INNOVATIVE SOLUTIONS

A N N U A L R E P O R T 2 0 1 8

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 more than 18,000 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 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 120,000 branded products and Henry Schein private-brand products in stock, as well as more than 180,000 additional products available as special-order items.

A FORTUNE 500 Company and a member of the S&P 500® and the Nasdaq 100® indexes, Henry Schein is headquartered in Melville, New York, and has operations or affiliates in

31 countries. The Company's sales from continuing operations reached $9.4 billion in 2018, and have grown at a compound annual rate of approximately 13% since Henry Schein became a public company in 1995.

(As of March 2019)

HENRY SCHEIN FINANCIAL HIGHLIGHTS 2016-2018

NET SALES

Unaudited

($ in Millions)

CAGR 7%

$10,000

$6,000

8,219$

8,883$

$9,418

$8,000

$4,000

$2,000

$0

2016

2017

2018

$800

$700

$600

$500

$400

$300

$200

$100

$0

NON-GAAP(1)

Operating Income

Unaudited

($ in Millions)

CAGR 5%

630

$675

$694

$

2016

2017

2018

$4.00

$3.00

$2.00

$1.00

$0

NON-GAAP(2)

Diluted EPS

Unaudited

CAGR 10%

2.63

$2.89

$3.17

$

2016

2017

2018

(1)GAAP operating income from continuing operations for 2016, 2017, and 2018 was $592 million, $670 million and $601 million, respectively. See page 8 for a reconciliation of GAAP andnon-GAAP measures.

(2)GAAP diluted EPS from continuing operations for 2016, 2017, and 2018 was $2.45, $1.85 and $2.80, respectively. See page 8 for a reconciliation of GAAP andnon-GAAP measures.

HENRY SCHEIN AT A GLANCE

2018 GLOBAL Net Sales of $9.4 BILLION*

67.4% DENTAL

28.3% MEDICAL

4.3% TECHNOLOGY &

VALUE-ADDED SERVICES*

2018 net sales of $6.3 billion

DENTAL

Only global dental distributor to general practitioners, specialists, and laboratories

Growth Opportunities:

Increasing penetration with existing customers

Geographic expansion

Advancing technology solutions

Greater penetration of specialty markets

Continued focus on large group practices

Digitalization of prosthetic solutions

2018 net sales of $2.7 billion

MEDICAL

A leading U.S. distributor to health care providers in multiple segments: alternate-site practices; ambulatory surgery centers; laboratory; public safety; government; and health systems

Growth Opportunities:

Increasing penetration organically and through acquisition

Continued focus on large accounts, health systems, and surgery centers

Focus on specialty segments and solutions

Create unique offering with supply partners

Select international opportunities

2018 net sales of $408 million*

TECHNOLOGY

& VALUE-ADDED SERVICES

A leader in practice management software, patient relationship management solutions, and patient demand generation solutions for dental practices

Full-service provider of financial services

Growth Opportunities:

Increasing penetration with existing customers

Geographic expansion

Ability to serve large group practices

Continued focus on facilitating financial services for technology investments and office expansion

FORTUNE 500

A FORTUNE

AN ETHISPHERE®

COMPONENT OF

FORTUNE

HIGHER

Ranking of the

WORLD'S

INSTITUTE

NASDAQ 100®

CHANGE THE

AMBITION

Largest U.S.

MOST ADMIRED

WORLD'S

(12 Years)

WORLD LIST

COMPANY

Corporations

COMPANY

MOST ETHICAL

AND S&P 500®

(2018)

OF THE

(15 Years)

(18 Years)

COMPANY

INDEXES

YEAR

(8 Years)

(4 Years)

(2018)

(As of March 2019)

*Sales from continuing operations (unaudited).

1

A MESSAGE FROM THE CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER

To My Fellow Stockholders,

Henry Schein is a company of innovation. Over the course of nearly nine decades, our Company has transformed by anticipating and adapting to market dynamics, consistently offering our customers better and brighter ideas. Our true innovation is seen in how

we apply these ideas to achieve results for our customers and other constituencies. That is how Henry Schein has become what we are today: a solutions company for health care professionals powered by a network of people and technology.

Innovation Through Focus

2018 was another year of innovation for Henry Schein. We announced the spin-off of our global animal

health business, which we completed in February 2019. That business is now part of a new, publicly traded company named Covetrus, which serves the global companion animal health market with technology- enabled solutions. We expect Covetrus customers will benefit from differentiated technology, practice management software, and insights to help drive better clinical and financial outcomes for their practices and

pet patients. This past year we also announced the formation of Henry Schein One, which pairs our dental practice management software with new demand-generation tools to help customers better communicate with patients and to create opportunities for dental professionals to interact with new patients.

