceptional customer experience, increased efficiency, and growth • Leverage (“L”) One Schein to broaden and deepen relationships with our customers • Drive (“D”) Digital transformation for our customers and for Henry Schein • +1 Create Value for our stakeholders To accomplish this, we apply our competitive strengths in executing the following strategies: • Increase penetration of our existing customer base.
The scope of these laws varies from one member state to another and may, for example, include the relations between healthcare industry players and physicians or their associations, students preparing for medical professions or their associations, teachers, health establishments or publishers of prescription and dispensing assistance software.
The scope of these laws varies from one member state to another and may, for example, include the relations between health care industry players and physicians or their associations, students preparing for medical professions or their associations, teachers, health establishments or publishers of prescription and dispensing assistance software.
Certain additional state and federal laws, such Table of Contents 14 as the federal Physician Self-Referral Law, commonly known as the “Stark Law,” prohibit physicians and other health care professionals from referring a patient to an entity with which the physician (or family member) has a financial relationship, for the furnishing of certain designated health services (for example, durable medical equipment and medical supplies), unless an exception applies.
Certain additional state and federal laws, such as the federal Physician Self-Referral Law, commonly known as the “Stark Law,” prohibit physicians and other health care professionals from referring a patient to an entity with which the physician (or family member) has a financial relationship, for the furnishing of certain designated health services (for example, durable medical equipment and medical supplies), unless an exception applies.
In 2023, we saw an increase in participation in our workshops, with TSMs reporting a high utilization of skills learned. • Continued expansion of our formal mentorship and coaching programs. • Continued roll-out of talent planning efforts designed to ensure a strong, diverse leadership pipeline across the organization by strategically identifying and developing talent through targeted development opportunities and intentional succession plans.
In 2024, we saw an increase in participation in our workshops, with TSMs reporting a high utilization of skills learned. • Continued expansion of our Leadership Development programs, with formal mentorship and coaching programs. • Continued roll-out of talent planning efforts designed to ensure a strong leadership pipeline across the organization by strategically identifying and developing talent through targeted development opportunities and intentional succession plans.
We are also subject to foreign regulations requiring transparency of certain interactions between suppliers and their customers. In the United States, government actions to seek to increase health-related price transparency may also affect our business.
We are also subject to foreign regulations requiring transparency of certain interactions between suppliers and their customers. In the United States, federal and state government actions to seek to increase health-related price transparency may also affect our business.
Table of Contents 10 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 (as amended, the “ACA”).
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 (as amended, the “ACA”).
Those DSCSA requirements that were scheduled to change on November 27, 2023, and include requiring trading partners to provide, receive and maintain documentation about products and ownership only “electronically”(and not via paper) are now subject to a one-year “stabilization period” announced by FDA through two guidance documents in late August 2023.
Those DSCSA requirements that were scheduled to change on November 27, 2023, and include requiring trading partners to provide, receive and maintain documentation about products and ownership only “electronically” (and not via paper), were subject to a one-year “stabilization period” announced by the FDA through two guidance documents in late August 2023.
At Table of Contents 16 the federal level, section 1927 of the Social Security Act sets forth Average Sales Price (ASP) reporting requirements for manufacturers (including repackagers and relabelers) and requires that manufacturers provide CMS with pricing information for their Part B-covered drugs no later than 30 days after the close of the previous quarter.
At the federal level, section 1927 of the Social Security Act sets forth Average Sales Price (ASP) reporting requirements for manufacturers (including repackagers and relabelers) and requires that manufacturers provide CMS with pricing information for their Part B-covered drugs no later than 30 days after the close of the previous quarter.
We support our direct marketing effort with inbound and outbound telesales representatives, who facilitate order processing, generate new sales through direct and frequent contact with customers and stay abreast of market developments and the hundreds of new products, services and technologies introduced each year to educate practice personnel. Table of Contents 6 • Electronic commerce solutions.
We support our direct marketing effort with inbound and outbound telesales representatives, who facilitate order processing, generate new sales through direct and frequent contact with customers and stay abreast of market developments and the hundreds of new products, services and technologies introduced each year to educate practice personnel. • Electronic commerce solutions.
Table of Contents 12 In addition, Section 301 of the National Organ Transplant Act, and a number of comparable state laws, impose civil and/or criminal penalties for the transfer of human organs, as defined in the regulations, for valuable consideration, while generally permitting payments for the reasonable costs incurred in their procurement, processing, storage and distribution.
In addition, Section 301 of the National Organ Transplant Act, and a number of comparable state laws, impose civil and/or criminal penalties for the transfer of human organs, as defined in the regulations, for valuable consideration, while generally permitting payments for the reasonable costs incurred in their procurement, processing, storage and distribution.
Our operating entities and employees engage our customers and supplier partners through various social media platforms, which are an important element of our communications and marketing efforts. We continue to expand our social media presence to raise awareness about issues, engage customers beyond a sale and deliver services and solutions to specialized audiences.
Our operating entities and employees engage our customers and supplier partners through various social media platforms, which are an important element of our communications and marketing efforts. We continue to expand our social media presence to raise awareness about issues, engage customers beyond a sale and deliver services and solutions to specialized audiences. Cost-effective purchasing .
Our practice management solutions provide practitioners with electronic medical records, patient treatment history, analytics, billing, accounts receivable analyses and management, appointment calendars, electronic claims processing and word processing programs, network and hardware services, e-commerce and electronic marketing services, sourcing third party patient payment plans, transition services and training and education programs for practitioners.
Our practice management solutions provide practitioners with electronic medical records, patient treatment history, analytics, billing, accounts receivable analyses and management, appointment calendars, electronic claims processing and word processing programs, network and hardware services, e-commerce and electronic marketing services, e-Prescribe medications and prescription solutions, sourcing third party patient payment plans, and transition services and training and education programs for practitioners.
EU Regulation of Medicinal and Dental Products European Union (“EU”) member states regulate their own healthcare systems, as does EU law. The latter regulates certain matters, most notably medicinal products and medical devices. Medicinal products are defined, broadly, as substances or combinations of substances having certain functionalities and may not include medical devices.
EU Regulation of Medicinal and Dental Products European Union (“EU”) member states regulate their own health care systems, as does EU law. The latter regulates certain matters, most notably medicinal products and medical devices. Medicinal products are defined, broadly, as substances or combinations of substances having certain functionalities and may not include medical devices.
Operating, Security and Licensure Standards Certain of our businesses are subject to local, state and federal governmental laws and regulations relating to the distribution of pharmaceuticals and medical devices and supplies.
Operating, Security and Licensure Standards Certain of our businesses are subject to local, state and federal governmental laws and regulations relating to the manufacturing and/or distribution of pharmaceuticals and medical devices and supplies.
Our broad global footprint has evolved over time through our organic success as well as through contribution from strategic acquisitions. We stock a comprehensive selection of more than 300,000 branded products and Henry Schein corporate brand products through our main distribution centers.
Our broad global footprint has evolved over time through organic growth as well as through the contribution from our strategic acquisitions. We stock a comprehensive selection of more than 300,000 branded products and Henry Schein corporate brand products through our main distribution centers.
Our customers are also subject to significant federal, state, local and foreign governmental regulation, which may affect our interactions with customers, including the design and functionality of our products.
Our customers are also subject to significant federal, state, local and foreign governmental regulations, which may affect our interactions with customers, including the design and functionality of our products.
EU law does not expressly include provisions like those of the Sunshine Act in the United States, but a growing number of EU member states (such as France in 2011 and Italy in 2022) have enacted laws to increase the transparency of relationships in the healthcare sector.
EU law does not expressly include provisions like those of the Sunshine Act in the United States, but a growing number of EU member states (such as France in 2011 and Italy in 2022) have enacted laws to increase the transparency of relationships in the health care sector.
The law’s track and trace requirements applicable to manufacturers, wholesalers, third-party logistics providers (e.g., trading partners), repackagers and dispensers (e.g., Table of Contents 11 pharmacies) of prescription drugs took effect in January 2015, and, as stated, continues to be implemented.
The law’s track and trace requirements applicable to manufacturers, wholesalers, third-party logistics providers (e.g., trading partners), repackagers and dispensers (e.g., pharmacies) of prescription drugs took effect in January 2015, and, as stated, continues to be implemented.
With more than 91 years of experience distributing health care products, we have built a vast set of small, mid-sized and large customers in the dental and medical markets, serving more than one million customers worldwide across dental practices, laboratories, physician practices, and ambulatory surgery centers, as well as government, institutional health care clinics and other alternate care clinics.
With 93 years of experience distributing health care products, we have built a vast base of small, mid-sized and large customers in the dental and medical markets, serving more than one million customers worldwide across dental practices, laboratories, physician practices, and ambulatory surgery centers, as well as government, institutional health care clinics and other alternate care clinics.
In North America, we compete with other distributors, as well as several manufacturers, of dental and medical products, primarily on the basis of price, breadth of product line, e-commerce capabilities, customer service and Table of Contents 5 value-added products and services.
In North America, we compete with other distributors, as well as several manufacturers, of dental and medical products, primarily on the basis of price, breadth of product line, e-commerce capabilities, customer service and value-added products and services.
We have over one million customers worldwide and we intend to increase sales to our existing customer base and enhance our position as their primary supplier.
We have over one million customers worldwide and we intend to increase sales to our existing customer base and enhance or secure our position as their primary supplier.
In addition, with respect to our specialty home medical supply business, we are subject to certain state licensure laws (including state pharmacy laws), and also certain accreditation standards, including to qualify for reimbursement from Medicare and other third-party payers.
In addition, with respect to our specialty home medical supplies business, we are subject to certain state licensure laws (including state pharmacy laws), and also certain accreditation standards, including to qualify for reimbursement from Medicare, Medicaid, and other third-party payers.
The industry ranges from sole practitioners working out of relatively small offices to mid-sized and large group practices ranging in size from a few practitioners to several hundred practices owned or operated by dental support organizations (“DSOs”), medical group purchasing organizations (“GPOs”), hospital systems or integrated delivery networks.
The industry ranges from sole practitioners working out of relatively small offices to mid- sized and large group practices ranging in size from a few practitioners to several hundred practices owned or operated by dental support organizations (“DSOs”), medical group purchasing organizations (“GPOs”), health maintenance organizations (“HMOs”), hospital systems or integrated delivery networks (“IDNs”).
Additionally, the FDA announced that it does not intend to take action to enforce the portion of the FDC Act with respect to drug product that is introduced in a transaction into commerce by the product’s manufacturer or repackager before November 27, 2024, and for subsequent transactions of such product through the product’s expiry.
Additionally, the FDA announced that it did not intend to take action to enforce the portion of the FDC Act with respect to drug product that was introduced in a transaction into commerce by the product’s manufacturer or repackager before November 27, 2024, and for subsequent transactions of such product through the product’s expiry.
Table of Contents 13 Regulation 2023/607 of the European Parliament and of the Council of amending Regulations (EU) 2017/745 and (EU) 2017/746 as regards the transitional provisions for certain medical devices and in vitro diagnostic medical devices has, notably, extended the EU MDR transitional periods applicable to certain medical devices that have been assessed and/or certified under the Directive No. 93/42/EEC of 1993 concerning medical devices (“EU Medical Device Directive”).
Regulation 2023/607 of the European Parliament and of the Council of March 15, 2023 amending Regulations (EU) 2017/745 and (EU) 2017/746 as regards the transitional provisions for certain medical devices and in vitro diagnostic medical devices has, notably, extended the EU MDR transitional periods applicable to certain medical devices that have been assessed and/or certified under the Directive No. 93/42/EEC of 1993 concerning medical devices (“EU Medical Device Directive”).
With respect to measures of this type, the United States government (among others) has expressed concerns about financial relationships between suppliers on the one hand and physicians, dentists and other healthcare professionals on the other. As a result, we regularly review and revise our marketing practices as necessary to facilitate compliance.
With respect to measures of this type, the United States government (among others) has expressed concerns about financial relationships between suppliers, manufacturers and distributors on the one hand and physicians, dentists and other health care professionals on the other. As a result, we regularly review and revise our marketing practices as necessary to facilitate compliance.
FDA is permitting the stabilization period to accommodate an additional year, until November 27, 2024, to allow trading partners to implement, troubleshoot and mature their electronic (versus paper), interoperable systems, during which time the FDA does not intend to take action to enforce the requirements for the interoperable, electronic, package level product tracing.
The FDA permitted the stabilization period to accommodate an additional year, until November 27, 2024, to allow trading partners to implement, troubleshoot and mature their electronic (versus paper), interoperable systems, during which time the FDA did not intend to take action to enforce the requirements for the interoperable, electronic, package level product tracing.
Violations of Anti-Kickback Statutes or the Stark Law may be enforced as violations of the federal False Claims Act.
Violations of the federal Anti-Kickback Statute or the Stark Law may be enforced as violations of the federal False Claims Act.
An ACA provision, generally referred to as the Physician Payments Sunshine Act or Open Payments Program (the “Sunshine Act”), imposes annual reporting and disclosure requirements for drug and device manufacturers and distributors with regard to payments or other transfers of value made to certain covered recipients (including physicians, dentists, teaching hospitals, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and certified nurse midwives), and for such manufacturers and distributors and for group purchasing organizations, with regard to certain ownership interests held by covered recipients in the reporting entity.
The federal Physician Payments Sunshine Act or Open Payments Program (the “Sunshine Act”) imposes annual reporting and disclosure requirements for drug and device manufacturers and distributors with regard to payments or other transfers of value made to certain covered recipients (including physicians, dentists, teaching hospitals, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and certified nurse midwives), and for such manufacturers and distributors and for group purchasing organizations, with regard to certain ownership interests held by covered recipients in the reporting entity.
See “ Item 1A. Risk Factors . ” for a discussion of additional burdens, risks and regulatory developments that may affect our results of operations and financial condition. Proprietary Rights We hold trademarks relating to the “Henry Schein ® ” name and logo, as well as certain other trademarks. We intend to protect our trademarks to the fullest extent practicable.
See “ Item 1A. Risk Factors . ” for a discussion of additional burdens, risks and regulatory developments that may affect our results of operations and financial condition. Proprietary Rights We hold trademarks relating to the “Henry Schein ® ” name and logo, as well as certain other trademarks.
In the dental business, we have significant cross- selling opportunities between our dental software users and our dental customers. In the medical business, we have opportunities to expand our vaccine, injectables and other pharmaceuticals sales to health care practitioners, as well as cross-selling EHR systems and software when we sell our core products.
We have significant cross-selling opportunities between our dental software users and our dental customers, and opportunities to expand our vaccine, injectables and other pharmaceuticals sales to health care practitioners, as well as cross-selling EHR systems and software when we sell our core products.
Table of Contents 9 Additionally, we seek to expand our dental full-service model and medical offerings in countries where opportunities exist. We do this through both direct sales and by partnering with local distribution and manufacturing companies.
Additionally, we seek to expand our dental full-service model and medical offerings in countries where opportunities exist. We do this through both direct sales and by partnering with local distribution and manufacturing companies.
FDA states this stabilization period is intended to avoid disruption to the supply chain, and ensure continued patient access to drug products as trading partners move towards full implementation of the DSCSA’s enhanced drug security requirements.
The FDA stated this stabilization period was intended to avoid disruption to the supply chain and ensure continued patient access to drug products as trading partners move towards full implementation of the DSCSA’s enhanced drug security requirements.
Various federal initiatives involve the adoption and use by health care providers of certain EHR systems and processes. The initiatives include, among others, programs that incentivize physicians and dentists, through MIPS, to use EHR technology in accordance with certain evolving requirements, including regarding quality, promoting interoperability, cost and improvement activities.
Table of Contents Index to Financial Statements 21 Various federal initiatives involve the adoption and use by health care providers of certain EHR systems and processes. The initiatives include, among others, programs that incentivize physicians and dentists, through MIPS, to use EHR technology in accordance with certain evolving requirements, including regarding quality, promoting interoperability, cost and improvement activities.
Table of Contents 19 We continue to explore ways and means to improve and expand our online presence and capabilities, including our online commerce offerings and our use of various social media outlets. International Transactions United States and foreign import and export laws and regulations require us to abide by certain standards relating to the importation and exportation of products.
We continually explore ways and means to improve and expand our online presence and capabilities, including in our online commerce offerings and our use of various social media outlets. International Transactions United States and foreign import and export laws and regulations require us to abide by certain standards relating to the importation and exportation of products.
We believe that the trend towards cost containment has the potential to favorably affect demand for technology solutions, including software, which can enhance the efficiency and facilitation of practice management. Competition The distribution and manufacture of health care supplies and equipment is highly competitive.
