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. Forward looking statements include the overall impact of the Novel

Coronavirus Disease 2019 (COVID-19)
on the Company, its results of operations, liquidity and financial condition
(including any estimates of the impact
on these items), the rate and consistency with which dental and other practices

resume or maintain normal
operations in the United States and internationally, expectations regarding
personal protective equipment ("PPE")
and COVID-19 related product sales and inventory levels, whether additional

resurgences or variants of the virus
will adversely impact the resumption of normal operations, whether vaccine

mandates will adversely impact the
Company (by disrupting our workforce and/or business), whether supply chain

disruptions will adversely impact
our business, the impact of restructuring programs as well as of any

future acquisitions, and more generally current
expectations regarding performance in current and future periods.

Forward looking statements also include the (i)
ability of the Company to have continued access to a variety of COVID-19

test types, expectations regarding
COVID-19 test sales, demand and inventory levels, as well

as the efficacy or relative efficacy of the test results given that the test efficacy has not been, or will not have been, independently

verified under normal FDA
procedures and (ii) potential for the Company to distribute the COVID-19

vaccines and ancillary supplies. Risk factors and uncertainties that could cause actual results to differ materially from current

and historical results
include, but are not limited to: risks associated with COVID-19

and any variants thereof, as well as other disease outbreaks, epidemics, pandemics, or similar wide-spread public health concerns

and other natural disasters; our
dependence on third parties for the manufacture and supply of our products;

our ability to develop or acquire and
maintain and protect new products (particularly technology products) and

technologies that achieve market acceptance with acceptable margins; transitional challenges associated with acquisitions,

dispositions and joint ventures, including the failure to achieve anticipated synergies/benefits; financial

and tax risks associated with acquisitions, dispositions and joint ventures; certain provisions in our governing

documents that may discourage third-party acquisitions of us; effects of a highly competitive (including, without

limitation, competition from third-
party online commerce sites) and consolidating market; the repeal or

judicial prohibition on implementation of the Affordable Care Act; changes in the health care industry; risks from expansion of

customer purchasing power and
multi-tiered costing structures; increases in shipping costs for our products

or other service issues with our third-
party shippers; general global macro-economic and political conditions,

including international trade agreements,
potential trade barriers and terrorism; failure to comply with existing and

future regulatory requirements; risks
associated with the EU Medical Device Regulation; failure to comply with

laws and regulations relating to health
care fraud or other laws and regulations; failure to comply with laws

and regulations relating to the collection, storage and processing of sensitive personal information or standards in electronic

health records or transmissions;
changes in tax legislation; risks related to product liability, intellectual
property and other claims; litigation
risks; new or unanticipated litigation developments and the status of

litigation matters; risks associated with
customs policies or legislative import restrictions; cyberattacks or other

privacy or data security breaches; risks
associated with our global operations; our dependence on our senior management,

employee hiring and retention,
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.

  Table of Contents
28
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. Where You

Can Find Important Information
We may disclose important information through one or more of the following
channels: SEC filings, public
conference calls and webcasts, press releases, the investor relations

page of our website (www.henryschein.com)
and the social media channels identified on the Newsroom page of our website.
Recent Developments
COVID-19 Pandemic

The COVID-19 pandemic negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of global financial markets in

2020 and 2021.

The impact of COVID-19 had a material adverse effect on our business, results of operations and cash flows in the

second quarter of 2020.

In the
latter half of the second quarter of 2020, dental and medical practices began

to re-open worldwide, and continued to
do so during the second half of 2020.

During the year ended December 25, 2021, patient traffic levels returned to levels approaching pre-pandemic levels.

Demand for dental products and certain medical products throughout 2021 was driven by sales of PPE, COVID-19 test kits and other COVID-19

related products.

During the three months
ended March 26, 2022, with the exception of COVID-19 test kits, we experienced

a decrease in the sales volume of
PPE and COVID-19 related products.

During the three months ended March 26, 2022,

as a result of an increase in COVID-19 variants, primarily in Europe and to a lesser extent in North America, we experienced lower dental

patient traffic, which began to
increase as the quarter progressed.

Although some COVID-19 restrictions are still in place in parts of Europe,

we

expect these markets to recover but at a slower pace.

In contrast to our dental business, during the three months ended March 26, 2022, our medical business benefited from an increase

in sales volume of COVID-19 test kits and
point-of-care diagnostics.
Our condensed consolidated financial statements reflect estimates and
assumptions

made by us that affect, among
other things, our goodwill, long-lived asset and definite-lived intangible

asset valuation; inventory valuation; equity
investment valuation; assessment of the annual effective tax rate; valuation of

deferred income taxes and income
tax contingencies; the allowance for doubtful accounts; hedging activity;

supplier rebates; measurement of
compensation cost for certain share-based performance awards and cash bonus

plans; and pension plan
assumptions.

