Henry Schein Inc.
11/04/2025 | Press release | Distributed by Public on 11/04/2025 13:34
Quarterly Report for Quarter Ending September 27, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Cautionary Note Regarding Forward-Looking Statements
In accordance with the "Safe Harbor" provisions of the Private Securities
Litigation Reform Act of 1995, we
provide the following cautionary remarks regarding important factors
that, among others, could cause future results
to differ materially from the forward-looking statements, expectations and assumptions
expressed or implied herein.
All forward-looking statements made by us are subject to risks and uncertainties
and are not guarantees of future
performance.
These forward-looking statements involve known and unknown
risks, uncertainties and other factors
that may cause our actual results, performance and achievements
or industry results to be materially different from
any future results, performance or achievements expressed or implied
by such forward-looking statements.
These
statements are generally identified by the use of such terms as "may," "could," "expect," "intend," "believe,"
"plan," "estimate," "forecast," "project," "anticipate," "to be," "to
make" or other comparable terms.
Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed in the documents we
file with the Securities and Exchange Commission (SEC), including our Annual
Report on Form 10-K.
Risk factors and uncertainties that could cause actual results to differ materially from
current and historical results
include, but are not limited to: our dependence on third parties for
the manufacture and supply of our products and
where we manufacture products, our dependence on third parties
for raw materials or purchased components; risks
relating to the achievement of our strategic growth objectives, including
anticipated results of restructuring and
value-optimization initiatives; risks related to the Strategic Partnership Agreement
with KKR Hawaii Aggregator
L.P.
entered into in January 2025; transitions in senior company leadership;
our ability to develop or acquire and
maintain and protect new products (particularly technology and specialty
products) and services and utilize new
technologies that achieve market acceptance with acceptable margins; transitional
challenges associated with
acquisitions and joint ventures, including the failure to achieve anticipated
synergies/benefits, as well as significant
demands on our operations, information systems, legal, regulatory, compliance, financial and human resources
functions in connection with acquisitions, dispositions and joint ventures; certain
provisions in our governing
documents that may discourage third-party acquisitions of us; adverse changes
in supplier rebates or other
purchasing incentives; risks related to the sale of corporate brand products;
risks related to activist investors;
security risks associated with our information systems and technology
products and services, such as cyberattacks
or other privacy or data security breaches (including the October 2023 incident);
effects of a highly competitive
(including, without limitation, competition from third-party online commerce
sites) and consolidating market;
political, economic and regulatory influences on the health care
industry; risks from expansion of customer
purchasing power and multi-tiered costing structures; increases in shipping costs
for our products or other service
issues with our third-party shippers, and increases in fuel and energy costs; changes
in laws and policies governing
manufacturing, development and investment in territories and countries
where we do business; general global and
domestic macro-economic and political conditions, including inflation,
deflation, recession, unemployment (and
corresponding increase in under-insured populations), consumer confidence,
sovereign debt levels, fluctuations in
energy pricing and the value of the U.S. dollar as compared to foreign currencies
and changes to other economic
indicators; failure to comply with existing and future regulatory
requirements, including relating to health care;
risks associated with the EU Medical Device Regulation; failure to comply with
laws and regulations relating to
health care fraud or other laws and regulations; failure to comply with
laws and regulations relating to the
collection, storage and processing of sensitive personal information or standards
in electronic health records or
transmissions; changes in tax legislation, changes in tax rates and availability
of certain tax deductions; risks related
to product liability, intellectual property and other claims; risks associated with customs policies or legislative
import restrictions; risks associated with disease outbreaks, epidemics,
pandemics (such as the COVID-19
pandemic), or similar wide-spread public health concerns and other
natural or man-made disasters; risks associated
with our global operations; the threat or outbreak of war (including, without
limitation, geopolitical wars), terrorism
or public unrest (including, without limitation, the war in Ukraine, the Israel-Gaza
war and other unrest and threats
in the Middle East and the possibility of a wider European or global conflict);
changes to laws and policies
governing foreign trade, tariffs and sanctions or greater restrictions on imports and
exports, including changes to
international trade agreements and the current imposition of (and the
potential for additional) tariffs by the U.S. on
numerous countries and retaliatory tariffs; supply chain disruption; litigation
risks; new or unanticipated litigation
developments and the status of litigation matters; our dependence on
our senior management (including, without
limitation, succession planning for our Chief Executive Officer), employee hiring
and retention, increases in labor
costs or health care costs, and our relationships with customers, suppliers
and manufacturers; and disruptions in
financial markets.
The order in which these factors appear should not be
construed to indicate their relative
importance or priority.
We caution that these factors may not be exhaustive and that many of these factors are beyond our ability to control
or predict.
Accordingly, any forward-looking statements contained herein should not be relied upon as a prediction
of actual results.
We undertake no duty and have no obligation to update forward-looking statements except as
required by law.
Where You
Can Find Important Information
We may disclose important information through one or more of the following channels: SEC filings, public
conference calls and webcasts, press releases, the investor relations
page of our website (www.henryschein.com)
and the social media channels identified on the About Media Center page
of our website.
Recent Developments
While the U.S. economy has experienced inflationary pressures and fluctuation
of the U.S. dollar, their impacts
have not been material to our results of operations.
Though inflation impacts both our revenues and costs, the
depth
and breadth of our product portfolio often allows us to offer lower-cost national brand solutions
or corporate brand
alternatives to our more price-sensitive customers who are unwilling to
absorb price increases, thus positioning us
to protect our gross profit.
Segment Reporting
During the fourth quarter of our fiscal year ended December 28, 2024,
we revised our reportable segments to align
with how the Chairman and Chief Executive Officer manages the business, assesses
performance and allocates
resources.
Our revised reportable segments now consist of: (i) Global Distribution
and Value
-Added Services; (ii)
Global Specialty Products; and (iii) Global Technology.
Global Distribution and Value-Added Services includes distribution to the global dental and medical markets of
national brand and corporate brand merchandise, as well as equipment and related
technical services.
This segment
also includes value-added services such as financial services, continuing
education services, consulting and other
services.
This segment also markets and sells under our own corporate brand
a portfolio of cost-effective, high-
quality consumable merchandise.
Global Specialty Products includes manufacturing, marketing
and sales of dental
implant and biomaterial products; and endodontic, orthodontic and orthopedic
products and other health care-
related products and services.
Global Technology includes development and distribution of practice management
software, e-services and other products, which are distributed to health
care providers.
Cyber Incident
As previously reported, 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.
