Henry Schein Inc.
08/04/2026 | Press release | Distributed by Public on 08/04/2026 09:59
Quarterly Report for Quarter Ending June 27, 2026 (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 SecuritiesLitigation Reform Act of 1995, we
provide the following cautionary remarks regarding important factorsthat, among others, could cause future results
to differ materially from the forward-looking statements, expectations and assumptionsexpressed or implied herein.
All forward-looking statements made by us are subject to risks and uncertaintiesand are not guarantees of future
performance.These forward-looking statements involve known and unknownrisks, uncertainties and other factors
that may cause our actual results, performance and achievementsor industry results to be materially different from
any future results, performance or achievements expressed or impliedby 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," "tomake" 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 AnnualReport on Form 10-K, and will be
contained in subsequent periodic filings we make with the SEC.These documents identify in detail important risk
factors that could cause our actual performance to differ materially from currentexpectations.
Risk factors and uncertainties that could cause actual results to differ materially fromcurrent and historical results
include, but are not limited to: our dependence on third parties forthe manufacture and supply of our products and
where we manufacture products, our dependence on third partiesfor raw materials or purchased components; risks
relating to the achievement of our strategic growth objectives, includinganticipated results of restructuring and
value creation initiatives; risks related to the Strategic Partnership Agreement withKKR Hawaii Aggregator L.P.
entered into in January 2025; transitions in senior company leadership(including, without limitation, the transition
to our new Chief Executive Officer); our ability to develop or acquire andmaintain and protect new products
(particularly technology and specialty products) and services and utilizenew technologies that achieve market
acceptance with acceptable margins; transitional challenges associated with acquisitionsand joint ventures,
including the failure to achieve anticipated synergies/benefits, as well as significantdemands on our operations,
information systems, legal, regulatory, compliance, financial and human resources functions in connection with
acquisitions, dispositions and joint ventures; certain provisionsin our governing documents that may discourage
third-party acquisitions of us; adverse changes in supplier rebatesor other purchasing incentives; risks related to the
sale of corporate brand products; risks related to activist investors; securityrisks associated with our information
systems and technology products and services, such as cyberattacks orother 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 purchasingpower and multi-tiered costing structures;
increases in shipping costs for our products or other service issueswith our third-party shippers, and increases in
fuel and energy costs; changes in laws and policies governing manufacturing, developmentand investment in
territories and countries where we do business; general global and domesticmacro-economic and political
conditions, including inflation, deflation, recession, unemployment (and correspondingincrease in under-insured
populations), consumer confidence, sovereign debt levels, fluctuations in energy pricingand the value of the U.S.
dollar as compared to foreign currencies and changes to other economicindicators; 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 healthcare fraud or other laws and regulations;
failure to comply with laws and regulations relating to the collection, storageand 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 productliability, 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), orsimilar 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 wars
in Ukraine and Iran, the Israel-Gaza war and other unrest and threats in the MiddleEast and the possibility of a
wider European or global conflict); changes to laws and policies governingforeign trade, tariffs and sanctions or
greater restrictions on imports and exports, including changes to internationaltrade agreements and the current
imposition of (and the potential for additional) tariffs by the U.S. on numerouscountries and retaliatory tariffs;
supply chain disruption; litigation risks; new or unanticipated litigationdevelopments and the status of litigation
matters; our dependence on our senior management, employee hiring andretention, increases in labor costs or
health care costs, and our relationships with customers, suppliers andmanufacturers; and disruptions in financial
markets.The order in which these factors appear should not be construedto 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 YouCan 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 relationspage of our website (www.henryschein.com)
and the social media channels identified on the About Media Center pageof our website.
Recent Developments
Chairman and Chief Executive Officer
On January 12, 2026, we announced the appointment of FrederickM. Lowery as CEO, effective March 2, 2026.In
connection with his appointment, Mr. Lowery joined our Board of Directors.Mr. Lowery succeeded Stanley M.
Bergman, who served as CEO through March 1, 2026 (at which time Mr. Bergman retired as CEO).Mr. Bergman
retired as Chairman of the Board as of the end of the 2026 annual meeting ofstockholders, and the Board approved
the appointment of Mr. Bergman as Chairman Emeritus effective upon his retirement as Chairman.The Board
appointed William K. "Dan" Daniel as Chairman following the Company's 2026 annual meeting of stockholders.
