Henry Schein Reports Fourth Quarter and Full Year 2024 Financial Results and Provides Detailed 2025 Financial Guidance

• Fourth-quarter 2024 GAAP diluted EPS of $0.74 and non-GAAP diluted EPS of $1.19
• Fourth-quarter 2024 operating cash flow of $204 million; full-year 2024 operating cash flow of $848 million, up $348 million compared with 2023
• 2025 non-GAAP diluted EPS expected to be in the range of $4.80 to $4.94 with mid-single digit 2025 Adjusted EBITDA growth
• Announces new reportable segments to provide more meaningful information for investors

Henry Schein, Inc. (NASDAQ:HSIC), the world's largest provider of health care solutions to office-based dental and medical practitioners, today reported financial results for the fourth quarter and full year ended December 28, 2024. The financial results and guidance being provided today are consistent with the preliminary financial results and guidance provided on January 29^th.

"Our fourth quarter financial results reflect relatively stable dental and medical end-markets. We continued to make progress on our 2022 to 2024 BOLD+1 Strategic Plan which we recently completed, exceeding our 2024 target of generating 40% of our worldwide operating income from high-growth, high-margin businesses," said Stanley M. Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein.

"We have confidence in the underlying fundamentals of our business and look forward to advancing the opportunities contained in our updated 2025 to 2027 BOLD+1 Strategic Plan. KKR's announced investment to become our largest non-index shareholder recognizes this potential. We expect 2025 to be the base year from which to grow and achieve our previously provided long-term goal of high-single digit to low-double digit earnings growth," Mr. Bergman added.

New Organizational Structure

"As part of the updated 2025 to 2027 BOLD+1 Strategic Plan, we have simplified our organizational structure and appointed Andrea Albertini and Tom Popeck to be responsible for our three business groups. Andrea will be responsible for our Global Distribution and Value-Added Services Group as well as our Global Technology Group, while Tom will lead our Global Specialty Products Group. We expect that these complementary businesses will drive growth by leveraging our current product portfolio across our customer base, providing new products and services to our customers, and growing our e-Commerce business," Mr. Bergman continued.

"Andrea has more than 20 years of experience in senior leadership positions in the health care products and services industry. He joined Henry Schein in 2013 and most recently served as President of Henry Schein's International Distribution Group. Tom has spent over two decades leading businesses in orthopedics and industrial manufacturing. He joined Henry Schein in 2019 and most recently served as President of the Henry Schein Healthcare Specialties Group," Mr. Bergman concluded.

New Reportable Segments

The Company is also today announcing a change to its reportable segments to align with management reporting and provide more meaningful information for investors on the business. The results being reported today reflect this change. The three reportable segments are:

• 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 practice transition, continuing education, consulting, financial and other services. This segment had annual sales of $10.8 billion for the full-year 2024.
• 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. This segment had annual sales of $1.4 billion for the full-year 2024.
• Global Technology: includes development, marketing and sales of practice management software, e-services and other products and related services. This segment had annual sales of $0.6 billion for the full-year 2024.

Our organizational structure also includes Corporate, which consists primarily of income and expenses associated with support functions and projects.

All prior comparative segment information has been recast to reflect our new segment structure, as provided in Exhibit D. We are also updating the breakdown of sales as detailed in Exhibit A to reflect new reportable segments. Of note, we are now reporting U.S. distribution sales instead of North America distribution sales.

Fourth Quarter 2024 Financial Results

• Total net sales for the quarter were $3.2 billion, an increase of 5.8% compared with the fourth quarter of 2023. This reflects 5.5% internal sales growth, 0.7% sales growth from acquisitions, and a 0.4% sales decrease resulting from foreign currency exchange. Excluding the impact of personal protective equipment (PPE) and COVID test kits, internal sales growth was 6.6%.
  
  
  
  Fourth-quarter sales growth is summarized below and detailed in Exhibit A¹.

• GAAP net income² for the quarter was $94 million, or $0.74 per diluted share⁴, and compares with fourth-quarter 2023 GAAP net income of $18 million, or $0.13 per diluted share.
• Non-GAAP net income² for the quarter was $149 million, or $1.19 per diluted share⁴, and compares with fourth-quarter 2023 non-GAAP net income of $86 million, or $0.66 per diluted share.
• Operating cash flow for the quarter was $204 million and compares with the fourth-quarter 2023 negative operating cash flow of $32 million.
• Adjusted EBITDA³ for the quarter was $270 million and compares with fourth-quarter 2023 Adjusted EBITDA of $172 million.

Full-Year 2024 Financial Results

• Total net sales for 2024 were $12.7 billion, an increase of 2.7% compared with 2023. This reflects a 0.4% internal sales decrease, 3.3% sales growth from acquisitions, and a 0.2% sales decrease resulting from foreign currency exchange. Excluding the impact of PPE and COVID test kits, internal sales growth was 0.3%.
  
  
  
  Full-year 2024 sales growth is summarized below and detailed in Exhibit A¹.