We believe that the trend towards cost containment has the potential to favorably affect demand for technology solutions, including software, which can enhance the efficiency and facilitation of practice management. Table of Contents Index to Financial Statements 5 Competition The distribution and manufacture of health care supplies and equipment is highly competitive.
Murphy has held several key positions of increasing responsibility within the legal function, most recently serving as Deputy General Counsel. Table of Contents 24 Christopher Pendergast has been our Senior Vice President and Chief Technology Officer since 2018. Prior to joining us, Mr.
Since joining us in 2011, Ms. Murphy has held several key positions of increasing responsibility within the legal function, most recently serving as Deputy General Counsel. Christopher Pendergast has been our Senior Vice President and Chief Technology Officer since 2018. Prior to joining us, Mr.
In addition, our businesses that involve physician and dental practice management products, and our specialty home medical supply business, include electronic information technology systems that store and process personal health, clinical, financial and other sensitive information of individuals.
In addition, our businesses that involve physician and dental practice management products, our specialty home medical supplies business, and our self-insured health plans include electronic information technology systems that store and process personal health, clinical, financial and other sensitive information of individuals.
EU Regulation No. 1223/2009 of 30 November 2009 on cosmetic products requires that cosmetic products (which includes dental products) be safe for human health when used under normal or reasonably foreseeable conditions of use and comply with certain obligations which apply to manufacturer, importer and distributor.
EU Regulation No. 1223/2009 of 30 November 2009 on cosmetic products requires that cosmetic products (which includes dental products) be safe for human health when used under normal or reasonably foreseeable conditions of use and comply with certain obligations which apply to manufacturers, importers and distributors.
Our infrastructure, including over 5.3 million square feet of space in 36 strategically located distribution and 22 manufacturing facilities around the world, enables us to historically provide rapid and accurate order fulfillment, better serve our customers and increase our operating efficiency.
Our infrastructure, including over 5.4 million square feet of space in 36 strategically located distribution centers and 0.5 million square feet of space in 15 manufacturing facilities around the world, enables us to historically provide rapid and accurate order fulfillment, better serve our customers and increase our operating efficiency.
Table of Contents 18 We also sell products and services that health care providers, such as physicians and dentists, use to store and manage patient medical or dental records.
We also sell products and services that health care providers, such as physicians and dentists, use to store and manage patient medical or dental records.
These information technology systems may be vulnerable to breakdown, wrongful intrusions, data breaches and malicious attack, which could require us to expend significant resources to eliminate these problems and address related security concerns and could involve claims against us by private parties and/or governmental agencies.
These Table of Contents Index to Financial Statements 19 information technology systems may be vulnerable to breakdown, wrongful intrusions, data breaches and malicious attack, which could require us to expend significant resources to eliminate these problems and address related security concerns and could involve claims against us by private parties and/or governmental agencies.
While we believe we have substantially compliant programs and controls in place to comply with the GDPR, CCPA, PIPL, CPRA and other state law requirements, our compliance with data privacy and cybersecurity laws is likely to impose additional costs on us, and we cannot predict whether the interpretations of the requirements, or changes in our practices in response to new requirements or interpretations of the requirements, could have a material adverse effect on our business.
While we believe we have substantially compliant programs and controls in place to comply with the US state and federal privacy laws and applicable international privacy laws such as GDPR and PIPL, our compliance with data privacy and cybersecurity laws is likely to impose additional costs on us, and we cannot predict whether the interpretations of the requirements, or changes in our practices in response to new requirements or interpretations of the requirements, could have a material adverse effect on our business.
The Centers for Medicare & Medicaid Services (“CMS”) recently released the 2024 durable medical equipment, prosthetics, orthotics and supplies (“DMEPOS”) reimbursement schedule, which, effective January 1, 2024, reduced the DMEPOS reimbursement rates for non-rural suppliers, such as us, by removing the Coronavirus Aid, Relief, and Economic Security (aka CARES) Act relief rates in effect during the COVID-19 pandemic.
For example, the Centers for Medicare & Medicaid Services’ (“CMS”) 2024 durable medical equipment, prosthetics, orthotics and supplies (“DMEPOS”) reimbursement schedule, which was effective January 1, 2024, reduced the DMEPOS reimbursement rates for non-rural suppliers, such as us, by removing the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act relief rates in effect during the COVID-19 pandemic.
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 corruption, controlled substances handling, medical device regulations and data privacy and security standards.
Federal, state and certain Table of Contents Index to Financial Statements 12 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.
Bribery Act, German anti-corruption laws and other anti-bribery laws and laws pertaining to the accuracy of our internal books and records, which have been the focus of increasing enforcement activity globally in recent years.
Bribery Act, German anti-corruption laws Table of Contents Index to Financial Statements 17 and other anti-bribery laws and laws pertaining to the accuracy of our internal books and records, which have been the focus of increasing enforcement activity globally in recent years.
Bribery Act, German anti-corruption laws and other anti-bribery laws and laws pertaining to the accuracy of our internal books and records, as well as other types of foreign requirements similar to those imposed in the United States.
Bribery Act, German Table of Contents Index to Financial Statements 22 anti-corruption laws and other anti-bribery laws and laws pertaining to the accuracy of our internal books and records, as well as other types of foreign requirements similar to those imposed in the United States.
With regard to our dental software, we compete against numerous companies, including the Patterson Dental division of Patterson Companies, Inc., Carestream Health, Inc., Carestream Dental LLC, Centaur Software Development Co Pty Ltd. (d.b.a. dental4windows, dental4web), Open Dental Software, Inc., PlanetDDS LLC, Good Methods Global Inc. (d.b.a. CareStack) and Curve Dental, LLC.
With regard to our dental software, we compete against numerous companies, including the Eaglesoft division of Patterson Companies, Inc., Carestream Dental LLC, Centaur Software Development Co Pty Ltd. (d.b.a. dental4windows, dental4web), Open Dental Software, Inc., PlanetDDS LLC, Good Methods Global Inc. (d.b.a. CareStack), Curve Dental, LLC., the NextGen division of Quality Systems, Inc., eClinicalWorks and Epic Systems Corporation.
Business Strategy Our mission is to provide innovative, integrated health care products and services; and to be trusted advisors and consultants to our customers - enabling them to deliver the best quality patient care and enhance their practice management efficiency and profitability.
Table of Contents Index to Financial Statements 10 Business Strategy Our mission is to provide innovative, integrated health care products and services; and to be trusted advisors and consultants to our customers - enabling them to deliver the best quality patient care and enhance their practice management efficiency and profitability.
Throughout 2023, we rolled out a continuous listening program that used various vehicles, including The Pulse Global Culture Survey and TSM roundtables, to garner feedback from our TSMs on their employee experience.
Throughout 2024, we rolled out a continuous listening program that used various vehicles, including The Pulse Global Culture Survey and TSM roundtables, to garner feedback from our TSMs on their employee experience. We believe that a great employee experience also drives a great customer experience.
Furthermore, Section 361 of the Public Health Service Act, which provides authority to prevent the introduction, transmission or spread of communicable diseases, serves as the legal basis for the United States Food and Drug Administration’s (“FDA”) regulation of human cells, tissues and cellular and tissue-based products, also known as “HCT/P products.” The Federal Drug Quality and Security Act of 2013 brought about significant changes with respect to pharmaceutical supply chain requirements.
Furthermore, Section 361 of the Public Health Service Act, which provides authority to prevent the introduction, transmission or spread of communicable diseases, serves as the legal basis for the United States Food and Drug Administration’s (“FDA”) regulation of human cells, tissues and cellular and tissue-based products, also known as “HCT/P products.” The Federal Drug Quality and Security Act of 2013 regulates pharmaceutical supply chain requirements and pre- empts certain state laws.
In the medical market, there continues to be a migration of procedures from acute-care settings to physicians’ offices and home health settings, a trend that we believe provides additional opportunities for us. There also is the continuing use of vaccines, injectables and other pharmaceuticals in alternate-care settings.
At the same time, there is an expected increase in dental insurance coverage. In the medical market, there continues to be a migration of procedures from acute-care settings to physicians’ offices and home health settings, a trend that we believe provides additional opportunities for us. There also is the continuing use of vaccines, injectables and other pharmaceuticals in alternate-care settings.
It also has accelerated the growth of health maintenance organizations (“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.
It also has accelerated the growth of HMOs, group practices, other managed care accounts and collective buying groups such as DSOs and GPOs, which, in addition to their emphasis on obtaining products at competitive prices, tend to favor distributors capable of providing specialized management information support.
The health care distribution industry continues to experience growth due to demand driven by the aging population, increased health care awareness and the importance of preventative care, an increasing understanding of the connection between good oral health and overall health, improved access to care globally, the proliferation of medical technology and testing, new pharmacology treatments and expanded third-party insurance coverage, partially offset by the effects of unemployment on insurance coverage and technological improvements, including the advancement of software and services, prosthetic solutions and telemedicine.
This includes an aging population, increased health care awareness and the importance of preventive care, an increasing understanding of the connection between good oral health and overall health, improved access to care globally, the proliferation of medical technology and testing, new pharmacology treatments and expanded third-party insurance coverage, partially offset by the effects of unemployment on insurance coverage and technological improvements, including the advancement of software and services, prosthetic solutions and telemedicine.
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; and safe working conditions.
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.
The UDI regulations also require labelers to submit certain information concerning UDI-labeled devices to the FDA, much of which information is publicly available on an FDA database, the Global Unique Device Identification Database.
The UDI regulations also Table of Contents Index to Financial Statements 14 require labelers to submit certain information concerning UDI-labeled devices to the FDA, much of which information is publicly available on an FDA database, the Global Unique Device Identification Database (GUDID).
James Mullins has been our Senior Vice President of Global Supply Chain since 2018. Mr. Mullins joined us in 1988 and has held a number of key positions with increasing responsibility, including Global Chief Customer Service Officer. Kelly Murphy has been our Senior Vice President and General Counsel since 2021. Since joining us in 2011, Ms.
Table of Contents Index to Financial Statements 27 James Mullins has been our Senior Vice President of Global Supply Chain since 2018. Mr. Mullins joined us in 1988 and has held a number of key positions with increasing responsibility, including Global Chief Customer Service Officer. Kelly Murphy has been our Senior Vice President and General Counsel since 2021.
Mlotek has been our Executive Vice President and Chief Strategic Officer since 2012. Mr. Mlotek was Senior Vice President and subsequently Executive Vice President of the Corporate Business Development Group between 2000 and 2012. Prior to that, Mr. Mlotek was Vice President, General Counsel and Secretary from 1994 to 1999 and became a director in 1995.
Mlotek was Senior Vice President and subsequently Executive Vice President of the Corporate Business Development Group between 2000 and 2012. Prior to that, Mr. Mlotek was Vice President, General Counsel and Secretary from 1994 to 1999 and became a director in 1995. Prior to joining us, Mr.
We are headquartered in Melville, New York and employ more than 25,000 people. Approximately 55% of our workforce is based in the United States and approximately 45% is based outside of the United States. We have operations or affiliates in 33 countries and territories.
We are headquartered in Melville, New York and employ approximately 25,000 people. Approximately 49% of our workforce is based in the United States and 51% outside of the United States. Our operations or affiliates are located in 33 countries and territories.
Certain of our businesses involve pharmaceuticals and/or medical devices, including in vitro diagnostic devices, that are paid for by third parties and must operate in compliance with a variety of burdensome and complex coding, billing and record-keeping requirements in order to substantiate claims for payment under federal, state and commercial healthcare reimbursement programs.
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.
This and other laws and regulations are subject to change and their evolving implementation may impact our operations and our financial performance. Our businesses are generally subject to numerous laws and regulations that could impact our financial performance, and failure to comply with such laws or regulations could have a material adverse effect on our business.
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.
Sasen Leadership Award from the Health Industry Distributors Association (HIDA), in recognition of his service to the industry, and induction into the Medical Distribution Hall of Fame by Repertoire Magazine. Michael S. Ettinger has been our Executive Vice President and Chief Operating Officer since 2022. Prior to his current position, Mr.
Throughout his career, he has received numerous industry honors, including the John F. Sasen Leadership Award from the Health Industry Distributors Association (HIDA), in recognition of his service to the industry, and induction into the Medical Distribution Hall of Fame by Repertoire Magazine. Michael S. Ettinger has been our Executive Vice President and Chief Operating Officer since 2022.
Among other things, the EU MDR: • strengthens the rules on placing devices on the market and reinforces surveillance once they are available; • establishes explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices placed on the market; • improves the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number; • sets up a central database to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU; • strengthens rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional check by experts before they are placed on the market; and • identifies importers and distributors and medical device products through registration in a database (EUDAMED, which is not fully functional for the time being and might not be so before the end of 2027 at the earliest; therefore, the use of this database is only possible through a voluntary basis and, by a way of consequence, is currently not mandatory).
Among other things, the EU MDR: • strengthens the rules on placing devices on the market and reinforces surveillance once they are available; • establishes explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices placed on the market; • improves the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number; • sets up a central database to provide patients, health care professionals and the public with comprehensive information on products available in the EU; • strengthens rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional check by experts before they are placed on the market; and • identifies importers and distributors and medical device products through registration in the EUDAMED database, which comprises several modules that are not yet fully functional.
Competitive Strengths We have more than 91 years of experience in distributing products to health care practitioners resulting in strong awareness of the Henry Schein ® brand. Our competitive strengths include: A focus on meeting our customers’ unique needs .
Table of Contents Index to Financial Statements 6 Competitive Strengths We have 93 years of experience in distributing products to health care practitioners resulting in strong awareness of the Henry Schein ® brand. Our competitive strengths include: A focus on meeting our customers’ unique needs .

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe impacts and potential impacts from the COVID-19 pandemic included, and could include as a result of other disasters, the following, among other impacts: • significant volatility in supply, demand and selling prices for personal protective equipment (PPE), test kits and related products; • reduction in peoples’ ability and willingness to be in public; • reduction in peoples’ ability and willingness to seek elective care; • interrupted operations of industries that use or manufacture the products we distribute; • impact of adapted business practices; • significant changes in political conditions; • volatility in the financial market; and • unavailability or impairment of our manufacturing, distribution, or other facilities, or firmwide systems such as our information systems.
Biggest changeThe impacts and potential impacts from the COVID-19 pandemic included, and could include as a result of other disasters, adverse impacts such as significant volatility in supply, demand and selling prices, interrupted operations of industries that use or manufacture the products we distribute for personal protective equipment (PPE), test kits and related products, reduction in peoples’ ability and willingness to be in public, impact of adapted business practices, volatility in the financial markets, and unavailability or impairment of our manufacturing, distribution, or other facilities, or firmwide systems such as our IS.
A cyberattack that bypasses or compromises our IS cybersecurity / or general information technology (“IT”) controls (including third-party systems we rely on) causing an IS security breach may lead, and has in the past led, to a disruption of our IS business systems (including third-party systems we rely on), interruption of operations (including, without limitation, receiving, verifying, and processing customer orders, customer service, accounts payable, warehouse management and shipping, and systems tied to internal controls over financial reporting), the loss or alteration of business, financial, and other protected information, a negative impact on our financial performance, and to an adverse impact on our financial accounting and reporting controls.
A cyberattack that bypasses or compromises our IS cybersecurity and/or general information technology (“IT”) controls (including third-party systems we rely on) causing an IS security breach may lead, and has in the past led, to a disruption of our IS business systems (including third-party systems we rely on), interruption of operations (including, without limitation, receiving, verifying and processing customer orders, customer service, accounts payable, warehouse management and shipping and systems tied to internal controls over financial reporting), the loss or alteration of business, financial and other protected information, a negative impact on our financial performance, and to an adverse impact on our financial accounting and reporting controls.
A cyberattack that bypasses or compromises our IS cybersecurity / or general computer controls or those of third parties with whom we engage may also lead to claims against us by affected parties and/or governmental agencies, and involve fines and penalties, as well as substantial defense and settlement expenses.
A cyberattack that bypasses or compromises our IS cybersecurity and/or general computer controls or those of third parties with whom we engage may also lead to claims against us by affected parties and/or governmental agencies, and involve fines and penalties, as well as substantial defense and settlement expenses.
Our business involves a risk of product liability, intellectual property infringement and other claims in the ordinary course of business, and from time to time we are named as a defendant in cases as a result of our distribution of products. Additionally, we own interests in companies that manufacture certain dental and medical products.
Our business involves a risk of product liability, intellectual property infringement and other claims in the ordinary course of business, and from time to time we are named as a defendant in cases as a result of our distribution of products. Additionally, we own and own interests in companies that manufacture certain dental and medical products.