Tariffs and Related Economic Conditions
The U.S. has adopted new and increased tariffs on imports from countries, andthe scope, applicability and legal
basis for these tariffs continue to evolve through legislative and executiveactions, exemptions and ongoing judicial
challenges.Although the U.S. Supreme Court invalidated certain tariffs imposedunder the International
Emergency Economic Powers Act (IEEPA), the U.S. government has subsequently implemented additional tariff
measures under other statutory authorities, and further changes to U.S. tradepolicy remain possible.Some
countries have imposed, or may impose, retaliatory tariffs or other restrictions on importsfrom the U.S.These
developments, and anticipated future developments, have created avolatile environment for global trade, and new
trade policies with individual countries.It is unclear whether, or the extent to which, the current tariffs on trade
with numerous countries will remain in place, or change, the exceptionsthat may apply, and their timing.
The tariffs did not have an adverse material impact on our results of operations duringfiscal year 2025 and the six
months ended June 27, 2026, although sales of U.S. dental equipment weretemporarily impacted by market
uncertainty related to tariffs in the second half of the quarter ended June 28, 2025.
During the three and six months ended June 27, 2026 we received animmaterial amount of refunds of certain tariffs
previously paid in the United States.We received additional refunds after June 27, 2026, and we expect to
recognize the net impact of these refunds in our financial statements duringthe quarter ending September 26, 2026.
Executive-Level Overview
Henry Schein, Inc. is a solutions company for health care professionals poweredby 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 andambulatory surgery centers, as well
as government, institutional health care clinics, home health providers, andother alternate care clinics.
We
believe
that we have a strong brand identity due to our more than 94 years of experiencedistributing health care products.
We
are headquartered in Melville, New York, employ more than 25,000 people (of which more than 13,000 are
based outside of the United States) and have operations or affiliates in 34 countries andterritories.Our broad
global footprint has evolved over time through our organic growth as well as throughcontribution from strategic
acquisitions.
We
have established strategically located distribution centers aroundthe 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, enablesus 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 ofcost-effective,
high-quality consumable merchandise products.
We
also manufacture, source and sell a range of company-owned
manufactured products, primarily implants, biomaterial products, endodontics, handpieceand 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, asmanufacturers of these products
typically do not utilize a distribution channel to serve customers.
Our reportable segments 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 relatedtechnical services.This segment
also includes value-added services such as financial services, continuing educationservices, 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, marketingand sales of dental
implant and biomaterial products; and endodontic, orthodontic and orthopedicproducts 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 healthcare providers.
A key element to grow closer to our customers is our One Schein initiative, whichis a unified go-to-market
approach that enables practitioners to work synergistically with our supply chain, equipmentsales and service and
other value-added services, allowing our customers to leverage thecombined 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 productsand 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 lowprices.It also has accelerated the
growth of DSOs, GPOs, HMOs, group practices, other managed careaccounts 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 andArtificial Intelligence
solutions, which can enhance the efficiency and facilitation of practice management.
Our operating results in recent years have been significantly affected by strategiesand 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 ofrelatively 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 managelarge quantities of supplies
in their offices, the distribution of health care supplies and small equipment to office-based healthcare 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 typicallymade by the
practitioner or an administrative assistant.Supplies and small equipment are generally purchased from morethan
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 aremade 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 asa provider of products and services
to the health care industry.This trend has resulted in our expansion into service areas that complementour existing
operations and provide opportunities for us to develop synergies with, and thus strengthen, the acquiredbusinesses.
As industry consolidation continues, we believe that we are positionedto capitalize on this trend, as we believe we
have the ability to support increased sales through our existing infrastructure, althoughthere 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 intend to continue toseek 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.
Aging Population and Other Market Influences
The health care products distribution industry continues to experience growthdue to the aging population,
increased health care awareness, the proliferation of medical technologyand testing, new pharmacological
treatments, and expanded third-party insurance coverage, partially offset by the effects of unemploymenton
insurance coverage.In addition, the physician market continues to benefit from theshift of procedures and
diagnostic testing from acute care settings to alternate-care sites, particularlyphysicians' offices.
According to the U.S. Census Bureau's International Database, between 2026 and 2036, the 45 and older
population is expected to grow by approximately 10%.Between 2026 and 2046, this age group is expected to grow
by approximately 17%.This compares with expected total U.S. population growth rates ofapproximately 4%
between 2026 and 2036and approximately 6% between 2026 and 2046.