During the three and nine months ended September 28, 2024, we had a
sales decrease in our dental and medical
distribution businesses, which we believe was primarily a result of lower sales
to episodic customers following the
cyber incident.
With respect to the October 2023 cyber incident, we have a $60 million insurance policy, following a $5 million
retention.
During the three and nine months ended September 27, 2025,
we did not incur any expenses directly
related to the cyber incident.
During the three and nine months ended September 28, 2024 we
incurred $3 million
and $8 million, respectively, of expenses related to the cyber incident, mostly consisting of professional
fees.
During the three and nine months ended September 28, 2024, we received
insurance proceeds of $10 million and
$20 million, respectively, representing a partial insurance recovery of losses related to the cyber incident.
During
the three months ended March 29, 2025 we received insurance proceeds
of $20 million, representing the remaining
insurance recovery of losses related to the cyber incident.
The expenses and insurance recoveries related to the
cyber incident are included in the selling, general and administrative
line in our condensed consolidated statements
of income.
Tariffs and Related Economic Conditions
The U.S. has adopted new and increased tariffs on imports from countries, subject
to evolving exemptions, with
additional tariff increases proposed but currently on pause.
Some countries have imposed retaliatory tariffs and
other restrictions on imports from the U.S.
The U.S. government is reported to be in negotiations with certain
other
countries over tariff rates and other trade policies.
These developments, and anticipated future developments, have
created a volatile environment for global trade, and new trade policies
with individual countries, if finalized, are
expected to be announced incrementally over a period of time.
The tariffs did not have a material impact on our results of operations in the first,
second, or third quarter of this
fiscal year, although sales of U.S. dental equipment were temporarily impacted by market uncertainty
related to
tariffs in the second half of the quarter ended June 28, 2025.
It is unclear whether, or the extent to which, the
current tariffs on trade with numerous countries will remain in place, or change, the
exceptions that may apply, and
their timing.
One Big Beautiful Bill Act
In the United States, the OBBBA, signed into law on July 4, 2025, includes
a number of provisions that are
expected to result in reductions in the number of Medicaid enrollees, which
will reduce utilization of services and
covered products generally.
There are also several provisions that will reduce federal funding to state
Medicaid
programs.
The OBBBA, in combination with tariffs, will almost certainly have an
adverse impact on utilization,
Medicaid payment and cost of production (if foreign components are used).
The OBBBA also includes changes to corporate tax rates, limitations
on certain deductions and modifications to
international tax provisions.
Executive-Level Overview
Henry Schein, Inc. is a solutions company for health care professionals powered
by a network of people and
technology.
We
believe we are the world's largest provider of health care products and services primarily to office-
based dental and medical practitioners, as well as alternate sites of care.
We
serve more than one million customers
worldwide including dental practitioners, laboratories, physician practices and
ambulatory surgery centers, as well
as government, institutional health care clinics, home health providers, 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.
We
are headquartered in Melville, New York, employ more than 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.
We
have established strategically located distribution centers around
the world to enable us to better serve our
customers and increase our operating efficiency.
This infrastructure, together with broad product and service
offerings at competitive prices, and a strong commitment to customer service, enables
us to be a single source of
supply for our customers' needs.
As a distributor, we market and sell branded products as well as our own corporate brand portfolio of
cost-effective,
high-quality consumable merchandise products.
We
also manufacture, source and sell a range of company-owned
manufactured products, primarily implants, biomaterial products, endodontics,
handpiece and small equipment,
hand instrument and repair, restoratives, orthodontics, wound care, orthopedics and dental lab products.
We
have
achieved scale in these global businesses primarily through acquisitions, as
manufacturers of these products
typically do not utilize a distribution channel to serve customers.
During the fourth quarter of our fiscal year ended December 28, 2024, we
revised our reportable segments to align
with how the Chairman and Chief Executive Officer manages the business, assesses performance
and allocates
resources.
Our revised reportable segments now consist of: (i) Global Distribution
and Value
-Added Services; (ii)
Global Specialty Products; and (iii) Global Technology.
Global Distribution and Value-Added Services includes distribution to the global dental and medical markets of
national brand and corporate brand merchandise, as well as equipment and related
technical services.
This segment
also includes value-added services such as financial services, continuing education
services, consulting and other
services.
This segment also markets and sells under our own corporate brand,
a portfolio of cost-effective, high-
quality consumable merchandise.
Global Specialty Products includes manufacturing, marketing
and sales of dental
implant and biomaterial products; and endodontic, orthodontic and orthopedic
products and other health care-
related products and services.
Global Technology includes development and distribution of practice management
software, e-services and other products, which are distributed to health
care providers.
A key element to grow closer to our customers is our One Schein initiative, which
is a unified go-to-market
approach that enables practitioners to work synergistically with our supply chain,
equipment sales and service and
other value-added services, allowing our customers to leverage the
combined value that we offer through a single
program.
Specifically, One Schein provides customers with streamlined access to our comprehensive offering of
national brand products, corporate brand products and proprietary specialty products
and solutions (including
implant, orthodontic and endodontic products).
In addition, customers have access to a wide range of services,
including software and other value-added services.
Industry Overview
In recent years, the health care industry has increasingly focused on cost containment.
This trend has benefited
distributors capable of providing a broad array of products and services at low
prices.
It also has accelerated the
growth of DSOs, GPOs, HMOs, group practices, other managed care
accounts and collective buying groups, which,
in addition to their emphasis on obtaining products at competitive prices,
tend to favor distributors capable of
providing specialized management information support.
We
believe that the trend towards cost containment has
the potential to favorably affect demand for technology solutions, including software, which
can enhance the
efficiency and facilitation of practice management.
Our operating results in recent years have been significantly affected by strategies
and transactions that we
undertook to expand our business, domestically and internationally, in part to address significant changes in the
health care industry, including consolidation of health care distribution companies, health care reform, trends
toward managed care, cuts in Medicare and collective purchasing arrangements.
Industry Consolidation
The health care products distribution industry, as it relates to office-based health care practitioners, is fragmented
and diverse.
The industry ranges from sole practitioners working out of
relatively small offices to group practices
or service organizations ranging in size from a few practitioners to a large number of practitioners who have
combined or otherwise associated their practices.
Due in part to the inability of office-based health care practitioners to store and manage
large quantities of supplies
in their offices, the distribution of health care supplies and small equipment to office-based health
care practitioners
has been characterized by frequent, small quantity orders, and a need for rapid,
reliable and substantially complete
order fulfillment.
The purchasing decisions within an office-based health care practice are typically
made by the
practitioner or an administrative assistant.