Our ability to make scheduled payments or refinance our obligations with respect to indebtedness will depend on our operating and financial performance, which in turn is subject to prevailing economic conditions and financial, business and other factors beyond our control. Disruptions in the financial markets may materially adversely affect the availability and cost of credit to us.
Disruptions in the financial markets may materially adversely affect the availability and cost of credit to us. Our ability to make scheduled payments or refinance our obligations with respect to indebtedness will depend on our operating and financial performance, which in turn is subject to prevailing economic conditions and financial, business and other factors beyond our control.
Certain of our businesses involve the development and sale of software and related products to support physician and dental practice management, and it is possible that the FDA or foreign government authorities could determine that one or more of our products is subject to regulation as a medical device, which could subject us or one or more of our businesses to substantial additional requirements, costs and potential enforcement actions or liabilities for noncompliance with respect to these products.
Certain of our businesses involve the development and sale of software and related products to support physician and dental practice management, and it is possible that the FDA or foreign government authorities could determine that one or more of our products is subject to regulation as a medical device, which could subject our businesses to substantial additional requirements, costs, potential enforcement actions or liabilities for noncompliance with respect to these products.
Our ability to anticipate customer needs and emerging trends and develop or acquire new products, services and technologies at competitive prices requires significant resources, including employees with the requisite skills, experience and expertise, particularly in our technology segment, including dental practice management, patient engagement and demand creation software solutions.
Our ability to anticipate customer needs and emerging trends and develop or acquire new products, services and technologies at competitive prices requires significant resources, including employees with the requisite skills, experience and expertise, particularly in our Global Technology segment, including dental practice management, patient engagement and demand creation software solutions.
Also, these measures may be interpreted or applied by a prosecutorial, regulatory or judicial authority in a manner that could require us to make changes in our operations or incur substantial defense and settlement expenses. Even unsuccessful challenges by regulatory authorities or private relators could result in reputational harm and the incurring of substantial costs.
Also, these measures may be interpreted or applied by a prosecutorial, regulatory or judicial authority in a manner that could require us to make changes in our operations or incur substantial defense and settlement expenses. Even unsuccessful challenges by regulatory authorities or relators could result in reputational harm and the incurring of substantial costs.
Also, evolving laws and regulations in this area could restrict the ability of our customers to obtain, use or disseminate patient information, or could require us to incur significant additional costs to re-design our products to reflect these legal requirements, which could have a material adverse effect on our operations.
Evolving laws and regulations in this area could restrict the ability of our customers to obtain, use or disseminate patient information, or could require us to incur significant additional costs to re-design our products to reflect these legal requirements, which could have a material adverse effect on our operations.
The Company believes that the following risks could have a material adverse impact on our business, reputation, financial results, financial condition and/or the trading price of our common stock. The order in which these factors appear does not necessarily reflect their relative importance or priority.
The Company believes that the following risks could have a material adverse impact on our business, reputation, operating results, financial condition and/or the trading price of our common stock. The order in which these factors appear does not necessarily reflect their relative importance or priority.
Our ability to successfully implement our acquisition and joint venture strategy depends upon, among other things, the following: • the availability of suitable acquisition or joint venture candidates at acceptable prices; • our ability to consummate such transactions, which could potentially be prohibited due to U.S. or foreign antitrust regulations; • the liquidity of our investments and the availability of financing on acceptable terms; • our ability to retain customers or product lines of the acquired businesses or joint ventures; • our ability to retain, recruit and incentivize the management of the companies we acquire; and • our ability to successfully integrate these companies’ operations, services, products and personnel with our culture, management policies, legal, regulatory, and compliance policies, cybersecurity systems and policies, internal procedures, working capital management, financial, and operational controls and strategies.
Our ability to successfully implement our acquisition and joint venture strategy depends upon, among other things, the following: • the availability of suitable acquisition or joint venture candidates at acceptable prices; • our ability to consummate such transactions, which could potentially be prohibited due to U.S. or foreign antitrust regulations; • the liquidity of our investments and the availability of financing on acceptable terms; • our ability to retain customers or product lines of the acquired businesses or joint ventures; • our ability to retain, recruit and incentivize the management of the companies we acquire; and • our ability to successfully integrate these companies’ operations, systems, services, products and personnel with our culture, management policies, legal, regulatory and compliance policies, information technology and cybersecurity systems and policies, internal procedures, working capital management, financial, operational and internal controls and strategies.
Additionally, the formation of provider networks, GPOs and DSOs may shift purchasing decisions to entities or persons with whom we do not have a historical relationship and may threaten our ability to compete effectively, which could in turn negatively impact our financial results.
Additionally, the formation of provider networks, GPOs, DSOs and MSOs may shift purchasing decisions to entities or persons with whom we do not have a historical relationship and may threaten our ability to compete effectively, which could in turn negatively impact our financial results.
Both our profitability and the profitability of our customers may be materially adversely affected by laws and regulations reducing reimbursement rates for pharmaceuticals, medical supplies and devices, and/or medical treatments or services, or changes to the methodology by which reimbursement levels are determined.
Both our profitability and that of our customers may be materially adversely affected by laws and regulations reducing reimbursement rates for pharmaceuticals, medical supplies and devices, and/or medical treatments or services, or changes to the methodology by which reimbursement levels are determined.
Some of our imaging software is regulated as a medical device which subjects our businesses to substantial additional requirements, costs and potential enforcement actions or liabilities for noncompliance with respect to these products.
For example, some of our imaging software is regulated as a medical device which subjects our businesses to substantial additional requirements, costs and potential enforcement actions or liabilities for noncompliance with respect to these products.
Moreover, in order to satisfy our customers and comply with evolving legal requirements, our products may need to incorporate increasingly complex functionality, such as with respect to reporting and information blocking.
Moreover, in order to satisfy our customers and comply with evolving legal requirements, our products may need to incorporate increasingly complex functionality, such as reporting and information blocking.
There is no guarantee that we would be able to obtain such alternative sources of supply on a timely basis, if at all, and an extended interruption in supply, particularly of a high-sales volume product, could result in a significant disruption in our sales and operations, as well as damage to our relationships with customers and our reputation.
There is no guarantee that we would be able to obtain such alternative sources of supply on a timely basis, if at all, and an extended interruption in supply, particularly of a high-sales volume and/or high-margin product, could result in a significant disruption in our sales and operations, as well as damage to our relationships with customers and our reputation.
Any non-compliance with these laws and regulations may subject us to fines, orders to rectify or terminate any actions that are deemed illegal by regulatory authorities, other penalties, as well as reputational damage or legal proceedings against us, which may affect our business, financial condition or results of operations.
Any non-compliance with these laws and regulations may subject us to fines, orders to rectify or terminate any actions that are deemed illegal by regulatory authorities, other penalties, reputational damage, or legal proceedings against us, which may affect our business, financial condition or results of operations.
Our aspirations, goals and disclosures related to environmental, social and governance matters and the focus on regulators and private litigants among other things on related claims made by companies and funds expose us to numerous risks, including reputational, financial, legal and other risks, that could have an adverse impact on us, including on our stock price.
Our aspirations, goals and disclosures related to environmental, social and governance matters and the focus on regulators and private litigants among other things on related claims made by companies and funds expose us to numerous risks, including reputational, financial, legal and other risks, that could have an adverse impact on us.
Although we are seeking to obtain similar terms from manufacturers to access lower prices demanded by GPO and DSO contracts or other contracts, and to develop relationships with existing and emerging provider networks, GPOs and DSOs, we cannot guarantee that such terms will be obtained or contracts executed.
Although we are seeking to obtain similar terms from manufacturers to access lower prices demanded by GPO, DSO and MSO contracts or other contracts, and to develop relationships with existing and emerging provider networks, GPOs, DSOs and MSOs, we cannot guarantee that such terms will be obtained or contracts executed.
Table of Contents 33 Applicable federal, state, local, and foreign laws and regulations also may require us to meet various standards relating to, among other things, licensure or registration, program eligibility, procurement, third-party reimbursement, sales and marketing practices, product integrity, and supply tracking to product manufacturers, product labeling, personnel, privacy and security of health or other personal information, installation, maintenance and repair of equipment and the importation and exportation of products.
Applicable federal, state, local and foreign laws and regulations also may require us to meet various standards relating to, among other things, licensure, registration, program eligibility, procurement, third-party reimbursement, sales and marketing practices, product integrity and supply tracking to product manufacturers, product labeling, personnel, privacy and security of health or other personal information, installation, maintenance and repair of equipment and the importation and exportation of products.
In particular, the EU MDR imposes strict requirements for the confirmation that a product meets the regulatory requirements, including regarding a product’s clinical evaluation and a company’s quality systems, and for the distribution, marketing and sale of medical devices, including post-market surveillance.
The EU MDR imposes strict requirements for the confirmation that a product meets the regulatory requirements, including regarding a product’s clinical evaluation and a company’s quality systems, and for the distribution, marketing and sale of medical devices, including post-market surveillance.
Among other things, such laws, and the regulations promulgated thereunder: • regulate the introduction, manufacture, advertising, marketing and promotion, sampling, pricing and reimbursement, labeling, packaging, storage, handling, returning or recalling, reporting, and distribution of, and record keeping for drugs, HCT/P products and medical devices, including requirements with respect to unique medical device identifiers; • subject us to inspection by the FDA and DEA and similar state authorities; • regulate the storage, transportation and disposal of certain of our products that are considered hazardous materials; • require us to advertise and promote our drugs and devices in accordance with applicable FDA requirements; • require us to report average sales price (ASP) for drugs or biologicals payable under Medicare Part B to CMS with or without a Medicaid drug rebate agreement; • require registration with the FDA and the DEA and various state agencies; • require record keeping and documentation of transactions involving drug products; • require us to design and operate a system to identify and report suspicious orders of controlled substances to the DEA and certain states; • require us to manage returns of products that have been recalled and subject us to inspection of our recall procedures and activities; • impose on us reporting requirements if a pharmaceutical, HCT/P product or medical device causes serious illness, injury or death; • require manufacturers, wholesalers, re-packagers and dispensers of prescription drugs to identify and trace certain prescription drugs as they are distributed; • require the licensing of prescription drug wholesalers and third-party logistics providers; and • mandate compliance with standards for the recordkeeping, storage and handling of prescription drugs, and associated reporting requirements.
Among other things, such laws and the regulations promulgated thereunder: • regulate the introduction, manufacture, advertising, marketing, promotion, sampling, pricing, reimbursement, labeling, packaging, storage, handling, returning, recalling, reporting, distribution of, and recordkeeping for drugs, HCT/P products and medical devices, including unique device identifiers; • subject us to inspection by the FDA, OSHA, and DEA and similar state authorities; • regulate the storage, transportation and disposal of hazardous materials; • require us to advertise and promote our drugs and devices in accordance with FDA regulations; • require us to report average sales price (ASP) to CMS for drugs or biologicals payable under Medicare Part B with or without a Medicaid drug rebate agreement; • require registration with the FDA and the DEA and various state agencies; • require us to design and operate a system to identify and report suspicious orders of controlled substances to the DEA and certain states; • require us to manage returns of products that have been recalled and subject us to inspection of our recall procedures and activities; • impose on us reporting requirements if a pharmaceutical, HCT/P product or medical device causes an adverse event, serious illness, injury or death; • require manufacturers, wholesalers, re-packagers and dispensers of prescription drugs to identify and trace certain prescription drugs as they are distributed; • require the licensing of prescription drug wholesalers and third-party logistics providers; and • mandate compliance with standards for the recordkeeping, storage, handling and documentation of transactions involving prescription drugs and associated reporting requirements.
Additionally, traditional health care supply and distribution relationships are being challenged by electronic online commerce solutions.
Additionally, traditional health care supply and distribution relationships are being challenged by online commerce solutions.
Our business is subject to additional requirements under various local, state, federal and international laws and regulations applicable to the sale and distribution of, and third-party payment for, pharmaceuticals and medical devices and HCT/P products.
Our business is subject to additional requirements under various local, state, federal and foreign laws and regulations applicable to the sale and distribution of, and third-party payment for, pharmaceuticals and medical devices and HCT/P products.
The fraud and abuse laws and regulations have been subject to heightened enforcement activity over the past few years, and significant enforcement activity has been the result of “relators” who serve as whistleblowers by filing complaints in the name of the United States (and if applicable, particular states) under applicable false claims laws, and who may receive up to 30% of total government recoveries.
The fraud and abuse laws and regulations have been subject to heightened enforcement activity over the past few years, often as the result of “relators” who serve as whistleblowers by filing complaints in the name of the United States (and if applicable, particular states) under applicable false claims laws, and who may receive up to 30% of total government recoveries.
GENERAL RISKS Our business operations, results of operations, cash flows, financial condition and liquidity may be negatively Table of Contents 38 impacted by the effects of disease outbreaks, epidemics, pandemics, or similar wide-spread public health concerns and other natural or man-made disasters, such as terrorism, civil unrest, fire, and extreme weather .
GENERAL RISKS Our business operations, results of operations, cash flows, financial condition and liquidity may be negatively impacted by the effects of disease outbreaks, epidemics, pandemics, or similar wide-spread public health concerns and other natural or man-made disasters, such as terrorism, civil unrest, fire and extreme weather .
The healthcare industry in particular has been targeted by threat actors seeking to undermine companies’ cybersecurity defensive measures. We have processes in place intended to ensure that our security measures keep pace with new and emerging risks. We regularly review, monitor and implement multiple layers of security through technology, processes and our people.
In particular, the health care industry has been targeted by threat actors seeking to undermine companies’ cybersecurity defensive measures. We have processes in place intended to ensure that our security measures keep pace with new and emerging risks. We regularly review, monitor and implement multiple layers of security through technology, processes and our people.
As mentioned above, pursuant to Regulation 2023/607 and subject to certain conditions, medical devices that (i) obtained a certificate under the EU Medical Device Directive from May 25, 2017, (ii) which was still valid on May 26, 2021, and (iii) has not been subsequently withdrawn may, for the moment, continue to be placed on the market or put into service until December 31, 2027 for higher risk devices or December 31, 2028 for medium and lower risk devices.
Pursuant to Regulation 2023/607 and subject to certain conditions, medical devices that (i) obtained a certificate under the EU Medical Device Directive from May 25, 2017, (ii) which was still valid on May 26, 2021, and (iii) has not been subsequently withdrawn may continue to be placed on the market or put into service until December 31, 2027 for higher risk devices or December 31, 2028 for medium and lower risk devices.
While we believe that we are substantially compliant with applicable fraud and abuse and other laws and regulations, and believe we have adequate compliance programs and controls in place to ensure substantial compliance, we cannot predict whether changes in applicable law, or interpretation of laws, or changes in our services or marketing practices in response to changes in applicable law or interpretation of laws, could have a material adverse effect on our business.
While we believe that we are substantially compliant with applicable laws and regulations, and believe we have adequate compliance programs and controls in place to ensure substantial compliance, we cannot predict whether changes in applicable law, or interpretation of laws, or changes in our services or marketing practices in response to changes in applicable law or interpretation of laws, could have a material adverse effect on our business.
Laws and regulations relating to privacy and data protection are continually evolving and subject to potentially differing interpretations. These requirements may not be harmonized, may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another or may conflict with other rules or our practices.
Laws and regulations relating to privacy and data protection are continually evolving and subject to potentially differing interpretations, including those relating to AI. These requirements may not be harmonized, may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another or may conflict with other rules or our practices.
These customers are subject to laws and regulations which require that they protect the privacy and security of those records, and our products may be used as part of these customers’ comprehensive data security programs, including in connection with their efforts to comply with applicable privacy and security laws.
These customers, and in some cases, we are subject to laws and regulations which require that they protect the privacy and security of those records, and our products may be used as part of these customers’ comprehensive data security programs, including in connection with their efforts to comply with applicable privacy and security laws.
Additionally, factors outside of our control, such as customer preferences, consolidation of suppliers or supply issues, can have a material impact on our ability to achieve the growth goals established by our suppliers, Table of Contents 27 which may reduce the amount of rebates or incentives we receive.
Additionally, factors outside of our control, such as customer preferences, consolidation of suppliers or supply issues, can have a material impact on our ability to achieve the growth goals established by our suppliers, which may reduce the amount of rebates or incentives we receive.