According to the U.S. Census Bureau's International Database, in 2026 there are over 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 over 17 million.The population aged 65 to 84 years is
projected to increase by approximately 12% during the same period.
As a result of these market dynamics, annual expenditures for health care servicescontinue to increase in the
United States.
We
believe that demand for our products and services will grow whilecontinuing 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 thattotal national health care spending reached
approximately $5.3 trillion in 2024, or 18.0% of the nation's gross domestic product, the benchmark measurefor
annual production of goods and services in the United States.Health care spending is projected to reach
approximately $9.0 trillion by 2034, or 20.6% of the nation's projected gross domestic product.
We
believe similar demographic changes are also occurring in othermarkets we serve outside the U.S.
Government
Certain of our businesses involve the distribution, manufacturing, importation,exportation, marketing, sale and/or
promotion of pharmaceuticals, medical devices and/or in vitro diagnosticsand 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, medical devices, and in vitro diagnostics;manufacturing activities; and
as part of our specialty home medical supplies businesses that distribute and sellmedical equipment and supplies
directly to patients.Federal, state and certain foreign governments have also increasedenforcement 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 ofmedical equipment and supplies directly to
patients, that are paid for by third parties and/or patients and must operate incompliance with a variety of
burdensome and complex coding, billing and record-keeping requirementsin order to substantiate claims for
payment under federal, state and commercial/private health care reimbursementprograms.
Government and private insurance programs fund a large portion of the total cost of medicalcare, and there have
been efforts to limit such private and government insurance programs, including efforts, thus farunsuccessful, 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, handlingand disposal of hazardous or
potentially hazardous substances; "forever chemicals" such as per-andpolyfluoroalkyl substances; warnings related
to potential cancer or reproductive harm linked to chemicals; amalgam bans; pricing disclosures;supply chain
transparency around human trafficking and forced labor practices; and safe workingconditions.In addition,
activities to control medical costs, including laws and regulations loweringreimbursement rates for
pharmaceuticals, medical devices, medical supplies and/or medicaltreatments or services, are ongoing.Laws and
regulations are subject to change and their evolving implementation may impactour operations and financial
performance.
Certain of our businesses also maintain contracts with governmental agenciesand are subject to certain regulatory
requirements specific to government contractors.
Our businesses are generally subject to numerous laws and regulations that couldimpact our financial performance,
and failure to comply with such laws or regulations could have a materialadverse effect on our businesses.
A more detailed discussion of laws, regulations and governmental activityis included in Management's Discussion
and Analysis of Financial Condition and Results of Operations, containedin our Annual Report on Form 10-K for
the fiscal year ended December 27, 2025, filed with the SEC on February24, 2026.
Results of Operations
The following tables summarize the significant components of our operatingresults for the three and six months
ended June 27, 2026 and June 28, 2025 and cash flows for the six monthsended June 27, 2026 and June 28, 2025
(in millions):
Three Months Ended
Six Months Ended
June 27,
June 28,
June 27,
June 28,
2026
2025
2026
2025
Operating results:
Net sales
$
3,458
$
3,240
$
6,826
$
6,408
Cost of sales
2,357
2,224
4,655
4,392
Gross profit
1,101
1,016
2,171
2,016
Operating expenses:
Selling, general and administrative
1,640
1,516
Depreciation and amortization
Restructuring and related costs
Operating income
$
$
$
$
Other expense, net
$
(34)
$
(30)
$
(66)
$
(60)
Income taxes
(34)
(31)
(72)
(66)
Net income
Net income attributable to Henry Schein, Inc.
Six Months Ended
June 27,
June 28,
2026
2025
Cash flows:
Net cash provided by operating activities
$
$
Net cash used in investing activities
(128)
(197)
Net cash provided by (used in) financing activities
(48)
Plan of Restructuring and Related Costs
On August 6, 2024, we committed to a restructuring plan (the "2024Plan") to integrate our acquisitions, right-size
operations and further increase efficiencies.We currently expect this plan to be completed by the end of 2027.
During the three months ended June 27, 2026 and June 28, 2025, werecorded restructuring and related charges
associated with the 2024 Plan of $29 million and $23 million, respectively.During the six months ended June 27,
2026 and June 28, 2025, we recorded restructuring charges associated with the 2024Plan of $41 million and $48
million, respectively.The restructuring and related costs for these periods primarily relatedto severance and
employee-related costs, costs to exit facilities and other exit costs.We expect to record restructuring and related
charges associated with the 2024 Plan through the end of 2027; however,an estimate of the amount of these
charges for 2026through 2027 has not yet been determined.