• GAAP net income² for 2024 was $390 million, or $3.05 per diluted share⁴, and compares with 2023 GAAP net income of $416 million, or $3.16 per diluted share.
• Non-GAAP net income² for 2024 was $605 million, or $4.74 per diluted share⁴, and compares with 2023 non-GAAP net income of $593 million, or $4.50 per diluted share. 2024 full-year GAAP and non-GAAP diluted EPS included a remeasurement gain of $0.11 resulting from the purchase of a controlling interest of a previously held equity investment.
• Operating cash flow for 2024 was $848 million, an increase of $348 million compared with 2023.
• Adjusted EBITDA³ for 2024 was $1,061 million and compares with 2023 Adjusted EBITDA of $985 million.

Restructuring Plan

During the fourth quarter of 2024, the Company recorded $37 million in restructuring costs. Restructuring activities in the third and fourth quarters are estimated to provide over $80 million in annual run-rate savings. We continue to expect to achieve $75 million to $100 million in aggregate annual run-rate savings by the end of 2025.

Share Repurchases

During the fourth quarter of 2024, the Company repurchased approximately 1.1 million shares of its common stock at an average price of $71.35 per share, for a total of $75 million. The impact of these share repurchases on fourth-quarter diluted EPS was immaterial.

For the full year 2024, the Company repurchased approximately 5.4 million shares of its common stock at an average price of $71.04 per share, for a total of $385 million. At year-end, Henry Schein had $380 million authorized and available for future stock repurchases, with a further $500 million authorized by the Company's Board of Directors on January 27, 2025, which is intended in part to be used to repurchase $250 million shares under an Accelerated Share Repurchase program.

2025 Financial Guidance

Henry Schein today provided financial guidance for 2025. Guidance is for current continuing operations as well as announced acquisitions and does not include the impact of restructuring and integration expenses, amortization expense of acquired intangible assets, any potential insurance claim recovery associated with the cybersecurity incident and costs associated with shareholder advisory matters. This guidance also assumes that foreign currency exchange rates remain generally consistent with 2024 levels and modest improvement in the dental and medical markets during the year.

• 2025 non-GAAP diluted EPS attributable to Henry Schein, Inc. is expected to be $4.80 to $4.94, reflecting growth of 1% to 4% compared with 2024 non-GAAP diluted EPS of $4.74.
• 2025 total sales growth is expected to be approximately 2% to 4% over 2024.
• 2025 Adjusted EBITDA³ growth is expected to increase mid-single digits compared with 2024.

Adjustments to 2025 GAAP Net Income and Diluted EPS

The Company is providing guidance for 2025 diluted EPS on a non-GAAP basis and for 2025 Adjusted EBITDA, as noted above. The Company is not providing a reconciliation of its 2025 non-GAAP diluted EPS guidance to its projected 2025 diluted EPS prepared on a GAAP basis, or its 2025 Adjusted EBITDA guidance to net income prepared on a GAAP basis. This is because the Company is unable to provide without unreasonable effort an estimate of restructuring costs related to an ongoing initiative to drive operating efficiencies, including the corresponding tax effect, which will be included in the Company's 2025 diluted EPS and net income, prepared on a GAAP basis. The inability to provide this reconciliation is due to the uncertainty and inherent difficulty of predicting the occurrence, magnitude, financial impact and timing of related costs.

Management does not believe these items are representative of the Company's underlying business performance. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.

Fourth-Quarter 2024 Conference Call Webcast

The Company will hold a conference call to discuss fourth-quarter 2024 financial results today, beginning at 8:00 a.m. Eastern time. Individual investors are invited to listen to the conference call through Henry Schein's website by visiting https://investor.henryschein.com/webcasts. In addition, a replay will be available beginning shortly after the call has ended for a period of one week.

The Company will be posting slides that provide a summary of its fourth-quarter 2024 financial results on its website at https://www.henryschein.com/us-en/Corporate/investor-presentations.aspx.

About Henry Schein, Inc.

Henry Schein, Inc. (NASDAQ:HSIC) is a solutions company for health care professionals powered by a network of people and technology. With approximately 25,000 Team Schein Members worldwide, the Company's network of trusted advisors provides more than 1 million customers globally with more than 300 valued solutions that help improve operational success and clinical outcomes. Our Business, Clinical, Technology and Supply Chain solutions help office-based dental and medical practitioners work more efficiently so they can provide quality care more effectively. These solutions also support dental laboratories, government and institutional health care clinics, as well as other alternate care sites.

Henry Schein operates through a centralized and automated distribution network, with a selection of more than 300,000 branded products and Henry Schein corporate brand products in our main distribution centers.

A FORTUNE 500 Company and a member of the S&P 500® index, Henry Schein is headquartered in Melville, N.Y., and has operations or affiliates in 33 countries and territories. The Company's sales reached $12.7 billion in 2024, and have grown at a compound annual rate of approximately 11.2 percent since Henry Schein became a public company in 1995.

For more information, visit Henry Schein at www.henryschein.com, Facebook.com/HenrySchein, Instagram.com/HenrySchein, and @HenrySchein on X.