The risks that our global operations are subject to include, among other things: • difficulties and costs relating to staffing and managing foreign operations; • difficulties and delays inherent in sourcing products, establishing channels of distribution and contract manufacturing in foreign markets; • fluctuations in the value of foreign currencies; • uncertainties relating to trade agreements and international trade relationships; • longer payment cycles of foreign customers and difficulty of collecting receivables in foreign jurisdictions; • repatriation of cash from our foreign operations to the United States; • regulatory requirements, including, without limitation, anti-bribery, anti-corruption and laws pertaining to the accuracy of our internal books and records; • litigation risks, new or unanticipated litigation developments and the status of litigation matters; • unexpected difficulties in importing or exporting our products and import/export tariffs, quotas, sanctions or penalties; • limitations on our ability under local laws to protect our intellectual property; • unexpected regulatory, legal, economic and political changes in foreign markets; • changes in tax regulations that influence purchases of capital equipment; • civil disturbances, geopolitical turmoil, including terrorism, war or political or military coups; and • risks associated with climate change, including physical risks such as impacts from extreme weather events and other potential physical consequences, regulatory and technological requirements, market developments, stakeholder expectations and reputational risk.
Our global operations are subject to risks that could materially adversely affect our business, including, among other things: • difficulties and costs relating to staffing and managing foreign operations; • difficulties and delays inherent in sourcing products, establishing channels of distribution and contract manufacturing in foreign markets; • fluctuations in the value of foreign currencies; • uncertainties relating to trade agreements and international trade relationships; • longer payment cycles of foreign customers and difficulty of collecting receivables in foreign jurisdictions; • repatriation of cash from our foreign operations to the United States; • regulatory requirements, including, without limitation, anti-bribery, anti-corruption and laws pertaining to the accuracy of our internal books and records; • litigation risks; • unexpected difficulties in importing or exporting our products and import/export tariffs, quotas, sanctions or penalties; • limitations on our ability under local laws to protect our intellectual property; • unexpected regulatory, legal, economic and political changes in foreign markets; • changes in tax regulations that influence purchases of capital equipment; • civil disturbances, geopolitical turmoil, including terrorism, war or political or military coups; and • risks associated with climate change, including physical risks such as impacts from extreme weather events and other potential physical consequences, regulatory and technological requirements, market developments, stakeholder expectations and reputational risk.
Certain additional state and federal laws, such as the federal Physician Self-Referral Law, commonly known as the “Stark Law,” prohibit physicians and other health care professionals from referring a patient to an entity with which the physician (or family member) has a financial relationship, for the furnishing of certain designated health services (for example, durable medical equipment and medical supplies), unless an exception applies.
Certain additional state and federal laws, such as the federal Physician Self-Referral Law (“Stark Law”), prohibit physicians and other health care professionals from referring a patient to an entity with which the physician (or family member) has a financial relationship, for the furnishing of certain designated health services (for example, durable medical equipment and medical supplies), unless an exception applies.
These information technology systems may be vulnerable to breakdown, wrongful intrusions, data breaches and malicious attack, which could require us to expend significant resources to eliminate these problems and address related security concerns, and could involve claims against us by private parties and/or governmental agencies.
These IT systems may be vulnerable to breakdown, wrongful intrusions, data breaches and malicious attack, which could require us to expend significant resources to eliminate these problems and address related security concerns, and could involve claims against us by private parties and/or governmental agencies.
Our IS are vulnerable to, among other things, natural disasters, power losses, computer viruses, telecommunication failures, cybersecurity threats and other criminal activity. Information security risks have significantly increased in recent years in part because of an overall increase in cyber incidents, their increased sophistication, and the involvement of organized crime, hackers, terrorists and foreign state agents.
Our IS are susceptible to, among other things, natural disasters, power losses, telecommunication failures, cybersecurity threats and other criminal activity. Information security risks have significantly increased in recent years in part because of an overall increase in cyber incidents, their increased sophistication and the involvement of organized crime, hackers, terrorists and foreign state agents.
Additionally, effective September 1, 2023, the OIG for HHS issued a final rule implementing civil money penalties for information blocking as established by the Cures Act. OIG incorporated regulations published Table of Contents 37 by ONC as the basis for enforcing information blocking penalties. Each information blocking violation carries a $1 million penalty.
Additionally, effective September 1, 2023, the HHS-OIG issued a final rule implementing civil money penalties for information blocking as established by the Cures Act. OIG incorporated regulations published by ONC as the basis for enforcing information blocking penalties. Each information blocking violation carries a $1 million penalty.
While we believe that we are substantially compliant with applicable laws and regulations, and believe we have adequate compliance programs and controls in place to ensure substantial compliance, if it is determined that we have not complied with these laws, we are potentially subject to warning letters, substantial civil and criminal penalties, mandatory recall of product, seizure of product and injunction, consent decrees and suspension or limitation of payments to us, product sale and distribution.
While we believe that we are substantially compliant with applicable laws and regulations, and have adequate compliance programs and controls in place to ensure substantial Table of Contents Index to Financial Statements 36 compliance, if it is determined that we have not complied with these laws, we are potentially subject to warning letters, substantial civil and criminal penalties, mandatory recall of product, seizure of product and injunction, consent decrees and suspension or limitation of payments to us, product sale and distribution.
Most states have adopted similar state false claims laws, and these state laws have their own penalties which may be in addition to federal False Claims Act penalties, as well as other fraud and abuse laws.
Most states have adopted similar state false claims acts, and these state laws have their own penalties which may be in addition to federal False Claims Act penalties, and other fraud and abuse laws.
Penalties under fraud and abuse laws may be severe, including treble damages and substantial civil penalties under the federal False Claims Act, as well as potential loss of licenses and the ability to participate in federal and state health care programs, criminal penalties, or imposition of a corporate compliance monitor, which could have a material adverse effect on our business.
Penalties under fraud and abuse laws may be severe, including treble damages and substantial civil penalties under the federal False Claims Act, as well as potential loss of licenses and the ability to participate in federal and state health care programs, criminal penalties, or imposition of a corporate compliance Table of Contents Index to Financial Statements 37 monitor, which could have a material adverse effect on our business.
We utilize security technologies designed to protect and maintain the integrity of our IS and data, and our Table of Contents 28 defenses are monitored and routinely tested internally and by external parties.
We utilize security technologies designed to protect and maintain the integrity of our IS and data, and our defenses are monitored and routinely tested internally and by external parties.
In recent years, the health care industry has undergone, and is in the process of undergoing, significant changes driven by various efforts to reduce costs, including, among other factors: trends toward managed care; collective purchasing arrangements and consolidation among office-based health care practitioners; and changes in reimbursements to customers, including increased attention to value-based payment arrangements, as well as growing enforcement activities (and related monetary recoveries) by governmental officials.
In recent years, the health care industry has been undergoing significant changes driven by various efforts to reduce costs, including, among other factors: trends toward managed care; collective purchasing arrangements and consolidation among office-based health care practitioners; and changes in reimbursements to customers, including increased attention to value-based payment arrangements, as well as enforcement activities (and related monetary recoveries) by governmental officials.
While the Company has policies against and seeks to avoid the import of goods that are manufactured in whole or in part by forced labor or through human trafficking, as a result of legislative and governmental policy initiatives, we may be subject to increasing potential delays, added costs, supply chain disruption and other restrictions.
While the Company has policies against and seeks to avoid the import of goods that are manufactured in whole or in part Table of Contents Index to Financial Statements 41 by forced labor or through human trafficking, as a result of legislative and governmental policy initiatives, we may be subject to increasing potential delays, added costs, supply chain disruption and other restrictions.
In addition to health information in our customers’ electronic medical and dental records, certain of our IS stores other sensitive personal and financial information, such as healthcare and other information related to our employees, as well as other sensitive information such as credit card information from our third-party business partners, that is confidential, and in many cases subject to privacy laws.
In addition to health information in our customers’ electronic medical and dental records, certain of our IS stores other sensitive personal and financial information, such as health care and other information related to our employees and individuals we service, as well as other sensitive information such as credit card information from our third-party business partners, that is confidential, and in many cases subject to privacy laws.
Our businesses are generally subject to numerous other laws and regulations that could impact our financial results, including, without limitation, securities, antitrust, consumer protection, and marketing laws and regulations. In the EU, both active and passive bribery are criminalized.
Our businesses are generally subject to numerous other laws and regulations that could impact our financial results, including, without limitation, securities, antitrust, consumer protection and marketing laws and regulations. In the EU, both active and passive corruption in the private sector are criminalized.
There can be no assurance that current and future government regulations will not adversely affect our business, and we cannot predict new regulatory priorities, the form, content or timing of regulatory actions, and their impact on the health care industry and on our business and operations. Global efforts toward healthcare cost containment continue to exert pressure on product pricing.
There can be no assurance that current and future government regulations will not adversely affect our business, and we cannot predict new regulatory priorities, the form, content or timing of regulatory actions, and their impact on the health care industry and on our business and operations. Global efforts to contain health care costs continue to exert pressure on product pricing.
Table of Contents 34 If we fail to comply with laws and regulations relating to health care fraud or other laws and regulations, we could suffer penalties or be required to make significant changes to our operations, which could materially adversely affect our business.
If we fail to comply with laws and regulations relating to health care fraud or other laws and regulations, we could suffer penalties or be required to make significant changes to our operations, which could materially adversely affect our business.
While we believe we have substantially compliant programs and controls in place to comply with the GDPR, CCPA, PIPL and CPRA requirements, our compliance with data privacy and cybersecurity laws is likely to impose additional costs on us, and we cannot predict whether the interpretations of the requirements, or changes in our practices in response to new requirements or interpretations of the requirements, could have a material adverse effect on our business.
While we believe we have substantially compliant programs and controls in place to comply with privacy laws domestically and internationally, our compliance with data privacy and cybersecurity laws is likely to impose additional costs on us, and we cannot predict whether the interpretations of the requirements, or changes in our practices in response to new requirements or interpretations of the requirements, could have a material adverse effect on our business.
Among the federal laws with which we must comply are the Controlled Substances Act, the FDC Act, the Federal Drug Quality and Security Act, including DSCSA, Section 361 of the Public Health Services Act and Section 401 of the Consolidated Appropriations Act of the Social Security Act.
Among the federal laws with which we must comply are the Controlled Substances Act, the FDC Act, the Federal Drug Quality and Security Act, including DSCSA, and Section 361 of the Public Health Services Act.
If we fail 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, we could be required to make significant changes to our products, or incur substantial fines, penalties, or other liabilities.
Table of Contents Index to Financial Statements 38 If we fail 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, we could be required to make significant changes to our products, or incur substantial fines, penalties, or other liabilities.
In addition, certain of our employee incentive plans provide for accelerated vesting of stock options and other awards upon termination without cause within two years following a change in control, or grant the plan committee discretion to accelerate awards upon a change of control.
In addition, certain of our employee incentive plans provide for accelerated vesting of equity awards upon termination without cause within two years following a change in control, or grant the plan committee discretion to accelerate awards upon a change of control.
In the event of any such interruption in supply, we would need to identify and obtain acceptable replacement sources on a timely basis.
In the event of any such interruption in supply, we would need to timely identify and obtain acceptable replacement sources.
COMPANY RISKS We are dependent upon third parties for the manufacture and supply of a significant volume of our products. We obtain a significant volume of the products we distribute from third parties, with whom we generally do not have long-term contracts.
COMPANY RISKS We are dependent upon third parties for the manufacture and supply of a significant volume of our products and where we manufacture products, we are dependent upon third parties for raw materials and purchased components. We obtain a significant volume of the products we distribute from third parties, with whom we generally do not have long-term contracts.
The emergence of such potential competition and our inability to anticipate and effectively respond to changes on a timely basis could have a material adverse effect on our business. The health care industry is experiencing changes due to political, economic and regulatory influences that could materially adversely affect our business.
The emergence of such competition and our inability to anticipate and effectively respond to changes on a timely basis could have a material adverse effect on our business, financial condition or operating results. The health care industry is experiencing changes due to political, economic and regulatory influences that could materially adversely affect our business.
We cannot be sure, for example, that we will achieve the benefits of revenue growth that we expect from these acquisitions or joint ventures or that we will avoid unforeseen additional costs, taxes, or expenses.
We cannot be sure, for example, that we will achieve the benefits of revenue growth that we expect from these transactions or that we will avoid unforeseen additional costs, taxes, or expenses.
If we are unable to react effectively to these and other changes in the health care industry, our business could be materially adversely affected. The ACA greatly expanded health insurance coverage in the United States and has been the target of litigation and Congressional reform efforts since its adoption.
If we are unable to react effectively to these and other changes in the health care industry, our business could be materially adversely affected. The ACA greatly expanded health insurance coverage in the United States and has been the target of legal and political challenges since its adoption.
In the United States, in addition to other government efforts to control health care costs, there has been increased scrutiny on drug pricing and concurrent efforts to control or reduce drug costs by Congress, the President, executive branch agencies and various states. We and our subsidiaries may be required to report drug pricing data under federal laws and regulations.
In the United States, there has been increased scrutiny on drug pricing and concurrent efforts to control or reduce drug costs by Congress, the President, executive branch agencies and various states. We may be required to report drug pricing data under federal laws and regulations.
The PIPL imposes specific rules for processing personal information and it also specifies that the law shall also apply to personal information activities carried out outside China but for the purpose of providing products or services to PRC citizens.
Effective November 1, 2021, China’s PIPL imposes specific rules for processing personal information and specifies that the law shall also apply to personal information activities carried out outside China but for the purpose of providing products or services to PRC citizens.
With respect to measures of this type, the United States government (among others) has expressed concerns about financial relationships between suppliers on the one hand and physicians, dentists, and other health care providers, on the other. As a result, we regularly review and revise our marketing practices as necessary to facilitate compliance.
The United States government (among others) has expressed concerns about financial relationships between suppliers or manufacturers on the one hand and physicians, dentists and other health care providers, on the other. As a result, we regularly review and revise our marketing practices as necessary to facilitate compliance.
While there is typically more than one source of supply, some key suppliers, in the aggregate, supply a significant portion of the products we sell. In 2023, our top 10 health care distribution suppliers and our single largest supplier accounted for approximately 25% and 4%, respectively, of our aggregate purchases.
While there is typically more than one source of supply, some key suppliers, in the aggregate, supply a significant portion of the products we sell. In 2024, our top 10 Global Distribution and Value- Added Services suppliers and our single largest supplier accounted for approximately 25% and 4%, respectively, of our aggregate purchases.
Non-compliance with government requirements could also adversely affect our ability to participate in important federal and state government health care programs, such as Medicare and Medicaid, and damage our reputation. The EU Medical Device Regulation (“MDR”) may adversely affect our business.
Non-compliance with government requirements could also adversely affect our ability to participate in important federal and state government health care programs, such as Medicare and Medicaid, and damage our reputation. The EU Medical Device Regulation (“MDR”) may adversely affect our business. The EU MDR significantly modified the regulatory compliance requirements for the medical device industry as a whole.
Our future growth (especially for our technology and value-added services segment) is dependent upon our ability to develop or acquire and maintain and protect new products and technologies that achieve market acceptance with acceptable margins.
Our future growth (especially for our Global Technology and Global Specialty Products segments) is dependent upon our ability to develop or acquire and maintain and protect new products and services and utilize new technologies that achieve market acceptance with acceptable margins.
At the state level, several states have adopted laws, that may apply to some of our operations, that require drug manufacturers, including re-packagers or re-labelers, to provide advance notice of certain price increases and to report information relating to those price increases, while others have taken legislative or administrative action to establish prescription drug affordability boards or multi-payer purchasing pools to reduce the cost of prescription drugs.
Several U.S. states have adopted laws, that may apply to some of our operations, that require drug manufacturers, including re-packagers or re-labelers, to provide advance notice of certain price increases and to report information relating to price increases, while others have established prescription drug affordability boards or multi-payer purchasing pools to reduce the cost of prescription drugs.
Among other things, the EU MDR: • strengthens the rules on placing devices on the market and reinforces surveillance once they are available; • establishes explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices placed on the market; • improves the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number; • sets up a central database to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU; • strengthens rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional check by experts before they are placed on the market; and • identifies importers and distributors and medical device products through registration in a database (EUDAMED not due, for the time being, until the end of 2027 at the earliest, as mentioned above).
Among other things, the EU MDR: • strengthens the rules on placing devices on the market and reinforces surveillance thereafter; • establishes explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices placed on the market; • improves the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number; • sets up a central database (EUDAMED) to provide patients, health care professionals and the public with comprehensive information on devices, importers, and distributors registered in the EU; • strengthens rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional check by experts before they are placed on the market; and • contains specific provisions in the event of interruption or discontinuation of supply of a device.