Due to the significant uncertainty surrounding the future impact of

COVID-19, our judgments
regarding estimates and impairments could change in the future.

There is an ongoing risk that the COVID-19 pandemic may again have a material adverse effect on our business, results of operations

and cash flows and may
result in a material adverse effect on our financial condition and liquidity.

However, the extent of the potential
impact cannot be reasonably estimated at this time.
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 and other alternate care clinics.

We believe that we have a strong
brand identity due to our more than 89 years of experience distributing health

care products.
We are headquartered in Melville, New York,

employ nearly 22,000 people (of which approximately 10,600

are

based outside of the United States) and have operations or affiliates in 32 countries

and territories.

Our broad
global footprint has evolved over time through our organic success as well as

through contribution from strategic
acquisitions.

  Table of Contents
29
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.
While our primary go-to-market strategy is in our capacity as a distributor, we
also manufacture certain

dental

specialty products and solutions in the areas of implants, orthodontics

and endodontics.

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.
We conduct our business through two reportable segments: (i) health care
distribution and (ii) technology and
value-added services.

These segments offer different products and services to the same customer base.

Our global dental businesses serve office-based dental practitioners, dental laboratories, schools

and other institutions.

Our

global medical businesses serve office-based medical practitioners, ambulatory

surgery centers, other alternate-care
settings and other institutions.
The health care distribution reportable segment aggregates our global

dental and medical operating segments.

This

segment distributes consumable products, small equipment, laboratory

products, large equipment, equipment repair services, branded and generic pharmaceuticals, vaccines, surgical products, dental

specialty products (including implant, orthodontic and endodontic products), diagnostic tests, infection-control

products, PPE and vitamins.

Our global technology and value-added services business provides software,

technology and other value-added
services to health care practitioners.

Our technology business offerings include practice management software systems for dental and medical practitioners.

Our value-added practice solutions include practice consultancy, education, revenue cycle management and financial services on a non-recourse

basis, e-services, practice
technology, network and hardware services, as well as consulting, and continuing
education services for
practitioners.
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, our private label 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 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.
Our current and future results have been and could be impacted by

the COVID-19 pandemic, the current economic
environment and continued economic and public health uncertainty.

Since the onset of the COVID-19 pandemic in
early 2020, we have been carefully monitoring its impact on our global

operations and have taken appropriate steps

  Table of Contents
30
to minimize the risk to our employees.

We have seen and expect to continue to see changes in demand trends for some of our products and services, supply chain challenges and labor

challenges, as rates of infection fluctuate, new
strains or variants of COVID-19 emerge and spread, vaccine uptake and mandates

increase and change,
governments adapt their approaches to combatting the virus (including

without limitation, vaccine mandates), and
local conditions change across geographies.

For example, vaccine mandates affecting our workforce, whether imposed through government regulations or contracts with governmental authorities

or other customers, could potentially cause staffing shortages if employees choose not to comply as well as

other consequences to our
business or operations, managing and tracking vaccination status and ongoing

testing for exempt employees could
potentially increase our costs, as could addressing inconsistent COVID-19

vaccination mandates.

As a result, we
expect to see continued volatility through at least the duration of the
pandemic.
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.
We believe that consolidation within the industry will continue to result in a
number of distributors, particularly
those with limited financial, operating and marketing resources, seeking

to combine with larger companies that can
provide growth opportunities.

This consolidation also may continue to result in distributors seeking

to acquire companies that can enhance their current product and service offerings or provide

opportunities to serve a broader
customer base.
Our trend with regard 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 also have invested in expanding our sales/marketing infrastructure to include a focus 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.

In response to the COVID-19
pandemic, we had taken a range of actions to preserve cash, including

the temporary suspension of significant

  Table of Contents
31
acquisition activity.

During the second half of 2020, as global conditions improved, we resumed

our acquisition
strategy.
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 pharmacology 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, in 2021 there were more than six and a half million Americans aged 85 years or older, the segment of the population most in need of long-term care

and elder-care services. By the year 2050, that number is projected to nearly triple to approximately

19 million. The population
aged 65 to 84 years is projected to increase by approximately 32% 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 $4.1 trillion in 2020, or 19.7% 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 $6.2 trillion in 2028, approximately 19.7% of the

nation's projected gross domestic product.