Supplies and small equipment are generally purchased from more
than
one distributor, with one generally serving as the primary supplier.
The trend of consolidation extends to our customer base.
Health care practitioners are increasingly seeking to
partner, affiliate or combine with larger entities such as hospitals, health systems, group practices or physician
hospital organizations.
In many cases, purchasing decisions for consolidated groups are
made at a centralized or
professional staff level; however, orders are delivered to the practitioners' offices.
Our approach to acquisitions and joint ventures has been to expand our role
as a provider of products and services
to the health care industry.
This trend has resulted in our expansion into service areas that complement
our existing
operations and provide opportunities for us to develop synergies with, and thus strengthen, the acquired
businesses.
As industry consolidation continues, we believe that we are positioned
to capitalize on this trend, as we believe we
have the ability to support increased sales through our existing infrastructure, although
there can be no assurances
that we will be able to successfully accomplish this.
We
are focused on building relationships with decision makers
who do not reside in the office-based practitioner setting.
As the health care industry continues to change, we continually evaluate possible
candidates for joint venture or
acquisition and intend to continue to seek opportunities to expand our
role as a provider of products and services to
the health care industry.
There can be no assurance that we will be able to successfully pursue
any such
opportunity or consummate any such transaction, if pursued.
If additional transactions are entered into or
consummated, we would incur merger and/or acquisition-related costs, and there
can be no assurance that the
integration efforts associated with any such transaction would be successful.
Aging Population and Other Market Influences
The health care products distribution industry continues to experience growth
due to the aging population,
increased health care awareness, the proliferation of medical technology
and testing, new pharmacological
treatments, and expanded third-party insurance coverage, partially offset by the effects of unemployment
on
insurance coverage.
In addition, the physician market continues to benefit from the
shift of procedures and
diagnostic testing from acute care settings to alternate-care sites, particularly
physicians' offices.
According to the U.S. Census Bureau's International Database, between 2025 and 2035, the 45 and older
population is expected to grow by approximately 10%.
Between 2025 and 2045, this age group is expected to grow
by approximately 17%.
This compares with expected total U.S. population growth
rates of approximately 4%
between 2025 and 2035 and approximately 6% between 2025 and 2045.
According to the U.S. Census Bureau's International Database, in 2025 there are approximately seven million
Americans aged 85 years or older, the segment of the population most in need of long-term care
and elder-care
services.
By the year 2050, that number is projected to increase to approximately
17 million.
The population aged
65 to 84 years is projected to increase by approximately 15% during
the same period.
As a result of these market dynamics, annual expenditures for health care services
continue to increase in the
United States.
We
believe that demand for our products and services will grow while
continuing to be impacted by
current and future operating, economic and industry conditions.
The Centers for Medicare and Medicaid Services,
or CMS, published "National Health Expenditure Data" indicating that
total national health care spending reached
approximately $4.9 trillion in 2023, or 17.6% of the nation's gross domestic product, the benchmark measure
for
annual production of goods and services in the United States.
Health care spending is projected to reach
approximately $8.6 trillion by 2033, or 20.3% of the nation's projected gross domestic product.
We
believe similar demographic changes are also occurring in other
markets we serve outside the U.S.
Government
Certain of our businesses involve the distribution, manufacturing, importation,
exportation, marketing, sale and
promotion of pharmaceuticals and/or medical devices, and in this regard, we
are subject to extensive local, state,
federal and foreign governmental laws and regulations, including as applicable
to our wholesale distribution of
pharmaceuticals and medical devices, manufacturing activities, and as part of
our specialty home medical supplies
businesses that distribute and sell medical equipment and supplies directly
to patients.
Federal, state and certain
foreign governments have also increased enforcement activity in the health care
sector, particularly in areas of fraud
and abuse, anti-bribery and anti-corruption, controlled substances handling,
medical device regulations and data
privacy and security standards.
Certain of our businesses involve pharmaceuticals and/or medical devices,
including orthopaedic, in vitro
diagnostic devices, software regulated as a medical device, and sales of
medical equipment and supplies directly to
patients, that are paid for by third parties and/or patients and must operate in
compliance with a variety of
burdensome and complex coding, billing and record-keeping requirements in
order to substantiate claims for
payment under federal, state and commercial health care reimbursement programs.
Government and private insurance programs fund a large portion of the total cost of medical
care, and there have
been efforts to limit such private and government insurance programs, including efforts, thus far
unsuccessful, to
seek repeal of the entire United States Patient Protection and Affordable Care Act,
as amended by the Health Care
and Education Reconciliation Act, each enacted in March 2010.
Certain of our businesses are subject to various additional federal, state,
local and foreign laws and regulations,
including with respect to the sale, transportation, importation, storage, handling
and disposal of hazardous or
potentially hazardous substances; "forever chemicals" such as per-and
polyfluoroalkyl substances; amalgam bans;
pricing disclosures; supply chain transparency around labor practices; and safe working
conditions.
In addition,
activities to control medical costs, including laws and regulations lowering
reimbursement rates for
pharmaceuticals, medical devices, medical supplies and/or medical treatments
or services, are ongoing.
Laws and
regulations are subject to change and their evolving implementation may impact
our operations and our financial
performance.
Certain of our businesses also maintain contracts with governmental agencies
and are subject to certain regulatory
requirements specific to government contractors.
Our businesses are generally subject to numerous laws and regulations that could
impact our financial performance,
and failure to comply with such laws or regulations could have a material adverse
effect on our business.
A few
noteworthy items that have come into effect recently are noted below:
●
Regulation (EU) 2023/1182 of June 14, 2023, entered into force on January 1, 2025, under the conditions
set out in Article 14.
This regulation lays down specific rules relating to medicinal
products for human use
intended to be placed on the market in Northern Ireland in accordance with
Article 6 of
Directive 2001/83/EC.
●
Directive No. 2025/794 of April 14, 2025, known as the "Stop-the-Clock"
Directive, amended Directives
(EU) 2022/2464 (CSRD) and (EU) 2024/1760 (CSDDD) by introducing
a uniform two-year postponement
of the sustainability reporting and due diligence requirements for financial
years beginning on or after
January 1, 2025 and on or after January 1, 2026.
●
Regulation (EU) 2025/327 of February 11, 2025 on the European Health Data Space and amending
Directive 2011/24/EU and Regulation (EU) 2024/2847 establishes the European Health Data Space
(EHDS) by providing for common rules, standards and infrastructures and
a governance framework, with a
view to facilitating access to electronic health data for the purpose of primary
use and secondary use of this
data.
This could potentially affect Henry Schein or its customers.