Additionally, when we decide to sell assets or a business, we may encounter difficulty in finding buyers or executing alternative exit strategies on acceptable terms in a timely manner, which could delay the accomplishment of our strategic objectives. Alternatively, we may dispose of assets or a business at a price or on terms that are less than we had anticipated.
Additionally, when we decide to sell assets or a business, we may encounter difficulty in finding buyers or timely executing alternative exit strategies on acceptable terms, which could delay the accomplishment of our strategic objectives.
Recessionary or inflationary conditions and depressed levels of consumer and commercial spending may also cause customers to reduce, modify, delay, or cancel plans to purchase our products and may cause suppliers to reduce their output or change their terms of sale. We have experienced inflationary pressures, including higher freight costs and interest expense.
Recessionary or inflationary conditions and depressed levels of consumer and commercial spending may also cause customers to reduce, modify, delay, or cancel plans to purchase our products and may cause suppliers to reduce their output or change their terms of sale.
Our businesses that involve physician and dental practice management products, and our specialty home medical supply businesses, include electronic information technology systems that store and process personal health, clinical, financial, and other sensitive information of individuals.
Our businesses that involve physician and dental practice management products, equipment and our specialty home medical supplies businesses, and our self-funded employee benefits programs include information technology (IT) systems that store and process personal health, clinical, financial, and other sensitive information of individuals.
While we have recently experienced increases in the cost of shipping, we do not expect these additional expenses to be material to our results. However, it is possible that such costs could be material in the future.
While we have recently experienced increases in shipping costs, we do not expect these additional expenses to be material to our results now, however, they could be material in the future.
In order to maintain certification of our EHR products, we must satisfy the changing governmental standards.
In order to maintain Table of Contents Index to Financial Statements 40 certification of our EHR products, we must satisfy the changing governmental standards.
In addition, certain of our practice management products and services purchased by health care providers, such as physicians and dentists, are used to store and manage patient medical or dental records.
In addition, certain of our practice management products and services purchased by health care providers, such as physicians and dentists, are used to store and manage patient medical or dental records, and when cloud-based approaches are used, we may be responsible for hosting those records.
Similarly, strikes or other service interruptions by those shippers, including at transportation centers or shipping ports, could cause our operating expenses to rise and materially adversely affect our ability to deliver products on a timely basis. MACRO-ECONOMIC AND POLITICAL RISKS Uncertain global and domestic macro-economic and political conditions could materially adversely affect our results of operations and financial condition.
Similarly, strikes or other service interruptions by those shippers, including at transportation centers or shipping ports, could cause our operating expenses to rise and materially adversely affect our ability to deliver products on a timely basis.
We may also incur substantial costs as we update our cybersecurity defense systems and our general computer controls to meet evolving challenges, and legislative or regulatory action related to cybersecurity may increase our costs to develop or implement new technology products and services.
We have incurred and may in the future incur substantial costs as we update our cybersecurity defense systems and our general computer controls Table of Contents Index to Financial Statements 32 to meet evolving challenges, and legislative or regulatory action related to cybersecurity may increase our costs to develop or implement new technology products and services.
Uncertain global and domestic macro-economic and political conditions that affect the economy and the economic outlook of the United States, Europe, Asia, and other parts of the world could materially adversely affect our results of operations and financial condition.
Uncertain global and domestic macro-economic and political conditions that affect the economy and the economic outlook of the United States, Europe, Asia and other parts of the world could have a material adverse effect our business, financial condition or operating results.
For example, as a global healthcare solutions company, the COVID-19 pandemic and the governmental responses to it had, and may again have, a material adverse effect on our business, results of operations and cash flows and may result in a material adverse effect on our financial condition and liquidity.
For example, as a global health care solutions company, the COVID-19 pandemic and the governmental responses to it had a material adverse effect on our business, financial condition, operating results and cash flows.
The continued advancement of online commerce by third parties will require us to cost-effectively adapt to changing technologies, to enhance existing services and to differentiate our business (including with additional value-added services) to address changing demands of consumers and our customers on a timely basis.
Table of Contents Index to Financial Statements 33 The continued advancement of online commerce by third parties and online price transparency requires us to cost- effectively adapt to changing technologies, to enhance existing services and to differentiate our business (including with additional value-added services) to address changing demands of consumers and our customers.
Bergman, the loss of the services of Mr. Bergman could have a material adverse effect on our business. We do not currently have “key man” life insurance policies on any of our employees. Competition for senior management is intense, burnout and turn-over rates are increasing workplace concerns, and we may not be successful in attracting and retaining key personnel.
We do not currently have “key man” life insurance Table of Contents Index to Financial Statements 42 policies on any of our employees. Competition for senior management is intense, burnout and turn-over rates are increasing workplace concerns, and we may not be successful in attracting and retaining key personnel.
Under this structure, certain institutions can obtain more favorable prices for health care products than we are able to obtain. The multi-tiered costing structure continues to expand as many large integrated health care providers and others with significant purchasing power, such as GPOs and DSOs, demand more favorable pricing terms.
The multi-tiered costing structure continues to expand as many large integrated health care providers and others with significant purchasing power, such as GPOs, DSOs and MSOs, demand more favorable pricing terms.
California has adopted stringent new climate disclosure requirements, as has the EU, and the SEC appears about to adopt expansive new disclosure requirements on climate change. In the EU, the Directive No. 2019/1937 of October 23, 2019, on the protection of persons who report breaches of Union law, organizes the legal protection of whistleblowers.
California has adopted stringent new climate disclosure requirements, as has the EU. As of April 4, 2024, the SEC has temporarily suspended implementation of its climate disclosure rules. In the EU, Directive No. 2019/1937 of October 23, 2019, on the protection of persons who report breaches of Union law, organizes the legal protection of whistleblowers.
One of our business strategies has been to expand our domestic and international markets in part through acquisitions and joint ventures and we expect to continue to make acquisitions and enter into joint ventures in the future.
One of our business strategies has been to expand in part through acquisitions and joint ventures and we expect to continue to make acquisitions and enter into joint ventures in the future. There is risk that one or more may not succeed.
We are directly or indirectly subject to numerous and evolving federal, state, local and foreign laws and regulations that protect the privacy and security of personal information, such as HIPAA, CAN-SPAM, TCPA, Section 5 of the FTC Act, the CCPA, and the CPRA that became effective on January 1, 2023.
We are directly or indirectly subject to numerous and evolving federal, state, local and foreign laws and regulations that protect the privacy and security of personal information (including health data), such as HIPAA, CAN-SPAM, TCPA, Section 5 of the FTC Act, the CCPA and various other privacy laws that have or will soon come into effect.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Vice President, Global CISO, who also serves as Vice President and Head of the Office of Cyber Security, is a National Security Agency Certified Information Systems Securities Engineer, has nearly 30 years of experience leading global cybersecurity programs, and received a BS, Electrical Engineering and Computer Science from Lafayette College, and a Master of Science, Business, Information Technology Management from Johns Hopkins University.
Biggest changeOur Vice President, Global CISO, who also serves as Vice Table of Contents Index to Financial Statements 43 President and Head of the Office of Cyber Security, has over 30 years of experience leading global cybersecurity and technology programs in large and complex corporations, and holds a Certified Information Systems Security Professional and a Certified Information Systems Auditor certification.
For these purposes, we define “information systems” in a manner consistent with the definition contained in the new rules recently adopted by the SEC to mean “electronic information resources, owned or used by the registrant, including physical or virtual infrastructure controlled by such information resources, or components thereof, organized for the collection, processing, maintenance, use, sharing, dissemination, or disposition of the registrant's information to maintain or support the registrant's operations.” Cybersecurity Risk Management and Strategy We have developed and implemented a cybersecurity risk mitigation strategy intended to protect our information systems.
For these purposes, we define “information systems” in a manner consistent with the definition contained in the rules adopted by the SEC to mean “electronic information resources, owned or used by the registrant, including physical or virtual infrastructure controlled by such information resources, or components thereof, organized for the collection, processing, maintenance, use, sharing, dissemination, or disposition of the registrant's information to maintain or support the registrant's operations.” Cybersecurity Risk Management and Strategy We have developed and implemented a cybersecurity risk mitigation strategy intended to protect our information systems.
The primary responsibilities of the Regulatory, Compliance and Cybersecurity Committee are to (i) discuss cybersecurity strategic decisions, issues, challenges and opportunities relating thereto, (ii) provide expertise to guide assessment and monitoring of Company-wide regulatory, corporate compliance and cybersecurity risk management budgeting, spending and capital investment, (iii) monitor progress and status of the Company’s regulatory, corporate compliance and cybersecurity risk management programs, (iv) review and evaluate major regulatory, corporate compliance and cybersecurity risk management initiatives to identify emerging and future opportunities for synergy or to leverage regulatory, corporate compliance and cybersecurity risk management investments more effectively and cost efficiently, (v) report to the Audit Committee on regulatory, corporate compliance and cybersecurity risk management matters reviewed by the Regulatory, Compliance and Cybersecurity Committee that may impact the Company’s financial reporting and (vi) be generally available to, and communicate with, the Company’s senior management, and to inform the Board in the areas described above.
The primary responsibilities of the Regulatory, Compliance and Cybersecurity Committee are to (i) discuss cybersecurity strategic decisions, issues, challenges and opportunities relating thereto, (ii) provide expertise to guide assessment and monitoring of Company-wide regulatory, corporate compliance and cybersecurity risk management budgeting, spending and capital investment, (iii) monitor progress and status of the Company’s regulatory, corporate compliance and cybersecurity risk management programs, (iv) review and evaluate major regulatory, corporate compliance and cybersecurity risk management initiatives to identify emerging and future opportunities for synergy or to leverage regulatory, corporate compliance and cybersecurity risk management investments more effectively and cost efficiently, Table of Contents Index to Financial Statements 44 (v) report to the Audit Committee on regulatory, corporate compliance and cybersecurity risk management matters reviewed by the Regulatory, Compliance and Cybersecurity Committee that may impact the Company’s financial reporting and (vi) be generally available to, and communicate with, the Company’s senior management, and to inform the Board in the areas described above.
Prior Cybersecurity Incidents In addition to immaterial and unrelated prior incidents at certain of our subsidiaries, in October 2023 Henry Schein experienced a cybersecurity incident that primarily affected the operations of our North American and European dental and medical distribution businesses.
Prior Cyber Incidents In addition to immaterial and unrelated prior incidents at certain of our subsidiaries, in October 2023 Henry Schein experienced a cyber incident that primarily affected the operations of our North American and European dental and medical distribution businesses.
In overseeing the operations of our cyber risk mitigation Table of Contents 40 strategy, the OCS partners with our Global Technology Solutions team, which is led by our Chief Technology Officer (“CTO”) and is comprised of over one hundred professionals that support our information systems and operations.
In overseeing the operations of our cyber risk mitigation strategy, the OCS partners with our Global Technology Solutions team, which is led by our Chief Technology Officer (“CTO”) and is comprised of over one hundred professionals that support our information systems and operations.
The cybersecurity risk mitigation strategy is also overseen by senior managers who are members of our Executive Steering Committee, comprised of the Company’s most senior technology, legal and internal auditing officers.
He also received a BS, Information Technology and Security from Baker College. The cybersecurity risk mitigation strategy is also overseen by senior managers who are members of our Executive Steering Committee, comprised of the Company’s most senior technology, legal and internal auditing officers.
Members of the Audit Committee and Regulatory, Compliance and Cybersecurity Committee of our Board of Directors are conducting a review of the October 2023 cybersecurity incident, including the measures undertaken in response to the incident. Cybersecurity Governance Our Board has a Regulatory, Compliance and Cybersecurity Committee that focuses on cybersecurity oversight, together with other board committees, principally the Audit Committee.
Cybersecurity Governance Our Board has a Regulatory, Compliance and Cybersecurity Committee that focuses on cybersecurity oversight, together with other board committees, principally the Audit Committee.
Henry Schein One, our practice management software, revenue cycle management and patient relationship management solutions business, was not affected, and our manufacturing businesses were mostly unaffected. Once we became aware of the issue, we took steps to assess, contain and remediate this incident. We restored affected systems and applications, our distribution operations resumed and we reactivated our ecommerce platform.
Henry Schein One, our practice management software, revenue cycle management and patient relationship management solutions business was not affected, and our manufacturing businesses were mostly unaffected.
Removed
We also notified law enforcement and our employees, customers, suppliers and investors, informing them of both the incident and management’s efforts to mitigate its impact on our daily operations and data maintained on the Company’s systems.
Added
The October 2023 cyber incident disrupted key business operations, adversely impacted our financial results for the fourth quarter and full year 2023, diverted attention of management, and caused the Company to incur significant remediation costs. The incident had residual impact on our financial results in 2024.
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Subsequently, on or about November 8, 2023, we determined that the threat actor obtained personal and sensitive information maintained on our systems belonging to certain third parties and since that date we have notified affected and potentially affected parties as appropriate. Table of Contents 41 The scope of personal and sensitive data impacted is still under investigation.
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On November 22, 2023, we experienced a related disruption to our ecommerce platform and related applications, which has since been remediated. As described in “Management’s Discussion & Analysis – 2023 Compared to 2022, the incident adversely impacted our financial results for the fourth quarter and full year 2023.
Removed
We also expect some short-term residual impact on our financial results in 2024. It is part of the mission of our cybersecurity risk mitigation strategy to constantly evolve our cybersecurity defenses to adapt to evolving risks, and to learn from prior incidents, and we have evaluated and continue to evaluate the incident with the assistance of third-party expert consultants.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties Within our health care distribution segment (for properties with more than 100,000 square feet) we lease and/or own approximately 5.7 million square feet of properties, consisting of distribution, office, showroom, manufacturing and sales space, in locations including the United States, Australia, Austria, Belgium, Brazil, Canada, Chile, China, the Czech Republic, France, Germany, Hong Kong SAR, Ireland, Israel, Italy, Japan, Liechtenstein, Luxembourg, Malaysia, Mexico, Morocco, the Netherlands, New Zealand, Poland, Portugal, Singapore, South Africa, Spain, Sweden, Switzerland, Thailand, United Arab Emirates and the United Kingdom.
Biggest changeProperties Within our Global Distribution and Value -Added Services and Global Specialty Products segments (for properties with more than 100,000 square feet) we lease and/or own approximately 5.1 million square feet of properties, consisting of distribution, office, showroom, manufacturing and sales space, in locations including the United States, Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, China, the Czech Republic, France, Germany, Hong Kong SAR, Ireland, Israel, Italy, Japan, Liechtenstein, Luxembourg, Mexico, Morocco, the Netherlands, New Zealand, Peru, Poland, Portugal, South Africa, Spain, Sweden, Switzerland, Thailand, United Arab Emirates and the United Kingdom.
Lease expirations range from 2024 to 2041. We believe that our properties are in good condition, are well maintained and are suitable and adequate to carry on our business. We have additional operating capacity at certain distribution center facilities.
Lease expirations range from 2025 to 2041. We believe that our properties are in good condition, are well maintained and are suitable and adequate to carry on our business. We have additional operating capacity at certain distribution center facilities.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+1 added−1 removed5 unchanged
Biggest changeThe following table summarizes repurchases of our common stock under our stock repurchase program during the fiscal quarter ended December 30, 2023: Total Number Maximum Number Total of Shares of Shares Number Average Purchased as Part that May Yet of Shares Price Paid of Our Publicly Be Purchased Under Fiscal Month Purchased (1) Per Share Announced Program Our Program (2) 10/1/2023 through 11/4/2023 - - - 5,048,074 11/5/2023 through 12/2/2023 - - - 4,529,764 12/3/2023 through 12/30/2023 692,441 $ 72.32 692,441 3,499,205 692,441 692,441 (1) All repurchases were executed in the open market under our existing publicly announced authorized program.
Biggest changeThe following table summarizes repurchases of our common stock under our stock repurchase program during the fiscal quarter ended December 28, 2024: Total Number Maximum Number Total of Shares of Shares Number Average Purchased as Part that May Yet of Shares Price Paid of Our Publicly Be Purchased Under Fiscal Month Purchased (1) Per Share Announced Program Our Program (2) 9/29/2024 through 11/2/2024 564,907 $ 70.93 564,907 5,895,367 11/3/2024 through 11/30/2024 441,702 71.32 441,702 4,975,402 12/1/2024 through 12/28/2024 44,530 77.02 44,530 5,395,131 1,051,139 1,051,139 (1) All repurchases were executed in the open market under our existing publicly announced authorized program.
Dividend Policy We have not declared any cash or stock dividends on our common stock during fiscal years 2023 or 2022. We currently do not anticipate declaring any cash or stock dividends on our common stock in the foreseeable future.