With this increased focus exclusively on the health of people, we are optimistic about the future of Henry Schein. We are excited about the long-term business opportunities in the global office- based dental and medical markets, while acknowledging that 2019 will be a year of transition. And we will continue to focus on driving growth in these market segments, supporting our customers around the world with innovative technology that expands our value-added solutions offering while pursuing new investment opportunities.

Financial Performance and Strategic Investments

As a result of the spin-off of our global animal health business, we are providing financial results on the basis of continuing operations, which excludes animal health contribution. Our continued

commitment to innovation reaped financial benefits in 2018. We achieved net sales from continuing operations of $9.4 billion, up 6.0% from 2017, with 4.0% internal growth in local currencies. Non- GAAP diluted EPS growth from continuing operations was 9.7%* versus 2017 non-GAAP results. Following the announcement of the animal health spin-off, we spent approximately $200 million to repurchase approximately 2.5 million shares of our common stock in 2018, reflecting our confidence in the strength of our business and our commitment to delivering shareholder value.

In addition, in 2018 we completed five majority owned strategic transactions in our dental and medical businesses, as we continued to expand our geographic presence and enhance our product offering. In dental, our acquisitions expanded our digital dentistry solutions for implants and orthodontics, and we announced Henry Schein One. In medical, in early 2019 we acquired a leading provider of mission-critical products for the defense and public safety markets, North American Rescue.

We expect to continue to invest in technology and dental specialty solutions for implants and bone regeneration, and in endodontic and orthodontic products. These categories complement the growth profile of our traditional dental business and enhance our profitability margins. We will also invest in expanding our global medical business. We have no shortage of opportunities to allocate capital toward strategic investments.

3

"Henry Schein is a company of innovation."

High-Touch, Consultative

Sales Model

We foresee an exciting future for Henry Schein as we continue on our path of success through innovation, serving our customers whose needs are rapidly evolving. Our high- touch, consultative sales model

is built on education, service and support, software and innovation, and strong customer relationships. Our consultative approach sets our business apart in an environment that demands fast access to a more expansive offering of products and services to dental and medical practitioners, as well as the power of technology to drive efficiency and better decision-making.

"Our long-term relationships are trust-based relationships that help drive our ability to reinvent our Company

to anticipate

industry changes

and build shareholder value."

Stakeholder Relationships Built Upon Trust

We have a goal of continuing to create long-term value for all of our constituencies: customers; investors; Team Schein Members; supplier partners; and society. We firmly believe our purpose- driven, values-based culture and highly engaged team create our success as we balance the needs and build trust with each constituency.

To create and sustain our trust-based relationships, we communicate our purpose, strategy, culture, and executional capabilities throughout Henry Schein, and we empower Team Schein Members to form innovative partnerships with our customers and supplier partners. In this way, we work with our constituencies to "Help Health Happen." This innovative collaboration model establishes

a common sense of purpose and creates a powerful vehicle to build value for society while driving our Company's success.

Henry Schein's partnership model is rooted in our values- based culture, and it distinguishes our Company in the global marketplace. Our long-term relationships are trust-based relationships that help drive our ability to reinvent our Company to anticipate industry changes and build shareholder value. In addition to providing exceptional customer service, we align our business strengths with societal issues that resonate with our customers and supplier partners, and together we make a positive difference in the world.

How is this approach working? Over the past 10 years, Henry Schein has posted an average annual total shareholder return of approximately 17%** and average annual earnings per share growth of approximately 11%**.

I would like to thank our more than 18,000 Team Schein Members around the world, whose engagement and commitment to our customers has led us on this path of great success. Team Schein's commitment to our values-based culture has been integral to our ability to be a trusted partner to every customer we serve. And we will continue to demonstrate to our customers, investors, Team Schein Members, supplier partners, and society that their trust in Henry Schein is well placed.

We look forward to an exciting future for Henry Schein, and to our next chapter of innovation.

Sincerely,

Stanley M. Bergman

Chairman of the Board and

Chief Executive Officer

March 2019

Forward-looking statements made in this report are subject to the reservations specified in the Safe Harbor statement noted in the Company's Form 10-K filing.

*2018 growth in GAAP diluted EPS from continuing operations was 51.4% versus 2017 GAAP results. See reconciliation of GAAP andnon-GAAP measures on page 8.

**From 2008 through 2018; on both a GAAP andnon-GAAP basis.

4

Attachments

  • Original document
  • Permalink

Disclaimer

Henry Schein Inc. published this content on 09 April 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 09 April 2019 13:47:07 UTC