The

latest projections begin after the latest historical year 2018 and go through

2028. These projections do not take into
account the impacts of COVID-19 because of the timing of the report and

the highly uncertain nature of the
pandemic.
Government
Certain of our businesses involve the distribution, importation, exportation,

marketing and sale of, and third party payment for, pharmaceuticals and 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, and as part of our specialty home medical

supply business that distributes and
sells medical equipment and supplies directly to patients.

The federal government and state governments have also increased enforcement activity in the health care sector, particularly in areas of fraud and abuse, anti-bribery

and

corruption, controlled substances handling, medical device regulations and

data privacy and security standards.
In addition, certain of our businesses must operate in compliance with

a variety of burdensome and complex billing and record-keeping requirements in order to substantiate claims for payment under

federal, state and commercial
healthcare reimbursement programs.

One of these businesses was recently suspended by CMS from

receiving

payments from Medicare, although it is permitted to continue to perform

and bill for Medicare services.

The

amounts billed are being deposited in an escrow account pending resolution

of an audit.

The Company has not recognized revenue for these services and has currently deferred slightly over $8

million in revenue (including $4
million deferred during the three months ended March 26, 2022 and slightly

over $4 million deferred during the
three months ended December 25, 2021).
Government and private insurance programs fund a large portion of the total cost
of medical

care, and there have been efforts to limit such private and government insurance programs, including efforts,

thus far unsuccessful, to seek repeal of the entire United States Patient Protection and Affordable Care Act,

as amended by the Health Care
and Education Reconciliation Act, each enacted in March 2010, (as amended,

the "ACA").

In addition, activities to
control medical costs, including laws and regulations lowering reimbursement

rates for pharmaceuticals, medical
devices and/or medical treatments or services, are ongoing.

Many of these laws and regulations are subject to
change and their evolving implementation may impact our operations and

our financial performance.































































  Table of Contents
32

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 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 25, 2021, filed with the SEC on February 15, 2022. Results of Operations The following table summarizes the significant components of our operating

results and cash flows for the three
months ended March 26, 2022 and March 27, 2021:
Three Months Ended
March 26,
March 27,
2022
2021
Operating results:
Net sales

$
3,179
$
2,925
Cost of sales

2,206
2,034
Gross profit

973
891
Operating expenses:
Selling, general and administrative

682
614
Depreciation and amortization
47
44
Restructuring costs

-
3
Operating income
$
244
$
230
Other expense, net

$
(5)
$
(4)
Net income
186
175
Net income attributable to Henry Schein, Inc.

181
166
Three Months Ended
March 26,
March 27,
2022
2021
Cash flows:

Net cash provided by operating activities
$
93
$
63
Net cash used in investing activities
(27)
(223)
Net cash used in financing activities
(62)
(120)
Plans of Restructuring
On November 20, 2019, we committed to a contemplated restructuring

initiative intended to mitigate stranded costs associated with the spin-off of our animal health business and to rationalize operations

and to provide expense
efficiencies.

These restructuring activities were completed in 2021. During the three months ended March 27, 2021, we recorded restructuring

costs of $3 million.

As of March 26,
2022 and December 25, 2021, the remaining accrued balance for restructuring

costs was $3 million and $4 million,
respectively.







































  Table of Contents
33

Three Months Ended March 26, 2022 Compared to Three Months Ended March 27, 2021

Net Sales
Net sales were as follows:
March 26,
% of
March 27,
% of
Increase
2022
Total
2021
Total
$
%
Health care distribution
(1)
Dental

$
1,828
57.5
%
$
1,789
61.2
%
$
39
2.2
%
Medical

1,172
36.9
991
33.9
181
18.3

Total health care distribution

3,000
94.4
2,780
95.1
220
7.9
Technology and value-added services
(2)
179
5.6
145
4.9
34
23.4
Total

$
3,179
100.0
%
$
2,925
100.0
%
$
254
8.7
(1)
Consists of consumable products, small equipment, laboratory products, large
equipment, equipment repair services, branded and
generic pharmaceuticals, vaccines, surgical products, dental specialty products
(including implant, orthodontic and endodontic
products), diagnostic tests, infection-control products, PPE and vitamins.
(2)
Consists of practice management software and other value-added products, which
are distributed primarily to health care providers,
practice consultancy, education, revenue cycle management and financial services
on a non-recourse basis, e-services, continuing
education services for practitioners, consulting and other services.
The 8.7% increase in net sales includes an increase of 10.1% in local currency

sales (7.7% increase in internally generated sales and 2.4% growth from acquisitions) partially offset by a decrease

of 1.4% related to foreign
currency exchange.