●
In the United States, as noted above, the OBBBA includes a number
of provisions that are expected to
result in reductions in the number of Medicaid enrollees, as well as reductions
in federal funding to state
Medicaid programs, resulting in potentially adverse impacts on utilization
of services and coverage of
products.
The OBBBA also includes changes to corporate tax rates, limitations on
certain deductions and
modifications to international tax provisions.
A more detailed discussion of governmental laws and regulations is
included in Management's Discussion &
Analysis of Financial Condition and Results of Operations, contained in our Annual
Report on Form 10-K for the
fiscal year ended December 28, 2024, filed with the SEC on February
25, 2025.
Results of Operations
The following tables summarize the significant components of our operating
results for the three and nine months
ended September 27, 2025 and September 28, 2024 and cash flows for
the nine months ended September 27, 2025
and September 28, 2024 (in millions):
Three Months Ended
Nine Months Ended
September 27,
September 28,
September 27,
September 28,
2025
2024
2025
2024
Operating results:
Net sales
$
3,339
$
3,174
$
9,747
$
9,482
Cost of sales
2,313
2,181
6,705
6,459
Gross profit
1,026
3,042
3,023
Operating expenses:
Selling, general and administrative
2,276
2,296
Depreciation and amortization
Restructuring costs
Operating income
$
$
$
$
Other expense, net
$
(30)
$
(29)
$
(90)
$
(79)
Income taxes
(28)
(32)
(94)
(97)
Net income
Net income attributable to Henry Schein, Inc.
Nine Months Ended
September 27,
September 28,
2025
2024
Cash flows:
Net cash provided by operating activities
$
$
Net cash used in investing activities
(253)
(372)
Net cash provided by (used in) financing activities
(306)
Plans of Restructuring
On August 6, 2024, we committed to a new restructuring plan (the "2024
Plan") to integrate recent acquisitions,
right-size operations and further increase efficiencies.
We currently expect completion of this plan to be at the end
of 2027.
During the three months ended September 27, 2025 and September
28, 2024, we recorded restructuring
charges associated with the 2024 Plan of $34 million and $36 million, respectively.
During the nine months ended
September 27, 2025 and September 28, 2024, we recorded restructuring
charges associated with the 2024 Plan of
$82 million and $36 million, respectively.
The restructuring costs for these periods primarily related
to severance
and employee-related costs, accelerated amortization of right-of-use assets and
fixed assets, and other exit costs.
We expect to record restructuring charges associated with the 2024 Plan through the end of 2027; however,
an
estimate of the amount of these charges for 2025 through 2027 has not yet been determined.
On August 1, 2022, we committed to a restructuring plan (the "2022
Plan") focused on funding the priorities of the
BOLD+1 strategic plan, streamlining operations and other initiatives to
increase efficiency.
The 2022 Plan was
completed as of July 31, 2024.
During the three and nine months ended September 28, 2024, in connection
with
our 2022 Plan, we recorded restructuring costs of $12 million and $37 million,
respectively, which primarily related
to severance and employee-related costs, accelerated amortization of
right-of-use assets and fixed assets, and other
exit costs.
Three Months Ended September 27, 2025 Compared to Three Months Ended September 28, 2024
Note: Percentages for Net Sales; Gross Profit; Operating Expenses; Other
Expense, Net; and Income Taxes are
based on actual values and may not recalculate due to rounding.
During the fourth quarter of our fiscal year ended December 28, 2024,
we revised our reportable segments to align
with how the Chairman and Chief Executive Officer manages the business, assesses
performance and allocates
resources.
Our revised reportable segments now consist of: (i) Global Distribution
and Value
-Added Services; (ii)
Global Specialty Products; and (iii) Global Technology.
All prior comparative segment information has been recast
to reflect our new segment structure.
Net Sales
Net sales by reportable segment and by major product or service type were
as follows:
September 27,
% of
September 28,
% of
Increase / (Decrease)
2025
Total
2024
Total
$
%
Global Distribution and Value
-Added Services
Global Dental Merchandise
(1)
$
1,210
36.2
%
$
1,155
36.4
%
$
4.6
%
Global Dental Equipment
(2)
13.2
13.1
5.5
Global Value
-Added Services
(3)
1.9
2.0
3.3
Global Dental
1,714
51.3
1,635
51.5
4.8
Global Medical
(4)
1,126
33.8
1,076
33.9
4.7
Total Global Distribution and Value
-Added Services
2,840
85.1
2,711
85.4
4.8
Global Specialty Products
(5)
11.0
11.0
5.9
Global Technology
(6)
5.2
4.9
9.7
Eliminations
(43)
(1.3)
(42)
(1.3)
(1)
n/a
Total
$
3,339
100.0
$
3,174
100.0
$
5.2
(1)
Includes infection-control products, handpieces, preventatives, impression materials, composites, anesthetics, teeth, gypsum,
acrylics, articulators, abrasives, PPE products and our own corporate brand of consumable merchandise.
(2)
Includes dental chairs, delivery units and lights, digital dental laboratories, X-ray supplies and equipment, equipment repair
services and high-tech and digital restoration equipment.
(3)
Consists of financial services on a non-recourse basis, continuing education services for practitioners, consulting and other services.
(4)
Includes branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products, X-ray
products, equipment, PPE products and vitamins.
(5)
Includes manufacturing, marketing and sales of dental implant and biomaterial products; and endodontic, orthodontic and
orthopedic products and other health care-related products and services.
(6)
Consists of development and distribution of practice management software, e-services and other products, which are distributed to
health care providers.
The components of our sales growth were as follows:
Constant Currency Growth
Total Constant
Currency Growth
Foreign
Exchange
Impact
Total Sales
Growth
Local Internal
Growth
Acquisition
Growth
Global Distribution and Value
-Added Services
Global Dental Merchandise
2.8
%
0.1
%
2.9
%
1.7
%
4.6
%
Global Dental Equipment
3.0
0.4
3.4
2.1
5.5
Global Value
-Added Services
0.7
2.2
2.9
0.4
3.3
Global Dental
2.8
0.2
3.0
1.8
4.8
Global Medical
3.0
1.6
4.6
0.1
4.7
Total Global Distribution and Value
-Added Services
2.9
0.8
3.7
1.1
4.8
Global Specialty Products
2.8
1.1
3.9
2.0
5.9
Global Technology
9.0
-
9.0
0.7
9.7
Total
3.3
0.7
4.0
1.2
5.2
Global Sales
Global net sales for the three months ended September 27, 2025 increased 5.2%.