During the quarter ended March 28, 2026 and six months ended June 27, 2026,in connection with the 2024 Plan,
we recorded a loss of $2 million related to the disposal of businessesin the Global Specialty Productssegment.
This amount is included in the $41 million of restructuring and related charges discussedabove.
Three Months Ended June 27, 2026 Compared to Three Months Ended June 28, 2025
Note: Percentages for Net Sales; Gross Profit; Operating Expenses; OtherExpense, Net; and Income Taxes are
based on actual values and may not recalculate due to rounding.
Our reportable segments are determined based on how our Chief ExecutiveOfficer manages the business, assesses
performance and allocates resources.We have three reportable segments:(i) Global Distribution and Value-Added
Services; (ii) Global Specialty Products; and (iii) Global Technology.
Net Sales
Net sales by reportable segment and by major product or service type wereas follows:
June 27,
% of
June 28,
% of
Increase
2026
Total
2025
Total
$
%
Global Distribution and Value-Added Services
Global Dental Merchandise
(1)
$
1,337
38.6
%
$
1,218
37.6
%
$
9.7
%
Global Dental Equipment
(2)
13.2
13.5
3.8
Global Value-Added Services
(3)
1.8
1.8
5.1
Global Dental
1,854
53.6
1,715
52.9
8.1
Global Medical
(4)
1,057
30.6
1,016
31.4
4.0
Total Global Distribution and Value-Added Services
2,911
84.2
2,731
84.3
6.6
Global Specialty Products
(5)
12.1
11.9
8.7
Global Technology
(6)
5.2
5.2
8.2
Eliminations
(53)
(1.5)
(44)
(1.4)
(9)
n/a
Total
$
3,458
100.0
%
$
3,240
100.0
%
$
6.7
(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, home solutions products, 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 the development and distribution of practice management software, e-services and other technology-enabled products
for health care providers.
The components of our sales growth were as follows:
Constant Currency
Growth/(Decline)
Total Constant
Currency Growth
Foreign
Exchange
Impact
Total Sales
Growth
Local Internal
Growth
Acquisition
Growth/
(Decline)
Global Distribution and Value-Added Services
Global Dental Merchandise
5.9
%
1.4
%
7.3
%
2.4
%
9.7
%
Global Dental Equipment
2.2
-
2.2
1.6
3.8
Global Value-Added Services
3.7
0.7
4.4
0.7
5.1
Global Dental
4.9
1.0
5.9
2.2
8.1
Global Medical
3.9
-
3.9
0.1
4.0
Total Global Distribution and Value-Added Services
4.5
0.6
5.1
1.5
6.6
Global Specialty Products
3.2
3.4
6.6
2.1
8.7
Global Technology
9.1
(1.3)
7.8
0.4
8.2
Total
4.6
0.7
5.3
1.4
6.7
Global Sales
Global net sales for the three months ended June 27, 2026 increased 6.7%,attributable to internal growth of 4.6%,
acquisition growth of 0.7%, and an increase in foreign exchange of 1.4%.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 June 27, 2026 increased 6.6%.
The components of our sales increase are presented in the tableabove.
The 4.9% increase in internally generated local currency dental sales wasprimarily due to merchandise sales
growth in U.S. and international markets, growth in digital dental equipmentin the U.S. and traditional and digital
equipment in international markets.
The 3.9% increase in internally generated local currency medical sales wasattributable to growth of our
government and Home Solutions businesses, partially offset by lower point of carediagnostic test products related
to respiratory illness.
Global Specialty Products Sales
Global Specialty Products net sales for the three months ended June 27, 2026increased 8.7%.The components of
our sales increase are presented in the table above.
The 3.2% increase in internally generated local currency sales was attributableto growth in our implant and
biomaterial businesses.
Global Technology Sales
Global Technology net sales for the three months ended June 27, 2026 increased 8.2%.The components of sales
growth are presented in the table above.
The internally generated local currency increase of 9.1% in Global Technology sales was primarily attributable to
the increased rate of customer adoption of our core practice management solutions,particularly our cloud-based
platforms.