Cautionary Note Regarding Forward-Looking Statements and Use of Non-GAAP Financial Information

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 include total sales growth, EPS and Adjusted EBITDA guidance and 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. A fuller discussion of our operations, financial condition and status of litigation matters, including factors that may affect our business and future prospects, is contained in documents we have filed with the United States Securities and Exchange Commission, or SEC, including our Annual Report on Form 10-K, and will be contained in all 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 current expectations.

Risk factors and uncertainties that could cause actual results to differ materially from current and historical results include, but are not limited to: our dependence on third parties for the manufacture and supply of our products and where we manufacture products, our dependence on third parties for raw materials or purchased components; risks relating to the achievement of our strategic growth objectives; risks related to the recently signed Strategic Partnership Agreement; our ability to develop or acquire and maintain and protect new products (particularly technology products) and services and utilize new technologies that achieve market acceptance with acceptable margins; transitional challenges associated with acquisitions, dispositions and joint ventures, including the failure to achieve anticipated synergies/benefits, as well as significant demands on our operations, information systems, legal, regulatory, compliance, financial and human resources functions in connection with acquisitions, dispositions and joint ventures; certain provisions in our governing documents that may discourage third-party acquisitions of us; adverse changes in supplier rebates or other purchasing incentives; risks related to the sale of corporate brand products; risks related to activist investors; security risks associated with our information systems and technology products and services, such as cyberattacks or other privacy or data security breaches (including the October 2023 incident); effects of a highly competitive (including, without limitation, competition from third-party online commerce sites) and consolidating market; changes in the health care industry; risks from expansion of customer purchasing power and multi-tiered costing structures; increases in shipping costs for our products or other service issues with our third-party shippers, and increases in fuel and energy costs; changes in laws and policies governing manufacturing, development and investment in territories and countries where we do business; general global and domestic macro-economic and political conditions, including inflation, deflation, recession, unemployment (and corresponding increase in under-insured populations), consumer confidence, sovereign debt levels, ongoing wars, fluctuations in energy pricing and the value of the U.S. dollar as compared to foreign currencies, and changes to other economic indicators, international trade agreements; the threat or outbreak of war, terrorism or public unrest (including, without limitation, the war in Ukraine, the Israel-Gaza war and other unrest and threats in the Middle East and the possibility of a wider European or global conflict); changes to laws and policies governing foreign trade, tariffs and sanctions, or greater restrictions on imports and exports; supply chain disruption; geopolitical wars; failure to comply with existing and future regulatory requirements, including relating to health care; risks associated with the EU Medical Device Regulation; failure to comply with laws and regulations relating to health care fraud or other laws and regulations; failure to comply with laws and regulations relating to the collection, storage and processing of sensitive personal information or standards in electronic health records or transmissions; changes in tax legislation, changes in tax rates and availability of certain tax deductions; risks related to product liability, intellectual property and other claims; risks associated with customs policies or legislative import restrictions; risks associated with disease outbreaks, epidemics, pandemics (such as the COVID-19 pandemic), or similar wide-spread public health concerns and other natural or man-made disasters; risks associated with our global operations; litigation risks; new or unanticipated litigation developments and the status of litigation matters; our dependence on our senior management, employee hiring and retention, increases in labor costs or health care costs, and our relationships with customers, suppliers and manufacturers; and disruptions in financial markets. The 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.

Included within the press release are non-GAAP financial measures that supplement the Company's Consolidated Statements of Income prepared under generally accepted accounting principles (GAAP). These non-GAAP financial measures adjust the Company's actual results prepared under GAAP to exclude certain items. In the schedule attached to the press release, the non-GAAP measures have been reconciled to and should be considered together with the Consolidated Statements of Income. Management believes that non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance and allow for greater transparency with respect to key metrics used by management in operating our business. The impact of certain items that are excluded include integration and restructuring costs, and amortization of acquisition-related assets, because the amount and timing of such charges are significantly impacted by the timing, size, number and nature of the acquisitions we consummate and occur on an unpredictable basis. These non-GAAP financial measures are presented solely for informational and comparative purposes and should not be regarded as a replacement for corresponding, similarly captioned, GAAP measures.

¹ See Exhibit A for details of sales growth. Internal sales growth is calculated from total net sales using constant foreign currency exchange rates and excludes sales from acquisitions.

² See Exhibit B for a reconciliation of GAAP net income and diluted EPS to non-GAAP net income and diluted EPS.

³ See Exhibit C for a reconciliation of GAAP net income to Adjusted EBITDA.

⁴ References to diluted EPS refer to diluted EPS attributable to Henry Schein, Inc.

(TABLES TO FOLLOW)

Management believes that non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance and allow for greater transparency with respect to key metrics used by management in operating our business. These non-GAAP financial measures are presented solely for informational and comparative purposes and should not be regarded as a replacement for corresponding, similarly captioned, GAAP measures. Net income growth rates are based on actual values and may not recalculate due to rounding. Amounts may not sum due to rounding.