Foreign exchange and
acquisitions contributed 1.2% and 0.7% to sales growth,
respectively.
The components of our sales increase are
presented in the table above.
Global Distribution and Value-Added Services Sales
Global Distribution and Value-Added Services net sales for the three months ended September 27, 2025 increased
4.8%.
The components of our sales increase are presented in
the table above.
The 2.8% increase in internally generated local currency dental sales was
due to merchandise sales growth in the
U.S and internationally, and traditional equipment sales growth internationally.
The U.S. merchandise growth
reflects the positive impact of the targeted promotional programs initiated last quarter.
The 3.0% increase in internally generated local currency medical sales was
attributable to growth in medical
products and pharmaceuticals and our Home Solutions business, partially offset by
lower demand for respiratory
diagnostic products and a decline in influenza vaccine sales.
We estimate that sales of PPE products and COVID-19 test kits were approximately $146 million for the three
months ended September 27, 2025, as compared to $155 million for
the three months ended September 28, 2024,
representing an estimated decrease of $9 million primarily due to lower sales
of COVID-19 test kits.
The estimated
increase in the segment's internally generated local currency sales, excluding PPE products and COVID-19
test
kits, was 3.4%.
Global Specialty Products
Global Specialty Products net sales for the three months ended September
27, 2025 increased 5.9%.
The
components of our sales increase are presented in the table above.
The 2.8% increase in internally generated local currency sales was attributable
to growth in dental implants and
biomaterials.
Global Technology
Global Technology net sales for the three months ended September 27, 2025 increased 9.7%.
The components of
sales growth are presented in the table above.
The internally generated local currency increase of 9.0% in Global Technology sales was primarily attributable to
the adoption of our core practice management solutions, particularly
our cloud-based platforms, as well as an
increase in revenue cycle management solutions.
Gross Profit
Gross profit and gross margin percentages by segment and in total were as follows:
September 27,
Gross
September 28,
Gross
Increase
2025
Margin %
2024
Margin %
$
%
Global Distribution and Value
-Added Services
$
24.7
%
$
25.3
%
$
2.5
%
Global Specialty Products
55.3
56.3
4.0
Global Technology
66.9
68.1
7.7
Corporate
n/a
n/a
n/a
Total
$
1,026
30.7
$
31.3
$
3.3
As a result of different practices of categorizing costs associated with distribution networks
throughout our
industry, our gross margins may not necessarily be comparable to other distribution companies.
Gross margin
percentages vary between our segments.
We realize substantially higher gross margin from sales of products that
we develop and manufacture within our Global Specialty Products segment
compared to gross margin from sales of
products that we distribute within our Global Distribution and Value-Added Services segment.
Within our Global
Technology segment, higher gross margins result from us being both the developer and seller of software products
and services.
Within our Global Distribution and Value
-Added Services segment, gross profit margins may vary between the
periods as a result of the changes in the mix of products sold as well as
changes in our customer mix.
With respect
to customer mix, sales to our large-group customers are typically completed at lower gross
margins due to the
higher volumes sold as opposed to the gross margin on sales to office-based practitioners, which
normally purchase
lower volumes.
The increase in Global Distribution and Value-Added Services gross profit for the three months ended September
27, 2025 compared to the prior-year-period was attributable to the growth in internally
generated sales volume as
described above. The decrease in gross margin rates was attributable to product
mix.
The increase in Global Specialty Products gross profit reflects increased
internally generated sales volume as
described above.
The decrease in gross margin rates was due to product mix.
The increase in Global Technology gross profit is the result of increased internally generated sales volume as
described above.
The decrease in gross margin rates was due to an increase in customer service
expense.
Operating Expenses
Operating expenses (consisting of selling, general and administrative
expenses; depreciation and amortization; and
restructuring costs) by segment were as follows:
% of
% of
September 27,
Respective
September 28,
Respective
Increase / (Decrease)
2025
Gross Sales
2024
Gross Sales
$
%
Global Distribution and Value
-Added Services
$
18.5
%
$
18.5
%
$
4.6
%
Global Specialty Products
36.0
43.6
(18)
(12.6)
Global Technology
40.3
43.3
2.2
Corporate
n/a
n/a
n/a
22.9
23.6
1.8
Adjustments
(1)
n/a
n/a
n/a
Total operating expenses
$
25.8
$
26.3
$
3.2
(1)
Adjustments represent items excluded from segment operating income to enable comparison of financial results between periods.
These
items may vary independently of business performance.
Please see
Note 5 - Segment Data
.
These adjustments (current quarter vs. prior
quarter) consist of (i) acquisition intangible amortization ($46 million vs. $47 million), (ii) restructuring costs ($34 million vs. $48
million),
(iii) change in contingent consideration ($6 million vs. $0 million),
(iv) cyber incident-insurance proceeds, net of third-party
advisory expenses (no activity) vs. $(9) million net proceeds), (v) litigation settlements ($2 million vs. $0 million), and (vi) costs
associated with shareholder advisory matters and select value creation consulting costs ($10 million vs. $0 million).
The net increase in operating expenses was attributable to the following:
Operating Costs
(excluding
acquisitions)
Acquisitions
Adjustments
Total
Global Distribution and Value
-Added Services
$
$
$
-
$
Global Specialty Products
(19)
-
(18)
Global Technology
-
-
Corporate
-
-
-
Adjustments
-
-
Total operating expenses
$
$
$
$
The components of the net increase in total operating expenses are presented
in the table above.
The increase in
operating costs (excluding acquisitions) during the three months
ended September 27, 2025 included an increase in
Corporate investments in technology supporting the launch of our Global E-Commerce
Platform
(www.henryschein.com)
and the impact of certain compensation related costs, partially offset by a gain
of $28
million related to the remeasurement to fair value of a previously held
equity investment within our Global
Specialty Products segment.
Other Expense, Net
Other expense, net was as follows:
September 27,
September 28,
Variance
2025
2024
$
%
Interest income
$
$
$
47.0
%
Interest expense
(38)
(34)
(4)
(12.0)
Other, net
(1)
(2)
(40.8)
Other expense, net
$
(30)
$
(29)
$
(1)
(2.4)
Interest income increased primarily due to increased interest rates.
Interest expense increased primarily due to
increased borrowings.
Income Taxes
Our effective tax rate was 21.3% for the three months ended September 27, 2025, compared
to 24.7% for the prior
year period.
The difference between our effective and federal statutory tax rates primarily relates to state
and
foreign income taxes and interest expense.
For the three months ended September 27, 2025, the difference was
further impacted by the tax treatment associated with the acquisition of a controlling
interest of a previously held
non-controlling equity investment.