Gross Profit
Gross profit and gross margin percentages by segment and in total were as follows:
June 27,
Gross
June 28,
Gross
Increase / (Decrease)
2026
Margin %
2025
Margin %
$
%
Global Distribution and Value-Added Services
$
25.6
%
$
25.2
%
$
8.0
%
Global Specialty Products
55.7
54.9
10.4
Global Technology
69.7
67.9
11.0
Corporate
(2)
n/a
n/a
(5)
n/a
Total
$
1,101
31.8
$
1,016
31.4
$
8.3
Gross margin may not be comparable to that of other distribution companies due todiffering industry practices in
the classification of distribution network costs.Gross margin percentages also vary across our segments, reflecting
differences in business models.The Global Specialty Products segment generateshigher gross margins, as it
primarily includes products we develop and manufacture, comparedto the Global Distribution and Value-Added
Services segment, which principally distributes third-party and corporate brandproducts.While the Global
Specialty Products segment has increasingly leveraged the GlobalDistribution and Value-Added Services segment
as a sales channel, the impact on overall margins has not been material.The Global Technology segment also
generates higher gross margins, reflecting our role as both developer and provider ofsoftware products and
services.
Within our Global Distribution and Value-Added Services segment, gross profit margins may fluctuate between the
periods as a result of the changes in product mix and customer mix.With respect to customer mix, sales to our
large-group customers are typically completed at lower gross margins as a result of higher salesvolumes, while
sales to office-based practitioners generally carry higher gross margins due to lower volumes.
The increase in Global Distribution and Value-Added Services gross profit for the three months ended June 27,
2026 compared to the prior-year-period is due primarily to increased internally generated sales volumeas described
above.The increase in gross margin rates was attributable primarily to favorablebusiness mix and early benefits
from our value creation initiatives.
The increase in Global Specialty Products gross profit primarily reflectsincreased internally generated sales
volume 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 primarily of higher internally generated sales.The
increase in gross margin rates was due to product mix.
Operating Expenses
Operating expenses (consisting of selling, general and administrativeexpenses; depreciation and amortization; and
restructuring and related costs) by segment were as follows:
% of
% of
June 27,
Respective
June 28,
Respective
Increase
2026
Sales
2025
Sales
$
%
Global Distribution and Value-Added Services
$
19.3
%
$
19.4
%
$
6.3
%
Global Specialty Products
40.8
41.4
7.2
Global Technology
42.8
41.0
12.7
Corporate
n/a
n/a
n/a
24.6
24.4
7.7
Adjustments
(1)
n/a
n/a
n/a
Total operating expenses
$
26.9
$
26.7
$
7.5
(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.
June 27,
June 28,
2026
2025
Adjustments:
Restructuring and related costs
$
$
Acquisition intangible amortization
Change in contingent consideration
(2)
-
Litigation settlements
-
Costs associated with shareholder advisory matters and select implementation related value
creation consulting costs
Total adjustments
$
$
The net increase in operating expenses wasattributable to the following:
Operating Costs
(excluding
acquisitions)
Acquisitions
Adjustments
Total
Global Distribution and Value-Added Services
$
$
$
-
$
Global Specialty Products
-
Global Technology
-
-
Corporate
-
-
-
Adjustments
-
-
Total operating expenses
$
$
$
$
The components of the net increase in total operating expenses are presentedin the table above.The increase in
operating costs (excluding acquisitions) during the three months endedJune 27, 2026 was primarily attributable to
costs associated with our sales growth and the unfavorable impact offoreign exchange rates.
Other Expense, Net
Other expense, net was as follows:
June 27,
June 28,
Variance
2026
2025
$
%
Interest income
$
$
$
(1)
(14.3)
%
Interest expense
(43)
(38)
(5)
(10.5)
Other, net
(1)
(148.5)
Other expense, net
$
(34)
$
(30)
$
(4)
(8.9)
Interest expense increased primarily due to increased borrowings.
Income Taxes
Our effective tax rate was 24.8% for the three months ended June 27, 2026, comparedto 24.4% for the prior year
period.The difference between our effective and federal statutory tax rates primarily relates to stateand foreign
income taxes and interest expense.
Six Months Ended June 27, 2026 Compared to Six Months Ended June 28, 2025
Note: Percentages for Net Sales; Gross Profit; Operating Expenses; OtherExpense, Net; and Income Taxes are
based on actual values and may not recalculate due to rounding.
Our reportable segments are determined based on how our Chief ExecutiveOfficer manages the business, assesses
performance and allocates resources.We have three reportable segments: (i) Global Distribution and Value-Added
Services; (ii) Global Specialty Products; and (iii) Global Technology.