Dividend Policy We have not declared any cash or stock dividends on our common stock during fiscal years 2024 or 2023. We currently do not anticipate declaring any cash or stock dividends on our common stock in the foreseeable future.
Dow Jones US Health Care Index NASDAQ Composite Index Stock Performance Graph The graph below compares the cumulative total stockholder return on $100 invested, assuming the reinvestment of all dividends, on December 29, 2018, the last trading day before the beginning of our 2019 fiscal year, through the end of our 2023 fiscal year with the cumulative total return on $100 invested for the same period in the Dow Jones U.S.
Dow Jones US Health Care Index NASDAQ Composite Index Stock Performance Graph The graph below compares the cumulative total stockholder return on $100 invested, assuming the reinvestment of all dividends, on December 28, 2019, the last trading day before the beginning of our 2020 fiscal year, through the end of our 2024 fiscal year with the cumulative total return on $100 invested for the same period in the Dow Jones U.S.
On February 20, 2024, there were approximately 107,000 holders of record of our common stock and the last reported sales price was $75.64. A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares are held by banks, brokers and other financial institutions.
On February 18, 2025, there were approximately 108,000 holders of record of our common stock and the last reported sales price was $77.63. A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares are held by banks, brokers and other financial institutions.
Table of Contents 43 $50 $100 $150 $200 $250 $300 December 2018 December 2019 December 2020 December 2021 December 2022 December 2023 Henry Schein, Inc.
Table of Contents Index to Financial Statements 46 $50 $100 $150 $200 $250 $300 December 2019 December 2020 December 2021 December 2022 December 2023 December 2024 Henry Schein, Inc.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN ASSUMES $100 INVESTED ON DECEMBER 29, 2018 ASSUMES DIVIDENDS REINVESTED December 29, December 28, December 26, December 25, December 31, December 30, 2018 2019 2020 2021 2022 2023 Henry Schein, Inc. $ 100.00 $ 110.31 $ 109.05 $ 124.11 $ 132.28 $ 125.37 Dow Jones U.S.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN ASSUMES $100 INVESTED ON DECEMBER 28, 2019 ASSUMES DIVIDENDS REINVESTED December 28, December 26, December 25, December 31, December 30, December 28, 2019 2020 2021 2022 2023 2024 Henry Schein, Inc. $ 100.00 $ 98.86 $ 112.51 $ 119.92 $ 113.66 $ 105.70 Dow Jones U.S.
Subsequent additional increases totaling $4.9 billion, authorized by our Board, to the repurchase program provide for a total of $5.0 billion (including $400 million authorized on February 8, 2023) of shares of our common stock to be repurchased under this program.
Subsequent additional increases totaling $5.9 billion, authorized by our Board, to the repurchase program provide for a total of $6.0 billion (including $500 million authorized on January 27, 2025) of shares of our common stock to be repurchased under this program. Subject to market conditions and other factors, we plan to continue to accelerate our share repurchase activity.
As of December 30, 2023, we had repurchased approximately $4.7 billion of common stock (90,394,805 shares) under these initiatives, with $265 million available for future common stock share repurchases.
As of December 28, 2024, we had repurchased approximately $5.1 billion of common stock (95,814,454 shares) under these initiatives, with $380 million available for future common stock share repurchases.
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Health Care Index 100.00 123.48 140.83 175.06 168.44 171.61 NASDAQ Stock Market Composite Index 100.00 138.27 198.34 244.03 164.56 238.01
Added
Health Care Index 100.00 114.06 141.78 136.42 138.99 143.91 NASDAQ Stock Market Composite Index 100.00 143.44 176.49 119.01 172.14 227.78

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeNet Sales Net sales were as follows: % of % of Increase / (Decrease) 2023 Total 2022 Total $ % Health care distribution (1) Dental $ 7,539 61.1 % $ 7,473 59.1 % $ 66 0.9 % Medical 3,994 32.4 4,451 35.2 (457) (10.3) Total health care distribution 11,533 93.5 11,924 94.3 (391) (3.3) Technology and value-added services (2) 806 6.5 723 5.7 83 11.4 Total $ 12,339 100.0 $ 12,647 100.0 $ (308) (2.4) The components of our sales growth were as follows: Local Currency Growth/(Decline) Total Local Currency Growth/(Decline) Foreign Exchange Impact Total Sales Growth/(Decline) Local Internal Growth Acquisition Growth Extra Week Impact Health care distribution (1) Dental Merchandise (1.6) % 4.2 % (1.0) % 1.6 % 0.1 % 1.7 % Dental Equipment (0.9) 1.1 (2.1) (1.9) - (1.9) Total Dental (1.4) 3.4 (1.3) 0.7 0.2 0.9 Medical (11.2) 2.2 (1.3) (10.3) - (10.3) Total Health Care Distribution (5.1) 2.9 (1.2) (3.4) 0.1 (3.3) Technology and value-added services (2) 7.2 5.0 (0.8) 11.4 - 11.4 Total (4.4) 3.1 (1.2) (2.5) 0.1 (2.4) (1) Consists of consumable products, dental specialty products (including implant, orthodontic and endodontic products), small equipment, laboratory products, large equipment, equipment repair services, branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products, PPE products and vitamins.
Biggest changeThe components of our sales growth/(decline) were as follows: Local Currency Growth/(Decline) Total Local Currency Growth/(Decline) Foreign Exchange Impact Total Sales Growth/(Decline) Local Internal Growth Acquisition Growth Global Distribution and Value -Added Services Global Dental Merchandise (1.2) % 0.2 % (1.0) % (0.3) % (1.3) % Global Dental Equipment 2.7 0.3 3.0 (0.1) 2.9 Global Value -added services 0.4 21.4 21.8 (0.3) 21.5 Global Dental (0.2) 0.9 0.7 (0.3) 0.4 Global Medical (1.2) 5.5 4.3 - 4.3 Total Global Distribution and Value -Added Services (0.6) 2.6 2.0 (0.1) 1.9 Global Specialty Products 0.1 9.1 9.2 (0.5) 8.7 Global Technology 2.4 2.0 4.4 0.3 4.7 Total (0.4) 3.3 2.9 (0.2) 2.7 Table of Contents Index to Financial Statements 55 Global Sales Global net sales for the year ended December 28, 2024 increased 2.7%.
These assumptions are forward-looking and could be affected by future economic and market conditions. Please see Note 5 – Business Acquisitions and Divestitures for further discussion of our acquisitions.
These assumptions are forward-looking and could be affected by future economic and market conditions. Please see Note 5 – Business Acquisitions for further discussion of our acquisitions.
The Organization of Economic Co-Operation and Development (OECD) issued technical and administrative guidance on Pillar Two Model Rules in December 2021, which provides for a global minimum tax rate on the earnings of large multinational businesses, on a country-by-country basis. Effective January 1, 2024, the minimum global tax rate is 15% for various jurisdictions pursuant to the Pillar Two framework.
The Organization of Economic Co-Operation and Development (OECD) issued technical and administrative guidance on Pillar Two rules in December 2021, which provides for a global minimum tax rate on the earnings of large multinational businesses on a country-by-country basis. Effective January 1, 2024, the minimum global tax rate is 15% for various jurisdictions pursuant to the Pillar Two rules.
We serve more than one million customers worldwide including dental practitioners, laboratories, physician practices, and ambulatory surgery centers, as well as government, institutional health care clinics and other alternate care clinics. We believe that we have a strong brand identity due to our more than 91 years of experience distributing health care products.
We serve more than one million customers worldwide including dental practitioners, laboratories, physician practices and ambulatory surgery centers, as well as government, institutional health care clinics and other alternate care clinics. We believe that we have a strong brand identity due to our more than 93 years of experience distributing health care products.
It also has accelerated the growth of HMOs, group practices, other managed care accounts and collective buying groups, which, in addition to their emphasis on obtaining products at competitive prices, tend to favor distributors capable of providing specialized management information support.
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.
We finance our business primarily through cash generated from our operations, revolving credit facilities and debt placements. Please see Note 13 – 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.
We finance our business primarily through cash generated from our operations, revolving credit facilities and debt placements. Please see Note 14 – 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.
However, as a result of the adverse impact of the cybersecurity incident during the quarter ended December 30, 2023, our internally generated local currency sales, excluding sales of PPE products and COVID-19 test kits, on a full year basis were flat compared to the prior year.
However, as a result of the adverse impact of the 2023 cyber incident during the quarter ended December 30, 2023, our internally generated local currency sales, excluding sales of PPE products and COVID-19 test kits, on a full year basis were flat compared to the prior year.
Critical Accounting Estimates Our accounting policies are more fully described in Note 1 – Basis of Presentation and Significant Accounting Policies of the consolidated financial statements. The preparation of consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities.
Critical Accounting Estimates Our accounting policies are described in Note 1 – Basis of Presentation and Significant Accounting Policies of the consolidated financial statements. The preparation of consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities.
These impairment charges were calculated as the differences between the carrying values and the estimated fair values of the impaired intangible assets, using a discounted estimate of future cash flows. Please see Note 15 – Plans of Restructuring and Integration Costs for additional details.
These impairment charges were calculated as the differences between the carrying values and the estimated fair values of the impaired intangible assets, using a discounted estimate of future cash flows. Please see Note 16 – Plans of Restructuring and Integration Costs for additional details.
The population aged 65 to 84 years is projected to increase by approximately 23% during the same period. As a result of these market dynamics, annual expenditures for health care services continue to increase in the United States.
The population aged 65 to 84 years is projected to increase by approximately 18% during the same period. As a result of these market dynamics, annual expenditures for health care services continue to increase in the United States.
Such examinations may result in future tax and interest assessments by these taxing authorities for uncertain tax positions taken in respect of certain tax matters. Please see Note 14 – Income Taxes for further discussion.
Such examinations may result in future tax and interest assessments by these taxing authorities for uncertain tax positions taken in respect of certain tax matters. Please see Note 15 – Income Taxes for further discussion.
This topic prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to Table of Contents 60 be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by the taxing authorities.
This topic prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by the taxing authorities.
Health care spending is projected to reach approximately $7.2 trillion by 2031, or 19.6% of the nation’s projected gross domestic product. Government 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. See “ Item 1.
Health care spending is projected to reach approximately $7.7 trillion by 2032, or 19.7% of the nation’s projected gross domestic product. Government 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. See “ Item 1.
Table of Contents 47 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.
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.
Table of Contents 59 Definite-Lived Intangible Assets Annually or if we identify an impairment indicator, definite-lived intangible assets such as non-compete agreements, trademarks, trade names, customer relationships and lists, and product development are reviewed for impairment indicators. If any impairment indicators exist, quantitative testing is performed on the asset.
Definite-Lived Intangible Assets Annually or if we identify an impairment indicator, definite-lived intangible assets such as non-compete agreements, trademarks, trade names, customer relationships and lists, and product development are reviewed for impairment indicators. If any impairment indicators exist, quantitative testing is performed on the asset.
Table of Contents 46 Executive-Level Overview Henry Schein, Inc. is a solutions company for health care professionals powered by a network of people and technology. We believe we are the world’s largest provider of health care products and services primarily to office- based dental and medical practitioners, as well as alternate sites of care.
Table of Contents Index to Financial Statements 49 Executive-Level Overview Henry Schein, Inc. is a solutions company for health care professionals powered by a network of people and technology. We believe we are the world’s largest provider of health care products and services primarily to office- based dental and medical practitioners, as well as alternate sites of care.
We are headquartered in Melville, New York, employ approximately 25,000 people (of which approximately 11,500 are based outside of the United States) and have operations or affiliates in 33 countries and territories. Our broad global footprint has evolved over time through our organic success as well as through contribution from strategic acquisitions.
We are headquartered in Melville, New York, employ approximately 25,000 people (of which approximately 13,000 are based outside of the United States) and have operations or affiliates in 33 countries and territories. Our broad global footprint has evolved over time through our organic growth as well as through contribution from strategic acquisitions.
Table of Contents 54 Other Expense, Net Other expense, net was as follows: Variance 2023 2022 $ % Interest income $ 17 $ 8 $ 9 125.1 % Interest expense (87) (35) (52) (148.7) Other, net (3) 1 (4) n/a Other expense, net $ (73) $ (26) $ (47) (172.9) % Interest income increased primarily due to increased interest rates.
Other Expense, Net Other expense, net was as follows: Variance 2023 2022 $ % Interest income $ 17 $ 8 $ 9 125.1 % Interest expense (87) (35) (52) (148.7) Other, net (3) 1 (4) n/a Other expense, net $ (73) $ (26) $ (47) (172.9) Interest income increased primarily due to increased interest rates.
Table of Contents 48 Aging Population and Other Market Influences The health care products distribution industry continues to experience growth due to the aging population, increased health care awareness, the proliferation of medical technology and testing, new pharmacological treatments, and expanded third-party insurance coverage, partially offset by the effects of unemployment on insurance coverage.
Aging Population and Other Market Influences The health care products distribution industry continues to experience growth due to the aging population, increased health care awareness, the proliferation of medical technology and testing, new pharmacological treatments, and expanded third-party insurance coverage, partially offset by the effects of unemployment on Table of Contents Index to Financial Statements 51 insurance coverage.
While the U.S. economy has recently experienced inflationary pressures and strengthening of the U.S. dollar, their impacts have not been material to our results of operations.
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.
Additionally, changes to tax laws and statutory tax rates can have an impact on our determination. Our intention is to evaluate the realizability of our deferred tax assets quarterly. ASC Topic 740 prescribes the accounting for uncertainty in income taxes recognized in the financial statements in accordance with provisions contained within its guidance.
Additionally, changes to tax laws and statutory tax rates can have an impact on our determination. We evaluate the realizability of our deferred tax assets quarterly. Accounting Standards Codification Topic 740 prescribes the accounting for uncertainty in income taxes recognized in the financial statements in accordance with provisions contained within its guidance.
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 2023 and 2033, the 45 and older population is expected to grow by approximately 11%.
In addition, the physician market continues to benefit from the shift of procedures and diagnostic testing from acute care settings to alternate-care sites, particularly physicians’ offices. According to the U.S. Census Bureau’s International Database, between 2024 and 2034, the 45 and older population is expected to grow by approximately 10%.
Table of Contents 45 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 Newsroom page of our website.
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.
The Centers for Medicare and Medicaid Services, or CMS, published “National Health Expenditure Data” indicating that total national health care spending reached approximately $4.5 trillion in 2022, or 17.3% of the nation’s gross domestic product, the benchmark measure for annual production of goods and services in the United States.
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.
Table of Contents 57 Leases We have operating and finance leases for corporate offices, office space, distribution and other facilities, vehicles and certain equipment. Our leases have remaining terms of less than one year to approximately 18 years, some of which may include options to extend the leases for up to 15 years.
Table of Contents Index to Financial Statements 66 Leases We have operating and finance leases for corporate offices, office space, distribution and other facilities, vehicles and certain equipment. Our leases have remaining terms of less than one year to approximately 17 years, some of which may include options to extend the leases for up to 15 years.
The redemption amounts have been estimated based on recent transactions, expected future earnings and cash flows and, if such earnings and cash flows are not achieved, the value of the redeemable noncontrolling interests might be impacted. See Note 1 – Basis of Presentation and Significant Accounting Policies and Note 19 – Redeemable Noncontrolling Interests for additional information.
The redemption amounts have been estimated based on recent transactions and/or implied multiples of earnings and, if such earnings and cash flows are not achieved, the value of the redeemable noncontrolling interests might be impacted. See Note 1 – Basis of Presentation and Significant Accounting Policies and Note 20 – Redeemable Noncontrolling Interests for additional information.
On August 26, 2022, we acquired Midway Dental Supply. In connection with this acquisition, during the year ended December 31, 2022, we recorded integration costs of $3 million related to one-time employee and other costs, as well as restructuring charges of $9 million, which are included in the $128 million of restructuring charges discussed above.
In connection with this acquisition, during the year ended December 31, 2022, we recorded integration costs of $3 million related to one-time employee and other costs, as well as restructuring charges of $9 million, which are included in the $128 million of restructuring charges discussed above.
Unrecognized tax benefits As more fully disclosed in Note 14 – Income Taxes of “Notes to Consolidated Financial Statements,” we cannot reasonably estimate the timing of future cash flows related to our unrecognized tax benefits, including accrued interest, of $115 million as of December 30, 2023.