On July 4, 2025, President Trump signed the reconciliation tax bill, commonly known as the "One Big Beautiful
Bill Act" (OBBBA), into law.
Corporate provisions in the OBBBA include immediate expensing of domestic
research and experimental expenditures, limitations on certain deductions,
and modifications to international tax
provisions.
As a result of the OBBBA, we anticipate a reduction in current income
tax liabilities and deferred tax
assets.
The OECD issued technical and administrative guidance on Pillar Two rules in December 2021, which provides for
a global minimum tax rate on the earnings of large multinational businesses on a country-by-country
basis.
Effective January 1, 2024, the minimum global tax rate is 15% for various jurisdictions pursuant
to the Pillar Two
rules.
Future tax reform resulting from these developments may result
in changes to long-standing tax principles,
which may adversely impact our effective tax rate going forward or result in higher cash
tax liabilities.
As of
September 27, 2025, the impact of the Pillar Two rules to our financial statements was immaterial.
Nine Months Ended September 27, 2025 Compared to Nine Months Ended September
28, 2024
Note: Percentages for Net Sales; Gross Profit; Operating Expenses; Other
Expense, Net; and Income Taxes are
based on actual values and may not recalculate due to rounding.
During the fourth quarter of our fiscal year ended December 28, 2024,
we revised our reportable segments to align
with how the Chairman and Chief Executive Officer manages the business, assesses
performance and allocates
resources.
Our revised reportable segments now consist of: (i) Global Distribution
and Value
-Added Services; (ii)
Global Specialty Products; and (iii) Global Technology.
All prior comparative segment information has been recast
to reflect our new segment structure.
Net Sales
Net sales by reportable segment and by major product or service type were
as follows:
September 27,
% of
September 28,
% of
Increase
2025
Total
2024
Total
$
%
Global Distribution and Value
-Added Services
Global Dental Merchandise
(1)
$
3,613
37.1
%
$
3,579
37.7
%
$
0.9
%
Global Dental Equipment
(2)
1,263
13.0
1,245
13.1
1.4
Global Value
-Added Services
(3)
1.8
1.8
(1)
(0.3)
Global Dental
5,050
51.9
4,999
52.6
1.0
Global Medical
(4)
3,197
32.8
3,059
32.3
4.5
Total Global Distribution and Value
-Added Services
8,247
84.7
8,058
84.9
2.4
Global Specialty Products
(5)
1,122
11.5
1,078
11.4
4.0
Global Technology
(6)
5.1
5.0
6.7
Eliminations
(124)
(1.3)
(124)
(1.3)
-
n/a
Total
$
9,747
100.0
$
9,482
100.0
$
2.8
(1)
Includes infection-control products, handpieces, preventatives, impression materials, composites, anesthetics, teeth, gypsum,
acrylics, articulators, abrasives, PPE products and our own corporate brand of consumable merchandise.
(2)
Includes dental chairs, delivery units and lights, digital dental laboratories, X-ray supplies and equipment, equipment repair
services and high-tech and digital restoration equipment.
(3)
Consists of financial services on a non-recourse basis, continuing education services for practitioners, consulting and other services.
(4)
Includes branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products, X-ray
products, equipment, PPE products and vitamins.
(5)
Includes manufacturing, marketing and sales of dental implant and biomaterial products; and endodontic, orthodontic and
orthopedic products and other health care-related products and services.
(6)
Consists of development and distribution of practice management software, e-services and other products, which are distributed to
health care providers.
The components of our sales growth/(decline) were as follows:
Constant Currency
Growth/(Decline)
Total Constant
Currency
Growth/(Decline)
Foreign
Exchange
Impact
Total Sales
Growth/
(Decline)
Local Internal
Growth/(Decline)
Acquisition
Growth
Global Distribution and Value
-Added Services
Global Dental Merchandise
0.6
%
0.4
%
1.0
%
(0.1)
%
0.9
%
Global Dental Equipment
0.3
0.6
0.9
0.5
1.4
Global Value
-Added Services
(5.0)
4.9
(0.1)
(0.2)
(0.3)
Global Dental
0.4
0.5
0.9
0.1
1.0
Global Medical
3.0
1.5
4.5
-
4.5
Total Global Distribution and Value
-Added Services
1.4
0.9
2.3
0.1
2.4
Global Specialty Products
2.3
1.5
3.8
0.2
4.0
Global Technology
6.3
-
6.3
0.4
6.7
Total
1.8
0.9
2.7
0.1
2.8
Global Sales
Global net sales for the nine months ended September 27, 2025
increased 2.8%, attributable to acquisition growth
of 0.9%,
and an increase in foreign exchange of 0.1%.
The components of our sales increase are presented in the
table above.
Global Distribution and Value-Added Services Sales
Global Distribution and Value-Added Services net sales for the nine months ended September 27, 2025 increased
2.4%.
The components of our sales increase are presented in
the table above.
The 0.4% increase in internally generated local currency dental sales was
primarily due to sales growth in U.S and
international dental merchandise as well as growth in international equipment.
The 3.0% increase in internally generated local currency medical sales was
attributable to growth of our Home
Solutions business,
and medical products and pharmaceuticals.
The decrease in internally generated local currency value-added services
sales was attributable primarily to lower
sales in our practice transitions business, which can fluctuate from quarter
to quarter.
We estimate that sales of PPE products and COVID-19 test kits were approximately $448 million for the nine
months ended September 27, 2025, as compared to $475
million for the nine months ended September 28, 2024,
representing an estimated decrease of $27 million primarily due to lower glove
prices and lower sales of COVID-19
test kits.
The estimated increase in the segment's internally generated local currency sales, excluding PPE products
and COVID-19 test kits, was 1.8%.
Global Specialty Products
Global Specialty Products net sales for the nine months ended September
27, 2025 increased 4.0%.
The
components of our sales increase are presented in the table above.
The 2.3% increase in internally generated local currency sales was attributable
to growth in our implant and
biomaterial businesses, partially offset by a decline in orthodontic sales.
Global Technology
Global Technology net sales for the nine months ended September 27, 2025 increased 6.7%.
The components of
sales growth are presented in the table above.
The internally generated local currency increase of 6.3% in Global Technology sales was primarily attributable to
the adoption of our core practice management solutions, particularly our
cloud-based platforms, as well as an
increase in revenue cycle management solutions.