Net Sales
Net sales by reportable segment and by major product or service type wereas follows:
June 27,
% of
June 28,
% of
Increase
2026
Total
2025
Total
$
%
Global Distribution and Value-Added Services
Global Dental Merchandise
(1)
$
2,629
38.5
%
$
2,403
37.5
%
$
9.4
%
Global Dental Equipment
(2)
12.8
12.9
6.0
Global Value-Added Services
(3)
1.7
1.7
7.7
Global Dental
3,620
53.0
3,336
52.1
8.5
Global Medical
(4)
2,130
31.2
2,071
32.3
2.8
Total Global Distribution and Value-Added Services
5,750
84.2
5,407
84.4
6.3
Global Specialty Products
(5)
12.0
11.8
8.4
Global Technology
(6)
5.2
5.1
7.6
Eliminations
(94)
(1.4)
(81)
(1.3)
(13)
n/a
Total
$
6,826
100.0
%
$
6,408
100.0
%
$
6.5
(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, home solutions products, 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 the development and distribution of practice management software, e-services and other technology-enabled products
for health care providers.
The components of our sales growth/(decline) were as follows:
Constant Currency
Growth/(Decline)
Total Constant
Currency Growth
Foreign
Exchange
Impact
Total Sales
Growth
Local Internal
Growth
Acquisition
Growth/
(Decline)
Global Distribution and Value-Added Services
Global Dental Merchandise
4.5
%
1.3
%
5.8
%
3.6
%
9.4
%
Global Dental Equipment
2.8
-
2.8
3.2
6.0
Global Value-Added Services
5.6
1.0
6.6
1.1
7.7
Global Dental
4.1
1.0
5.1
3.4
8.5
Global Medical
2.6
-
2.6
0.2
2.8
Total Global Distribution and Value-Added Services
3.5
0.6
4.1
2.2
6.3
Global Specialty Products
2.2
2.8
5.0
3.4
8.4
Global Technology
8.0
(1.3)
6.7
0.9
7.6
Total
3.6
0.7
4.3
2.2
6.5
Global Sales
Global net sales for the six months ended June 27, 2026 increased 6.5%,attributable to internal growth of 3.6%,
acquisition growth of 0.7%, and an increase in foreign exchange of 2.2%.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 six months ended June 27, 2026 increased 6.3%.
The components of our sales increase are presented in the tableabove.
The 4.1% increase in internally generated local currency dental sales wasprimarily due to merchandise sales
growth in U.S. and international markets, growth in traditional dental equipmentin the U.S. and international
markets, and value-added services sales attributable to increased sales inour practice transitions business.
The 2.6% increase in internally generated local currency medical sales wasattributable to growth of our Home
Solutions business and dialysis products, partially offset by lower point of care diagnostictest products related to
respiratory illness.
Global Specialty Products Sales
Global Specialty Products net sales for the six months ended June 27, 2026increased 8.4%.The components of
our sales increase are presented in the table above.
The 2.2% increase in internally generated local currency sales was attributableto growth in our value implant and
biomaterial businesses.
Global Technology Sales
Global Technology net sales for the six months ended June 27, 2026 increased 7.6%.The components of sales
growth are presented in the table above.
The internally generated local currency increase of 8.0% in Global Technology sales was primarily attributable to
the increased rate of customer adoption of our core practice management solutions,particularly our cloud-based
platforms.
Gross Profit
Gross profit and gross margin percentages by segment and in total were as follows:
June 27,
Gross
June 28,
Gross
Increase / (Decrease)
2026
Margin %
2025
Margin %
$
%
Global Distribution and Value-Added Services
$
1,476
25.7
%
$
1,369
25.3
%
$
7.8
%
Global Specialty Products
55.5
55.4
8.6
Global Technology
69.2
67.9
9.6
Corporate
(3)
n/a
n/a
(9)
n/a
Total
$
2,171
31.8
$
2,016
31.5
$
7.7
Gross margin may not be comparable to that of other distribution companies due todiffering industry practices in
the classification of distribution network costs.Gross margin percentages also vary across our segments, reflecting
differences in business models.The Global Specialty Products segment generateshigher gross margins, as it
primarily includes products we develop and manufacture, comparedto the Global Distribution and Value-Added
Services segment, which principally distributes third-party and corporate brandproducts.While the Global
Specialty Products segment has increasingly leveraged the GlobalDistribution and Value-Added Services segment
as a sales channel, the impact on overall margins has not been material.The Global Technology segment also
generates higher gross margins, reflecting our role as both developer and provider ofsoftware products and
services.