Unrecognized tax benefits As more fully disclosed in Note 15 – Income Taxes of “Notes to Consolidated Financial Statements,” we cannot reasonably estimate the timing of future cash flows related to our unrecognized tax benefits, including accrued interest, of $108 million and $115 million as of December 28, 2024 and December 30, 2023, respectively.
Census Bureau’s International Database, in 2023 there are approximately seven million Americans aged 85 years or older, the segment of the population most in need of long-term care and elder-care services. By the year 2050, that number is projected to nearly triple to approximately 19 million.
Census Bureau’s International Database, in 2024 there are approximately seven million Americans aged 85 years or older, the segment of the population most in need of long-term care and elder-care services. By the year 2050, that number is projected to increase to approximately 17 million.
During the year ended December 31, 2022, in connection with our restructuring plan, we vacated one of the buildings at our corporate headquarters in Melville, New York, which resulted in an accelerated amortization of a right-of-use lease asset of $34 million.
The disposal was completed during the first quarter of 2024. During the year ended December 31, 2022, in connection with the 2022 Plan, we vacated one of the buildings at our corporate headquarters in Melville, New York, which resulted in an accelerated amortization of a right-of-use lease asset of $34 million.
Goodwill Goodwill is subject to impairment analysis at least once annually as of the first day of our fourth quarter, or if an event occurs or circumstances change that would more likely than not reduce a reporting unit’s fair value below carrying value.
Goodwill Goodwill is subject to impairment analysis at least once annually as of the first day of our fourth quarter, or if an event occurs or circumstances change that would more likely than not reduce a reporting unit’s fair value below carrying value. We regard our reporting units to be our operating segments or one level below the operating segments.
We believe that the following critical accounting estimates, which have been discussed with the Audit Committee of our Board, affect the significant estimates and judgments used in the preparation of our consolidated financial statements: Inventories and Reserves Inventories consist primarily of finished goods and are valued at the lower of cost or net realizable value.
We believe that the following critical accounting estimates, which have been discussed with the Audit Committee of our Board, affect the significant estimates and judgments used in the preparation of our consolidated financial statements: Table of Contents Index to Financial Statements 67 Inventories and Reserves Inventories consist primarily of finished goods, raw materials and work-in-process and are valued at the lower of cost or net realizable value.
We believe that the trend towards cost containment has the potential to favorably affect demand for technology solutions, including software, which can enhance the efficiency and facilitation of practice management.
We believe that the trend towards cost containment has Table of Contents Index to Financial Statements 50 the potential to favorably affect demand for technology solutions, including software, which can enhance the efficiency and facilitation of practice management.
Table of Contents 55 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.
Table of Contents Index to Financial Statements 64 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.
Redeemable Noncontrolling Interests Some minority stockholders in certain of our consolidated subsidiaries have the right, at certain times, to require us to acquire their ownership interest in those entities at fair value.
Table of Contents Index to Financial Statements 69 Redeemable Noncontrolling Interests Some minority stockholders in certain of our consolidated subsidiaries have the right, at certain times, to require us to acquire their ownership interest in those entities at fair value.
Risk factors and uncertainties that could cause actual results to differ materially from current and historical results include, but are not limited to: our dependence on third parties for the manufacture and supply of our products; our ability to develop or acquire and maintain and protect new products (particularly technology products) and technologies that achieve market acceptance with acceptable margins; transitional challenges associated with acquisitions, dispositions and joint ventures, including the failure to achieve anticipated synergies/benefits, as well as significant demands on our operations, information systems, legal, regulatory, compliance, financial and human resources functions in connection with acquisitions, dispositions and joint ventures; certain provisions in our governing documents that may discourage third-party acquisitions of us; adverse changes in supplier rebates or other purchasing incentives; risks related to the sale of corporate brand products; security risks associated with our information systems and technology products and services, such as cyberattacks or other privacy or data security breaches (including the October 2023 incident); effects of a highly competitive (including, without limitation, competition from third-party online commerce sites) and consolidating market; changes in the health care industry; risks from expansion of customer purchasing power and multi-tiered costing structures; increases in shipping costs for our products or other service issues with our third-party shippers; general global and domestic macro-economic and political conditions, including inflation, deflation, recession, ongoing wars, fluctuations in energy pricing and the value of the U.S. dollar as compared to foreign currencies, and changes to other economic indicators, international trade agreements, potential trade barriers and terrorism; geopolitical wars; failure to comply with existing and future regulatory requirements; risks associated with the EU Medical Device Regulation; failure to comply with laws and regulations relating to health care fraud or other laws and regulations; failure to comply with laws and regulations relating to the collection, storage and processing of sensitive personal information or standards in electronic health records or transmissions; changes in tax legislation; risks related to product liability, intellectual property and other claims; risks associated with customs policies or legislative import restrictions; risks associated with disease outbreaks, epidemics, pandemics (such as the COVID-19 pandemic), or similar wide-spread public health concerns and other natural or man-made disasters; risks associated with our global operations; litigation risks; new or unanticipated litigation developments and the status of litigation matters; our dependence on our senior management, employee hiring and retention, and our relationships with customers, suppliers and manufacturers; and disruptions in financial markets.
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; risks related to the recently signed Strategic Partnership Agreement; our ability to develop or acquire and maintain and protect new products (particularly technology products) and services and utilize new technologies that achieve market acceptance with acceptable margins; transitional challenges associated with acquisitions, dispositions and joint ventures, including the failure to achieve anticipated synergies/benefits, as well as significant demands on our operations, information systems, legal, regulatory, compliance, financial and human resources functions in connection with acquisitions, dispositions and joint ventures; certain provisions in our governing documents that may discourage third-party acquisitions of us; adverse changes in supplier rebates or other purchasing incentives; risks related to the sale of corporate brand products; 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; changes in the health care industry; risks from expansion of customer purchasing power and multi-tiered costing structures; increases in shipping costs for our products or other service issues with our third-party shippers, 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, ongoing wars, fluctuations in energy pricing and the value of the U.S. dollar as compared to foreign currencies, and changes to other economic indicators, international trade agreements; the threat or outbreak of war, 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; supply chain disruption; geopolitical wars; 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; litigation risks; new or unanticipated litigation developments and the status of litigation matters; our dependence on our senior management, 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 restructuring costs for these periods primarily related to severance and employee-related costs, impairment of intangible assets, accelerated amortization of right-of-use lease assets and fixed assets, other lease exit costs, and certain business exit costs discussed below.
The restructuring costs for these periods primarily related to severance and employee-related costs, accelerated amortization of right-of-use lease assets and fixed assets, impairment of intangible assets related to disposal of a U.S. business, and other exit costs.
Table of Contents 51 2023 Compared to 2022 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.
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.
For the nine months ended September 30, 2023, the estimated increase in internally generated local currency sales, excluding PPE products and COVID-19 test kits, was 3.5%.
The 4.2% decrease in our internally generated local currency sales was primarily attributable to a decrease in sales of PPE products and COVID-19 test kits. For the nine months ended September 30, 2023, the estimated increase in internally generated local currency sales, excluding PPE products and COVID-19 test kits, was 3.5%.
During the year ended December 31, 2022 we recorded $49 million of impairment charges related to businesses in our health care distribution segment, the components of which were a $15 million charge related to the disposal of an unprofitable business and a $34 million charge related to customer lists and relationships attributable to customer attrition rates being higher than expected in certain other health care distribution businesses.
During the year ended December 31, 2022, we recorded $49 million of impairment charges related to businesses in our Global Distribution and Value-Added Services segment, consisting of a $15 million charge related to the disposal of an unprofitable business in connection with our restructuring initiatives, and a $34 million charge related to customer lists and relationships attributable to customer attrition rates being higher than expected in certain other Global Distribution and Value-Added Services businesses.
During the year ended December 30, 2023 we recorded $19 million of impairment charges related to businesses in our health care distribution segment, the components of which were $7 million primarily related to customer lists and relationships attributable to lower than anticipated operating margins in certain businesses, and a $12 million charge related to the planned exit of a business.
During the year ended December 30, 2023, we recorded $19 million of impairment charges related to businesses in our Global Distribution and Value-Added Services segment, consisting of $7 million primarily related to customer lists and relationships attributable to lower than anticipated operating margins in certain businesses, and a $12 million charge related to the planned exit of a business in connection with our restructuring initiatives.
Our business requires a substantial investment in working capital, which is susceptible to fluctuations during the year as a result of inventory purchase patterns and seasonal demands. Inventory purchase activity is a function of sales activity, special inventory forward buy-in opportunities and our desired level of inventory. We anticipate future increases in our working capital requirements.
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.
As of December 30, 2023 and December 31, 2022, our balance for redeemable noncontrolling interests was $864 million and $576 million, respectively. Please see Note 19 – Redeemable Noncontrolling Interests for further information.
As of December 28, 2024 and December 30, 2023, our balance for redeemable noncontrolling interests was $806 million and $864 million, respectively. Please see Note 20 – Redeemable Noncontrolling Interests for further information.
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.
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.
Based on our quantitative assessment for the year ended December 31, 2022, we recorded a $20 million impairment of goodwill relating to the disposal of an unprofitable business for which estimated fair value was lower than carrying value.
For the year ended December 31, 2022, in connection with our restructuring activities, we recorded a $20 million impairment of goodwill, in the Global Specialty Products segment, relating to the disposal of an unprofitable business for which estimated fair value was lower than carrying value.
Between 2023 and 2043, this age group is expected to grow by approximately 21%. This compares with expected total U.S. population growth rates of approximately 6% between 2023 and 2033 and approximately 11% between 2023 and 2043. According to the U.S.
Between 2024 and 2044, this age group is expected to grow by approximately 18%. This compares with expected total U.S. population growth rates of approximately 4% between 2024 and 2034 and approximately 6% between 2024 and 2044. According to the U.S.
These impairment charges were calculated as the differences between the carrying values and the estimated fair values of the impaired intangible assets, using a discounted estimate of future cash flows. Please see Note 15 – Plans of Restructuring and Integration Costs for additional details.
These impairment charges were calculated as the differences between the carrying values and the estimated fair values of the impaired intangible assets, using a discounted estimate of future cash flows.
During the year ended December 30, 2023, in connection with our restructuring plan, we recorded an impairment of an intangible asset of $12 million related to a planned disposal of a non-U.S. business. The disposal is expected to be completed in 2024. This impairment is included in the $80 million of restructuring charges discussed above.
During the year ended December 30, 2023, in connection with the 2022 Plan, we recorded an impairment of an intangible asset of $12 million related to disposal of a U.S. business. This impairment is included in the $80 million of restructuring costs discussed above and related to the Global Specialty Products segment.
Table of Contents 56 The following table summarizes selected measures of liquidity and capital resources: December 30, December 31, 2023 2022 Cash and cash equivalents $ 171 $ 117 Working capital (1) 1,805 1,764 Debt: Bank credit lines $ 264 $ 103 Current maturities of long-term debt 150 6 Long-term debt 1,937 1,040 Total debt $ 2,351 $ 1,149 Leases: Current operating lease liabilities $ 80 $ 73 Non-current operating lease liabilities 310 275 (1) Includes $284 million and $327 million of certain accounts receivable which serve as security for U.S. trade accounts receivable securitizations at December 30, 2023 and December 31, 2022, respectively.
Table of Contents Index to Financial Statements 65 The following table summarizes selected measures of liquidity and capital resources: December 28, December 30, 2024 2023 Cash and cash equivalents $ 122 $ 171 Working capital (1) 1,180 1,805 Debt: Bank credit lines $ 650 $ 264 Current maturities of long-term debt 56 150 Long-term debt 1,830 1,937 Total debt $ 2,536 $ 2,351 Leases: Current operating lease liabilities $ 75 $ 80 Non-current operating lease liabilities 259 310 (1) Includes $241 million and $284 million of certain accounts receivable which serve as security for U.S. trade accounts receivable securitization at December 28, 2024 and December 30, 2023, respectively.
As of December 30, 2023, our right-of-use assets related to operating leases were $325 million and our current and non-current operating lease liabilities were $80 million and $310 million, respectively. Please see Note 7 – Leases for further information.
As of December 28, 2024, our right-of-use assets related to operating leases were $293 million and our current and non-current operating lease liabilities were $75 million and $259 million, respectively. Please see Note 8 – Leases for further information.
During the year ended December 30, 2023, our operating expenses were favorably impacted by the recognition of a remeasurement gain of $18 million following an acquisition of a controlling interest of a previously held equity investment, and were negatively impacted by restructuring, an impairment of capitalized costs of $27 million and impairment of intangible assets of $7 million within our health care distribution segment.
During the year ended December 30, 2023, our operating expenses were favorably impacted by the recognition of a remeasurement gain of $18 million following an acquisition of a controlling interest of a previously held equity investment.
We have elected to recognize the tax on GILTI as a period expense in the period the tax is incurred. Accounting Standards Update For a discussion of accounting standards updates that have been adopted or will be adopted in the future, please see Note 1 – Basis of Presentation and Significant Accounting Policies included under Item 8.
Accounting Standards Update For a discussion of accounting standards updates that have been adopted or will be adopted in the future, please see Note 1 – Basis of Presentation and Significant Accounting Policies included under Item 8. Table of Contents Index to Financial Statements 70
Global net sales for the year ended December 30, 2023 decreased 2.4%. The components of our sales growth are presented in the table above. The 4.4% decrease in our internally generated local currency sales was primarily attributable to a decrease in sales of PPE products and COVID-19 test kits.
Excluding PPE products and COVID-19 test kits, our internally generated local currency sales were flat. Global Specialty Products Global Specialty Products net sales for the year ended December 30, 2023 increased 4.6%. The components of sales increase are presented in the table above.
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.
The order in which these factors appear should not be construed to indicate their relative importance or priority. Table of Contents Index to Financial Statements 48 We caution that these factors may not be exhaustive and that many of these factors are beyond our ability to control or predict.
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.
We 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.
Interest expense increased primarily due to increased borrowings and increased interest rates. Income Taxes Our effective tax rate was 22.1% for the year ended December 30, 2023 compared to 23.5% for the prior year. In each year, the difference between our effective and federal statutory tax rates primarily relates to state and foreign income taxes and interest expense.
Interest expense increased primarily due to increased borrowings and increased interest rates. Table of Contents Index to Financial Statements 63 Income Taxes Our effective tax rate was 22.1% for the year ended December 30, 2023 compared to 23.5% for the prior year.
During the years ended December 30, 2023, December 31, 2022, and December 25, 2021, we recorded restructuring costs of $80 million, $128 million, and $8 million, respectively.
During the years ended December 28, 2024, December 30, 2023, and December 31, 2022, in connection with our 2022 Plan, we recorded restructuring costs of $37 million, $80 million, and $128 million, respectively.
We also initiated the disposal of a non-profitable U.S. business and recorded related costs of $49 million, which primarily consisted of impairment of intangible assets and goodwill, inventory impairment, and severance and employee-related costs. These expenses are included in the $128 million of restructuring charges discussed above. The disposal was completed during the first quarter of 2023.
We also initiated the disposal of a non-profitable U.S. business within the Global Specialty Products segment and recorded related costs of $49 million, which primarily consisted of impairment of intangible assets and goodwill, inventory impairment, and severance and employee-related costs, which are included in the Global Specialty Products segment.
Cost is determined by the first-in, first-out method for merchandise and actual cost for large equipment and high tech equipment. In estimating carrying value of inventory, we consider many factors including the condition and Table of Contents 58 salability of the inventory by reviewing on-hand quantities, historical sales, forecasted sales and market and economic trends.
In estimating carrying value of inventory, we consider many factors including the condition and salability of the inventory by reviewing on-hand quantities, historical sales, forecasted sales and market and economic trends.
Health care distribution gross profit for the year ended December 30, 2023 decreased compared to the prior-year- period due to the decrease in sales resulting from the cybersecurity incident and a reduction in sales of PPE products and COVID-19 test kits, partially offset by gross profit from acquisitions and gross margin expansion as a result of a favorable impact of sales mix of higher-margin products.
The decrease in Global Distribution and Value-Added Services gross profit for the year ended December 30, 2023 compared to the prior year was due to the 2023 cyber incident and a reduction in sales of PPE products and COVID-19 test kits, partially offset by additional gross profit from acquisitions.
Redeemable Noncontrolling Interests Some minority stockholders in certain of our consolidated subsidiaries have the right, at certain times, to require us to acquire their ownership interest in those entities.
Subject to market conditions and other factors, we plan to continue to accelerate our share repurchase activity. 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.
While our primary go-to-market strategy is in our capacity as a distributor, we also market and sell our own corporate brand portfolio of cost-effective, high-quality consumable merchandise products, including in vitro diagnostic devices, manufacture certain dental specialty products in the areas of implants, orthodontics and endodontics, manufacture drug products, and repackage/relabel prescription drugs and/or devices.