Gross Profit
Gross profit and gross margin percentages by segment and in total were as follows:
September 27,
Gross
September 28,
Gross
Increase / (Decrease)
2025
Margin %
2024
Margin %
$
%
Global Distribution and Value
-Added Services
$
2,071
25.1
%
$
2,094
26.0
%
$
(23)
(1.1)
%
Global Specialty Products
55.4
55.6
3.6
Global Technology
67.5
67.6
6.5
Corporate
n/a
n/a
-
n/a
Total
$
3,042
31.2
$
3,023
31.9
$
0.6
As a result of different practices of categorizing costs associated with distribution networks
throughout our
industry, our gross margins may not necessarily be comparable to other distribution companies.
Gross margin
percentages vary between our segments.
We realize substantially higher gross margin from sales of products that
we develop and manufacture within our Global Specialty Products segment
compared to gross margin from sales of
products that we distribute within our Global Distribution and Value-Added Services segment.
Within our Global
Technology segment, higher gross margins result from us being both the developer and seller of software products
and services.
Within our Global Distribution and Value
-Added Services segment, gross profit margins may vary between the
periods as a result of the changes in the mix of products sold as well as
changes in our customer mix.
With respect
to customer mix, sales to our large-group customers are typically completed at lower gross
margins due to the
higher volumes sold as opposed to the gross margin on sales to office-based practitioners, which
normally purchase
lower volumes.
The decrease in Global Distribution and Value-Added Services gross profit for the nine months ended September
27, 2025 compared to the prior-year-period is due to decreased internally generated
sales volume as described
above.
The decrease in gross margin rates was attributable to the impact of targeted promotional
programs and
lower gross margins on glove sales.
The increase in Global Specialty Products gross profit reflects increased
internally generated sales volume and
gross profit from acquisitions.
Gross margin rates were relatively flat.
The increase in Global Technology gross profit is the result of higher internally generated sales.
Gross margin rates
were relatively flat.
Operating Expenses
Operating expenses (consisting of selling, general and administrative
expenses; depreciation and amortization; and
restructuring costs) by segment were as follows:
% of
% of
September 27,
Respective
September 28,
Respective
Increase / (Decrease)
2025
Gross Sales
2024
Gross Sales
$
%
Global Distribution and Value
-Added Services
$
1,567
19.0
%
$
1,563
19.4
%
$
0.3
%
Global Specialty Products
39.4
43.8
(30)
(6.4)
Global Technology
41.1
45.0
(5)
(2.4)
Corporate
n/a
n/a
n/a
2,325
23.9
2,312
24.4
0.6
Adjustments
(1)
n/a
n/a
(18)
n/a
Total operating expenses
$
2,552
26.2
$
2,557
27.0
$
(5)
(0.2)
(1)
Adjustments represent items excluded from segment operating income to enable comparison of financial results between periods.
These
items may vary independently of business performance.
Please see
Note 5 - Segment Data
.
These adjustments (current year-to-date vs.
prior year-to-date) consist of (i) acquisition intangible amortization ($133 million vs. $140 million), (ii) restructuring costs ($82 million
vs. $73 million), (iii) change in contingent consideration ($4
million vs. $38 million), (iv) litigation settlements ($3 million vs. $5
million), (v) cyber incident-insurance proceeds, net of
third-party advisory expenses ($(20) million net proceeds vs. $(11) million net
proceeds), (vi) impairment of intangible assets ($1 million vs. $0 million), and (vii) costs associated with shareholder advisory matters
and select value creation consulting costs ($24 million vs. $0 million).
The net decrease in operating expenses was attributable to the following:
Operating Costs
(excluding
acquisitions)
Acquisitions
Adjustments
Total
Global Distribution and Value
-Added Services
$
(15)
$
$
-
$
Global Specialty Products
(29)
(1)
-
(30)
Global Technology
(5)
-
-
(5)
Corporate
-
-
(5)
-
Adjustments
-
-
(18)
(18)
Total operating expenses
$
(5)
$
$
(18)
$
(5)
The components of the net decrease in total operating expenses are presented
in the table above.
The decrease in
operating costs (excluding acquisitions) during the nine months ended September
27, 2025 included cost savings
from our restructuring activities, certain changes in estimates and other operating
cost efficiencies, partially offset
by an increase in Corporate investments in technology supporting the
launch of our Global E-Commerce Platform
(www.henryschein.com), the impact of certain compensation related costs, and the timing of certain non-income
tax credits.
In addition, during the nine months ended September 27, 2025,
our operating costs were impacted by
recognition of remeasurement gains related to the remeasurement to fair value
of previously held equity
investments of $28 million within our Global Specialty Products segment
and $4 million within our Global
Distribution and Value-Added Services segment.
During the nine months ended September 28, 2024, our operating
costs were impacted by recognition of a remeasurement gain related to the
remeasurement to fair value of a
previously held equity investments of $18 million within our Global Distribution
and Value
-Added Services
segment.
Other Expense, Net
Other expense, net was as follows:
September 27,
September 28,
Variance
2025
2024
$
%
Interest income
$
$
$
39.2
%
Interest expense
(111)
(96)
(15)
(15.7)
Other, net
(3)
(1)
(2)
(844.9)
Other expense, net
$
(90)
$
(79)
$
(11)
(14.1)
Interest income increased primarily due to increased interest rates.
Interest expense increased primarily due to
increased borrowings.
Income Taxes
Our effective tax rate was 23.5% for the nine months ended September 27, 2025, compared
to 25.1% for the prior
year period.
The difference between our effective and federal statutory tax rates primarily relates to state
and
foreign income taxes and interest expense.
For the nine months ended September 27, 2025, the difference was
further impacted by the tax treatment associated with the acquisition of a controlling
interest of a previously held
non-controlling equity investment.
On July 4, 2025, President Trump signed the reconciliation tax bill, commonly known as the "One Big Beautiful
Bill Act" (OBBBA), into law.
Corporate provisions in the OBBBA include, immediate expensing of domestic
research and experimental expenditures, limitations on certain deductions,
and modifications to international tax
provisions.
As a result of the OBBBA, we anticipate a reduction in current income
tax liabilities and deferred tax
assets.
The OECD issued technical and administrative guidance on Pillar Two rules in December 2021, which provides for
a global minimum tax rate on the earnings of large multinational businesses on a country-by-country
basis.
Effective January 1, 2024, the minimum global tax rate is 15% for various jurisdictions pursuant
to the Pillar Two
rules.
Future tax reform resulting from these developments may result
in changes to long-standing tax principles,
which may adversely impact our effective tax rate going forward or result in higher cash
tax liabilities.
As of
September 27, 2025, the impact of the Pillar Two rules to our financial statements was immaterial.