Within our Global Distribution and Value-Added Services segment, gross profit margins may fluctuate between the
periods as a result of the changes in product mix and customer mix.With respect to customer mix, sales to our
large-group customers are typically completed at lower gross margins as a result ofhigher sales volumes, while
sales to office-based practitioners generally carry higher gross margins due to lower volumes.
The increase in Global Distribution and Value-Added Services gross profit for the six months ended June 27, 2026
compared to the prior-year-period is due primarily to increased internally generated sales volume as described
above.The increase in gross margin rates was attributable primarily to favorablebusiness mix.
The increase in Global Specialty Products gross profit primarily reflectsincreased internally generated sales
volume 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 primarily of higher internally generated sales.The
increase in gross margin rates was due to product mix.
Operating Expenses
Operating expenses (consisting of selling, general and administrativeexpenses; depreciation and amortization; and
restructuring and related costs) by segment were as follows:
% of
% of
June 27,
Respective
June 28,
Respective
Increase
2026
Sales
2025
Sales
$
%
Global Distribution and Value-Added Services
$
1,112
19.3
%
$
1,043
19.3
%
$
6.6
%
Global Specialty Products
40.8
41.1
7.7
Global Technology
42.3
41.5
9.6
Corporate
n/a
n/a
n/a
1,668
24.4
1,561
24.4
6.9
Adjustments
(1)
n/a
n/a
n/a
Total operating expenses
$
1,818
26.6
$
1,690
26.4
$
7.6
(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.
June 27,
June 28,
2026
2025
Adjustments:
Restructuring and related costs
$
$
Acquisition intangible amortization
Cyber incident-insurance proceeds, net of third-party advisory expenses
-
(20)
Change in contingent consideration
(1)
(2)
Litigation settlements
-
Impairment of intangible assets
-
Costs associated with shareholder advisory matters and select implementation related value
creation consulting costs
Total adjustments
$
$
The net increase in operating expenses wasattributable to the following:
Operating Costs
(excluding
acquisitions)
Acquisitions
Adjustments
Total
Global Distribution and Value-Added Services
$
$
$
-
$
Global Specialty Products
-
Global Technology
-
-
Corporate
-
-
-
Adjustments
-
-
Total operating expenses
$
$
$
$
The components of the net increase in total operating expenses are presentedin the table above.The increase in
operating costs (excluding acquisitions) during the six months endedJune 27, 2026 was primarily attributable to
costs associated with our sales growth and the unfavorable impact offoreign exchange rates.During the six months
ended June 27, 2026, our operating costs were favorably impacted by theremeasurement to the fair value of a
previously held equity investment of $11 million within our Global Specialty Products segment.
Other Expense, Net
Other expense, net was as follows:
June 27,
June 28,
Variance
2026
2025
$
%
Interest income
$
$
$
-
0.4
%
Interest expense
(82)
(73)
(9)
(11.5)
Other, net
(2)
(118.9)
Other expense, net
$
(66)
$
(60)
$
(6)
(8.5)
Interest expense increased primarily due to increased borrowings.
Income Taxes
Our effective tax rate was 25.2% for the six months ended June 27, 2026, compared to 24.7%for the prior year
period.The difference between our effective and federal statutory tax rates primarily relates tostate and foreign
income taxes and interest expense.
Liquidity and Capital Resources
Our principal capital requirements have included funding of acquisitions, purchasesof 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 receivablesand payables.Historically, sales have
tended to be stronger during the second half of the year and special inventoryforward buy-in opportunities have
been most prevalent just before the end of the year, and have caused our working capital requirementsto be higher
from the end of the third quarter to the end of the first quarter ofthe following year.
We finance our business primarily through cash generated from our operations, revolving credit facilities and debt
placements.Please see
Note 7 - Debt
for further information.Our ability to generate sufficient cash flows from
operations is dependent on the continued demand of our customersfor our products and services, and access to
products and services from our suppliers.
Our business requires a substantial investment in working capital, whichis 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, maychange.Consequently, we may change
our funding structure to reflect any new requirements.
Our acquisition strategy is focused on investments in companies,including high growth high margin businesses
aligned with our BOLD+1 strategy, that add new customers and sales teams, increase our geographic footprint
(whether entering a new country, such as emerging markets, or building scale where we have already invested in
businesses), and finally, those that enable us to access new products and technologies.