While our primary go-to-market strategy is in our capacity as a distributor, we also market and sell our own corporate brand portfolio of cost-effective, high-quality consumable merchandise products.
Stock Repurchases On February 8, 2023, our Board authorized the repurchase of up to an additional $400 million in shares of our common stock. From March 3, 2003 through December 30, 2023, we repurchased $4.7 billion, or 90,394,805 shares, under our common stock repurchase programs, with $265 million available as of December 30, 2023 for future common stock share repurchases.
Stock Repurchases On January 27, 2025, our Board authorized the repurchase of up to an additional $500 million in shares of our common stock. From March 3, 2003 through December 28, 2024, we repurchased $5.1 billion, or 95,814,454 shares, under our common stock repurchase programs, with $380 million available as of December 28, 2024 for future common stock share repurchases.
This segment of our business was largely unaffected by the cybersecurity incident in the fourth quarter.
This segment of our business was not directly affected by the 2023 cyber incident in the fourth quarter.
We regard our reporting units to be our operating segments: our global dental and medical businesses, and technology and value-added services. Goodwill is allocated to such reporting units, for the purposes of preparing our impairment analyses, based on a specific identification basis.
Goodwill is allocated to such reporting units, for the purposes of preparing our impairment analyses, based on a specific identification basis.
The components of our sales growth are presented in the table above. The internally generated local currency decrease in medical sales is primarily attributable to the impact of the cybersecurity incident that occurred during the fourth quarter of the year ended December 30, 2023 and to lower sales of PPE products and COVID-19 test kits and other point-of-care diagnostic products.
The 11.0% decrease in internally generated local currency medical sales is primarily attributable to the impact of the 2023 cyber incident and to lower sales of PPE products and COVID-19 test kits and other point-of-care diagnostic products.
Within our health care distribution segment, gross profit margins may vary between the periods as a result of the changes in the mix of products sold as well as changes in our customer mix.
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.
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 we operate in jurisdictions which have adopted Pillar 2, we are continuing to analyze the implications to effectively manage the impact for 2024 and beyond.
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.
Technology and value-added services gross profit increased as a result of a higher gross profit from internally generated sales and gross profit from acquisitions, as well as an increase in gross margin rates primarily due to product mix and increases in productivity.
The increase in Global Specialty Products gross profit reflects increased sales volume and higher gross profit from internally generated sales and gross profit from acquisitions. The increase in gross margin rates was due to product mix. The increase in Global Technology gross profit is the result of a higher gross profit from internally generated sales and gross profit from acquisitions.
Contractual obligations The following table summarizes our contractual obligations related to fixed and variable rate long-term debt and finance lease obligations, including interest (assuming a weighted average interest rate of 4.8%), as well as inventory purchase commitments and operating lease obligations as of December 30, 2023: Payments due by period 2 - 3 years 4 - 5 years > 5 years Total Contractual obligations: Long-term debt, including interest $ 243 $ 1,097 $ 346 $ 783 $ 2,469 Inventory purchase commitments 5 8 4 - 17 Operating lease obligations 92 141 86 119 438 Transition tax obligations 11 24 - - 35 Finance lease obligations, including interest 4 3 2 - 9 Total $ 355 $ 1,273 $ 438 $ 902 $ 2,968 For information relating to our debt please see Note 13 – Debt .
Contractual obligations The following table summarizes our contractual obligations related to fixed and variable rate long-term debt and finance lease obligations, including interest (assuming a weighted average interest rate of 4.88%), as well as inventory purchase commitments and operating lease obligations as of December 28, 2024: Payments due by period 2 - 3 years 4 - 5 years > 5 years Total Contractual obligations: Long-term debt, including interest $ 140 $ 1,053 $ 337 $ 657 $ 2,187 Inventory purchase commitments 9 5 - - 14 Operating lease obligations 87 130 80 81 378 Transition tax obligations 24 - - - 24 Finance lease obligations, including interest 3 3 1 - 7 Total $ 263 $ 1,191 $ 418 $ 738 $ 2,610 For information relating to our debt please see Note 14 – Debt .
Gross Profit Gross profit and gross margin percentages by segment and in total were as follows: Gross Gross Increase / (Decrease) 2023 Margin % 2022 Margin % $ % Health care distribution $ 3,312 28.7 % $ 3,357 28.2 % $ (45) (1.3) % Technology and value-added services 549 68.0 474 65.5 75 15.7 Total $ 3,861 31.3 $ 3,831 30.3 $ 30 0.8 Table of Contents 53 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 Profit Gross profit and gross margin percentages by reportable segment were as follows: Gross Gross Increase / (Decrease) 2023 Margin % 2022 Margin % $ % Global Distribution and Value -Added Services $ 2,699 25.6 % $ 2,769 25.2 % $ (70) (2.5) % Global Specialty Products 720 54.1 678 53.3 42 6.3 Global Technology 417 67.4 375 69.2 42 11.3 Corporate 24 n/a 9 n/a 15 152.9 Total $ 3,860 31.7 $ 3,831 31.3 $ 29 0.8 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.
Net cash used in investing activities was $1,135 million for the year ended December 30, 2023, compared to net cash used in investing activities of $276 million for the prior year.
Net cash used in financing activities was $510 million for the year ended December 28, 2024, compared to net cash provided by financing activities of $701 million for the prior year.
Net cash provided by operating activities was $500 million for the year ended December 30, 2023, compared to net cash provided by operating activities of $602 million for the prior year. The net change of $102 million was primarily attributable to lower cash net income.
Net cash provided by operating activities was $848 million for the year ended December 28, 2024, compared to net cash provided by operating activities of $500 million for the prior year. The net change of $348 million was primarily attributable to changes in working capital accounts (primarily accounts receivable and inventory), and higher cash net income.
We estimate that sales of PPE products and COVID-19 test kits were approximately $375 million and $797 million for the years ended December 30, 2023 and December 31, 2022, respectively, representing an estimated decrease of $422 million or 52.9% versus the prior year, with the $422 million net decrease year-over-year representing 10.6% of medical net sales for the year ended December 30, 2023.
We estimate that sales of PPE products and COVID-19 test kits were approximately $710 million for the year ended December 30, 2023 as compared to $1,238 million for the year ended December 31, 2022 representing an estimated decrease of $528 million.
Technology and value-added services Technology and value-added services net sales for the year ended December 30, 2023 increased 11.4%. The components of our sales growth are presented in the table above. During the year ended December 30, 2023, the trend for sales of practice management software growth remains strong as we continued to increase the number of cloud-based users.
During the year ended December 30, 2023, the trend for sales of practice management software growth remained strong as we continued to increase the number of cloud-based users. We also experienced increased demand for our revenue cycle management solutions and our analytical products.
We undertake no duty and have no obligation to update forward-looking statements except as required by law.
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.
The following tables summarize the significant components of our operating results and cash flows: Years Ended December 30, December 31, December 25, 2023 2022 2021 Operating results: Net sales $ 12,339 $ 12,647 $ 12,401 Cost of sales 8,478 8,816 8,727 Gross profit 3,861 3,831 3,674 Operating expenses: Selling, general and administrative 2,956 2,771 2,634 Depreciation and amortization 210 182 180 Restructuring and integration costs 80 131 8 Operating income $ 615 $ 747 $ 852 Other expense, net $ (73) $ (26) $ (21) Gain on sale of equity investment - - 7 Net income 436 566 660 Net income attributable to Henry Schein, Inc. 416 538 631 Years Ended December 30, December 31, December 25, 2023 2022 2021 Cash flows: Net cash provided by operating activities $ 500 $ 602 $ 710 Net cash used in investing activities (1,135) (276) (677) Net cash provided by (used in) financing activities 701 (315) (333) Table of Contents 50 Plans of Restructuring and Integration Costs On August 1, 2022, we committed to a restructuring plan focused on funding the priorities of the BOLD+1 strategic plan, streamlining operations and other initiatives to increase efficiency.
Table of Contents Index to Financial Statements 52 Results of Operations The following tables summarize the significant components of our operating results and cash flows for each of the three years ended December 28, 2024, December 30, 2023, and December 31, 2022 (in millions): Years Ended December 28, December 30, December 31, 2024 2023 2022 Operating results: Net sales $ 12,673 $ 12,339 $ 12,647 Cost of sales 8,657 8,479 8,816 Gross profit 4,016 3,860 3,831 Operating expenses: Selling, general and administrative 3,034 2,956 2,771 Depreciation and amortization 251 209 182 Restructuring and integration costs 110 80 131 Operating income $ 621 $ 615 $ 747 Other expense, net $ (108) $ (73) $ (26) Income taxes (128) (120) (170) Net income 398 436 566 Net income attributable to Henry Schein, Inc. 390 416 538 Years Ended December 28, December 30, December 31, 2024 2023 2022 Cash flows: Net cash provided by operating activities $ 848 $ 500 $ 602 Net cash used in investing activities (430) (1,135) (276) Net cash provided by (used in) financing activities (510) 701 (315) Table of Contents Index to Financial Statements 53 Plans of Restructuring and Integration Costs 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 years ended December 30, 2023 and December 31, 2022, we wrote off approximately $16 million and $10 million, respectively, of fully reserved accounts receivable against our trade receivable reserve. Our inventory turns from operations was 4.5 as of December 30, 2023 and 4.7 as of December 31, 2022.
Adjusted for the impact of the cyber incident our days sales outstanding decreased to 45.7 days as of December 28, 2024. During the years ended December 28, 2024 and December 30, 2023, we wrote off approximately $12 million and $16 million, respectively, of fully reserved accounts receivable against our trade receivable reserve.
We also experienced increased demand for our revenue cycle management solutions and our analytical products. The increase in sales during the year ended December 30, 2023 was partially offset by the expiration, during the year ended December 31, 2022, of a modestly profitable government contract in one of our value-added services businesses.
The increase in internally generated local currency value-added services sales is attributable to an increase in our dental billing solutions, partially offset by the expiration, during the year ended December 31, 2022, of a modestly profitable government contract in one of our value-added services businesses.
Our sales decrease in internally generated local currency for dental equipment was also primarily attributable to the impact of the cybersecurity incident.
The 0.6% decrease in internally generated local currency dental sales was attributable to a decrease in sales of dental merchandise and dental equipment as a result of the adverse impact of the 2023 cyber incident.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

13 edited+1 added−0 removed11 unchanged
Biggest changeUnder the terms of the interest rate swap agreements, we receive variable interest payments based on the one-month Term SOFR rate and pay interest at a fixed rate. As of December 30, 2023, the notional value of the interest rate swap agreements was $741 million. This term loan matures on July 11, 2026.
Biggest changeUnder the terms of the interest rate swap agreements, we receive variable interest payments based on the one-month Term SOFR rate and pay interest at a fixed rate. As of December 28, 2024, the notional value of the interest rate swap agreements was $713 million.
Total Return Swaps On March 20, 2020, we entered into a total return swap for the purpose of economically hedging our unfunded non- qualified supplemental retirement plan and our deferred compensation plan obligation. Table of Contents 61 At inception, the notional value of the investments in these plans was $43 million.
Total Return Swaps On March 20, 2020, we entered into a total return swap for the purpose of economically hedging our unfunded non- qualified supplemental retirement plan and our deferred compensation plan obligation. At inception, the notional value of the investments in these plans was $43 million.
A hypothetical 5% change in the average value of the U.S. dollar in 2023 compared to foreign currencies would have changed our 2023 reported Net income attributable to Henry Schein, Inc. by approximately $5 million.
A hypothetical 5% change in the average value of the U.S. dollar in 2024 compared to foreign currencies would have changed our 2024 reported Net income attributable to Henry Schein, Inc. by approximately $7 million.
Our revolving credit facility which we entered into on July 11, 2023 and expires on July 11, 2028, has a variable interest rate that is based on the SOFR plus a spread based on our leverage ratio at the end of each financial reporting quarter. As of December 30, 2023, there was $200 million outstanding under this revolving credit facility.
Our revolving credit facility, which we entered into on July 11, 2023 and expires on July 11, 2028, has a variable interest rate that is based on the SOFR plus a spread based on our leverage ratio at the end of each financial reporting quarter. As of December 28, 2024, there was $0 million outstanding under this revolving credit facility.
Our U.S. trade accounts receivable securitization, which we entered into on April 17, 2013 and expires on December 15, 2025, has a variable interest rate that is based upon the asset-backed commercial paper rate.
Our U.S. trade accounts receivable securitization, which we entered into on April 17, 2013 and expires on December 6, 2027, has a variable interest rate that is based upon the asset-backed commercial paper rate.
For the years ended December 30, 2023, December 31, 2022, and December 25, 2021 we have recorded a gain/(loss), within selling, general and administrative expense, of approximately $10 million, $(17) million and $12 million, respectively, net of transaction costs, related to this undesignated swap.
For the years ended December 28, 2024, December 30, 2023, and December 31, 2022 we have recorded a gain/(loss), within selling, general and administrative expense, of approximately $8 million, $10 million and $(17) million, respectively, net of transaction costs, related to this undesignated swap.
Included in the forward foreign currency exchange agreements, Henry Schein, Inc. had net investment designated EUR/USD forward contracts with notional values of approximately €300 million and reported fair values of $(7) million. A 5% increase in the value of the Euro to the USD from December 30, 2023 would decrease the fair value of these forward contracts by $18 million.
Included in the forward foreign currency exchange agreements, Henry Schein, Inc. had net investment designated EUR/USD forward contracts with notional values of approximately €300 million and reported fair values of $9 million. A 5% increase in the value of the Euro to the USD from December 28, 2024 would decrease the fair value of these forward contracts by $17 million.
As of December 30, 2023, our forward foreign currency exchange agreements, which expire through November 3, 2028, had a fair value of $(8) million as determined by quoted market prices.
As of December 28, 2024, our forward foreign currency exchange agreements, which expire through November 3, 2028, had a fair value of $12 million as determined by quoted market prices.
During the year ended December 30, 2023, the average outstanding balance was approximately $61 million. Based upon our average outstanding balances, for each hypothetical increase of 25 basis points, our interest expense thereunder would have increased by $0.2 million.
During the year ended December 28, 2024, the average outstanding balance was approximately $50 million. Based upon our average outstanding balances, for each hypothetical increase of 25 basis points, our interest expense thereunder would have increased by $0.1 million.
At December 30, 2023, the notional value of the investments in these plans was $96 million. At December 30, 2023, the financing blended rate for this swap was based on the Secured Overnight Financing Rate (“SOFR”) of 5.33% plus 0.52%, for a combined rate of 5.85%.
At December 28, 2024, the notional value of the investments in these plans was $106 million. At December 28, 2024, the financing blended rate for this swap was based on the Secured Overnight Financing Rate (“SOFR”) of 4.53% plus 0.61%, for a combined rate of 5.14%.
Interest Rate Risk As of December 30, 2023, we had variable interest rate exposure for certain of our revolving credit facilities and our U.S. trade accounts receivable securitization.
Table of Contents Index to Financial Statements 71 Interest Rate Risk As of December 28, 2024, we had variable interest rate exposure for certain of our revolving credit facilities and our U.S. trade accounts receivable securitization.
As of December 30, 2023, the commercial paper rate was 5.67% plus 0.75%, for a combined rate of 6.42%, and the outstanding balance under this securitization facility was $210 million. During the year ended December 30, 2023, the average outstanding balance was approximately $238 million.
As of December 28, 2024, the commercial paper rate was 4.73% plus 0.75%, for a combined rate of 5.48%, and the outstanding balance under this securitization facility was $150 million. During the year ended December 28, 2024, the average outstanding balance was approximately $252 million.
At December 30, 2023, the interest on this Term Credit Agreement was 5.36% plus 1.35% for a combined rate of 6.71%. However, we have a hedge in place (see Note 12 – Derivatives and Hedging Activities for additional information) that ultimately creates an effective fixed rate of 5.79%. Table of Contents 62
At December 28, 2024, the interest rate under the Term Credit Agreement was 4.45% plus 1.60% for a combined rate of 6.05%. However, we have a hedge in place (see Note 13 – Derivatives and Hedging Activities for additional information) that ultimately creates an effective fixed rate of 6.04%. Table of Contents 72
Added
On July 11, 2023, we entered into a three-year $750 million term loan credit agreement (the “Term Credit Agreement”). The interest rate on this term loan is based on the Term SOFR plus a spread based on our leverage ratio at the end of each financial reporting quarter. This term loan matures on July 11, 2026.

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