Liquidity and Capital Resources
Our principal capital requirements have included funding of acquisitions, purchases
of additional noncontrolling
interests, repayments of debt principal, the funding of working capital needs,
purchases of fixed assets and
repurchases of common stock.
Working capital requirements generally result from increased sales, special
inventory forward buy-in opportunities and payment terms for receivables
and payables.
Historically, sales have
tended to be stronger during the second half of the year and special inventory
forward buy-in opportunities have
been most prevalent just before the end of the year, and have caused our working capital requirements
to be higher
from the end of the third quarter to the end of the first quarter of
the following year.
We finance our business primarily through cash generated from our operations, revolving credit facilities and debt
placements.
Please see
Note 8 - Debt
for further information.
Our ability to generate sufficient cash flows from
operations is dependent on the continued demand of our customers
for our products and services, and access to
products and services from our suppliers.
Our business requires a substantial investment in working capital, which
is susceptible to fluctuations during the
year as a result of inventory purchase patterns and seasonal demands.
Inventory purchase activity is a function of
sales activity, special inventory forward buy-in opportunities and our desired level of inventory.
We finance our business to provide adequate funding for at least 12 months.
Funding requirements are based on
forecasted profitability and working capital needs, which, on occasion, may
change.
Consequently, we may change
our funding structure to reflect any new requirements.
We believe that our cash and cash equivalents, our ability to access private debt markets and public equity markets,
and our available funds under existing credit facilities provide us with
sufficient liquidity to meet our currently
foreseeable short-term and long-term capital needs.
Our acquisition strategy is focused on investments in companies that
add new customers and sales teams, increase
our geographic footprint (whether entering a new country, such as emerging markets, or building scale where we
have already invested in businesses), and finally, those that enable us to access new products and technologies.
Net cash provided by operating activities was $331 million for the
nine months ended September 27, 2025,
compared to net cash provided by operating activities of $644 million for
the prior year.
The net change of $313
million was primarily attributable to changes in working capital accounts
(primarily accounts receivable,
inventory,
and accounts payable and accrued expenses).
Our operating cash flows during the nine months ended September
28, 2024 were affected by the residual impacts of the 2023 cyber incident and included a higher-than-normal
level
of cash collections.
Our cash collections normalized during the nine months ended September
27, 2025.
Net cash used in investing activities was $253 million for the nine months
ended September 27, 2025, compared to
net cash used in investing activities of $372 million for the prior year.
The net change of $119 million was
primarily attributable to reduced payments for equity investments and business
acquisitions.
Net cash provided by financing activities was $18 million for the nine
months ended September 27, 2025,
compared to net cash used in financing activities of $306 million for the prior
year.
The net change of $324 million
was primarily due to increased net borrowings from debt to finance our
investments and proceeds received from the
issuance of common stock, and a reduction in acquisitions of noncontrolling
interests in subsidiaries, partially offset
by increased repurchases of common stock.
The following table summarizes selected measures of liquidity and capital
resources:
September 27,
December 28,
2025
2024
Cash and cash equivalents
$
$
Working
capital
(1)
1,246
1,180
Debt:
Bank credit lines
$
$
Current maturities of long-term debt
Long-term debt
2,153
1,830
Total debt
$
3,096
$
2,536
Leases:
Current operating lease liabilities
$
$
Non-current operating lease liabilities
(1)
Includes $492 million and $241 million of certain accounts receivable, which serve as security for U.S. trade accounts receivable
securitization at September 27, 2025 and December 28, 2024, respectively.
Our cash and cash equivalents consist of bank balances and investments
in money market funds representing
overnight investments with a high degree of liquidity.
Accounts receivable days sales outstanding and inventory turns
Our accounts receivable days sales outstanding from operations decreased
to 45.3 days as of September 27, 2025
from 48.6 days as of September 28, 2024, which was primarily attributable
to impact that the cyber incident had on
the cash collections during the three months ended March 30, 2024.
During the nine months ended September 27,
2025, we wrote off approximately $12 million of fully reserved accounts receivable
against our trade receivable
reserve.
Our inventory turns from operations decreased to 4.8 as of September
27, 2025 from 5.0 as of September
28, 2024.
Our working capital accounts may be impacted by current
and future economic conditions.
Leases
We
have operating and finance leases for corporate offices, office space, distribution and other facilities,
vehicles
and certain equipment.
Our leases have remaining terms of less than one year to approximately
16 years, some of
which may include options to extend the leases for up to 10 years.
As of September 27, 2025, our right-of-use
assets related to operating leases were $308 million and our current and non-current
operating lease liabilities were
$81 million and $264 million, respectively.
Stock Repurchases
On January 27, 2025, our Board of Directors authorized the repurchase
of up to an additional $500 million in shares
of our common stock.
On May 19, 2025, we executed an accelerated share repurchase program
to repurchase a total of $250 million of
our outstanding common stock based on volume-weighted average
prices.
In May 2025, we received 3,122,832
shares at an estimated fair value of $224
million.
In July 2025, we received an additional 368,651 shares at an
estimated fair value of $26 million, representing the final amount of shares
to be received under this accelerated
share repurchase program.
On September 8, 2025, our Board of Directors authorized the repurchase of
up to an additional $750 million in
shares of our common stock.
From March 3, 2003 through September 27, 2025, we repurchased $5.8 billion,
or 105,063,756 shares,
under our
common stock repurchase programs, with $980 million available
as of September 27, 2025 for future common
stock share repurchases.
Redeemable Noncontrolling Interests
Some minority stockholders in certain of our subsidiaries have the right,
at certain times, to require us to acquire
their ownership interest in those entities at fair value.
Accounting Standards Codification Topic 480-10 is
applicable for noncontrolling interests where we are or may be required
to purchase all or a portion of the
outstanding interest in a consolidated subsidiary from the noncontrolling
interest holder under the terms of a put
option contained in contractual agreements.
As of September 27, 2025 and December 28, 2024, our balance
for
redeemable noncontrolling interests was $877 million and $806 million,
respectively.
Please see
Note 13 -
Redeemable Noncontrolling Interests
for further information.
Critical Accounting Policies and Estimates
There have been no material changes in our critical accounting policies
and estimates from those disclosed in Item
7 of our Annual Report on Form 10-K for the year ended December 28, 2024.
Accounting Standards Update
For a discussion of accounting standards updates that have been adopted
or will be adopted, see
Note 2 - Significant
Accounting Policies and Recently Issued Accounting Standards
of the Notes to the Condensed Consolidated
Financial Statements included under Item 1.
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