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 withsufficient liquidity to meet our currently
foreseeable short-term and long-term capital needs.
Net cash provided by operating activities was $145 million for thesix months ended June 27, 2026, compared to
net cash provided by operating activities of $157 million for theprior year.The net change of $12 million was
primarily attributable to changes in working capital accounts (primarilyaccounts receivable, inventory, and
accounts payable and accrued expenses), partially offset by an increase in operatingincome.
Net cash used in investing activities was $128 million for thesix months ended June 27, 2026, compared to net
cash used in investing activities of $197 million for the prior year.The net change of $69 million was primarily
attributable to lower acquisition activity.
Net cash used in financing activities was $48 million for the sixmonths ended June 27, 2026, compared to net cash
provided by financing activities of $145 million for the prior year period.In May 2025, funds affiliated with KKR
invested $250 million in Henry Schein through the purchase of 3,285,152shares of common stock.Shortly
thereafter, we initiated a $250 million accelerated share repurchase program to offset the resulting dilution.As a
result, during the six months ended June 27, 2026 we had lower proceedsfrom the issuance of common stock and
lower share repurchases compared to the prior year period.Other factors contributing to the net change of $193
million in financing activities primarily include lower net borrowings as wellas lower payments for acquisitions of
noncontrolling interests and contingent consideration.
The following table summarizes selected measures of liquidity and capitalresources:
June 27,
December 27,
2026
2025
Cash and cash equivalents
$
$
Workingcapital
(1)
1,112
1,236
Debt:
Bank credit lines
$
1,024
$
Current maturities of long-term debt
Long-term debt
2,300
2,310
Total debt
$
3,462
$
3,107
Leases:
Current operating lease liabilities
$
$
Non-current operating lease liabilities
(1)
Includes $526 million and $491 million of certain accounts receivable which serve as security for U.S. trade accounts receivable
securitization at June 27, 2026 and December 27, 2025, respectively.
Our cash and cash equivalents consist of bank balances and investmentsin 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 operationsincreased to 45.7 days as of June 27, 2026 from
44.7 days as of June 28, 2025.During the six months ended June 27, 2026, we wrote off approximately $7million
of fully reserved accounts receivable against our trade receivable reserve.Our inventory turns from operations
decreased to 4.6 as of June 27, 2026 from 4.7 as of June 28, 2025.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 otherfacilities, vehicles
and certain equipment.Our leases have remaining terms of less than one year to approximately22 years, some of
which may include options to extend the leases for up to 10 years.As of June 27, 2026, our right-of-use assets
related to operating leases were $322 million and our current and non-currentoperating lease liabilities were $76
million and $275 million, respectively.
Stock Repurchases
On January 27, 2025, our Board of Directors authorized the repurchaseof up to an additional $500 million in shares
of our common stock.
On May 19, 2025, we executed an accelerated share repurchase programto repurchase a total of $250 million of
our outstanding common stock based on volume-weighted averageprices.In May 2025, we received 3,122,832
shares at an estimated fair value of $224million.In July 2025, we received an additional 368,651 shares at an
estimated fair value of $26 million, representing the final amount of sharesto be received under this accelerated
share repurchase program.
On September 8, 2025, our Board of Directors authorized the repurchase ofup to an additional $750 million in
shares of our common stock.
From March 3, 2003 through June 27, 2026, we repurchased $6.3 billion,or 112,094,874 shares,under our
common stock repurchase programs, with $455 million availableas of June 27, 2026 for future 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 requiredto purchase all or a portion of the
outstanding interest in a consolidated subsidiary from the noncontrollinginterest holder under the terms of a put
option contained in contractual agreements.As of June 27, 2026 and December 27, 2025, our balancefor
redeemable noncontrolling interests was $906 million and $895 million,respectively.Please see
Note 12 -
Redeemable Noncontrolling Interests
for further information.
Critical Accounting Estimates
There have been no material changes in our critical accounting estimatesfrom those disclosed in Item 7 of our
Annual Report on Form 10-K for the year ended December 27, 2025.
Accounting Standards Update
For a discussion of accounting standards updates that have been adoptedor will be adopted, see
Note 2 - Significant
Accounting Policies, Accounting Pronouncements Recently Adopted and Recently Issued Accounting
Pronouncements
of the Notes to the Condensed Consolidated Financial Statementsincluded under Item 1.
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