We estimate that sales of PPE and COVID-19 related products were approximately $487 million, an increase of 4.4% versus the prior year.

Excluding PPE and COVID-19 related products, the estimated increase in internally generated local currency sales was 8.9%. The 2.2% increase in dental net sales includes an increase of 4.4% in local

currency sales (3.5% increase in internally generated sales and 0.9% growth from acquisitions) partially offset by a

decrease of 2.2% related to
foreign currency exchange.

The 4.4% increase in local currency sales was attributable to an increase in dental consumable merchandise sales of 2.4% (1.3% increase in internally generated

sales and 1.1% growth from
acquisitions) and an increase in dental equipment and service

sales of 12.0% (11.9% increase in internally
generated sales and 0.1% growth from acquisitions).

Our sales growth in dental merchandise was lower than our sales growth in dental equipment during the first half of the three months

ended March 26, 2022.

As a result of an
increase in COVID-19 variants, primarily in Europe and to a lesser extent

in North America, our dental merchandise growth was impacted by lower patient traffic, which began to increase as the

quarter progressed.

Dental equipment sales increased in both our North American and international

markets, which is primarily
attributable to increased demand and strong order backlog.

We estimate that our dental business recorded sales of approximately $143 million of PPE and COVID-19 related products, an estimated

decrease of 15.3% versus the
prior year.

Excluding PPE and COVID-19 related products, the estimated

increase in internally generated local
currency dental sales was 6.3%.
The 18.3% increase in medical net sales includes an increase of 18.5%

in local currency sales (14.7% increase in internally generated sales and 3.8% growth from acquisitions), partially offset by

a decrease of 0.2% related to
foreign currency exchange.

We estimate that our medical business recorded sales of approximately $344 million of PPE, COVID-19 test kits, point-of-care diagnostics and other COVID-19

related products for the three months
ended March 26, 2022, an estimated increase of 15.7%

compared to the prior year.

Excluding sales of PPE,
COVID-19 test kits, point-of-care diagnostics and other COVID-19

related products, the estimated increase in internally generated local currency medical sales was 14.5%. The 23.4% increase in technology and value-added services net sales includes

an increase of 24.1%

in local currency sales (11.1% increase in internally generated sales and 13.0% growth from acquisitions)

partially offset by
a decrease of 0.7% related to foreign currency exchange.

During the quarter ended March 26, 2022, the trend for transactional software sales improved compared to the prior year, as more patients visited dental practices worldwide, generating demand for our sales cycle management solutions,

and also from cloud-based solutions that
drive practice efficiency and patient engagement.




































  Table of Contents
34
Gross Profit
Gross profit and gross margin percentages by segment and in total were as
follows:
March 26,
Gross
March 27,
Gross
Increase
2022
Margin %
2021
Margin %
$
%
Health care distribution

$
857
28.6
%
$
789
28.4
%
$
68
8.6
%
Technology and value-added services
116
64.9
102
70.3
14
13.8
Total

$
973
30.6
$
891
30.5
$
82
9.2

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.

Additionally, we realize substantially higher gross margin percentages in our technology and value-added services

segment than in
our health care distribution segment.

These higher gross margins result from being both the developer and seller of software products and services, as well as certain financial services.

The software industry typically realizes higher gross margins to recover investments in development. Within our health care distribution segment, gross profit margins may vary from one period to the next.

Changes in
the mix of products sold as well as changes in our customer mix have been

the most significant drivers affecting
our gross profit margin.

For example, sales of our private label products achieve

gross profit margins that are
higher than average total gross profit margins of all products.

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, who normally purchase lower volumes at

greater frequencies.
Health care distribution gross profit increased $68 million, or 8.6%, primarily

due to the increase in net sales
discussed above.

In addition, health care distribution gross profit margin benefitted from supplier rebates

during

the quarter due to increased purchase volumes.

The overall increase in our health care distribution gross profit includes an increase of $37 million from internally generated sales, $19

million additional gross profit from acquisitions, and a $12 million increase in the gross margin rates due to product mix and supplier

rebates.

Technology and value-added services gross profit increased $14 million, or 13.8%, due to a $10 million increase in internally generated sales and $8 million additional gross profit from acquisitions,

partially offset by a decrease of
$4 million from gross margin rates due to product mix.

Technology and value-added services gross profit margin decreased to 64.9% from 70.3% primarily due to lower gross margins of recently acquired

companies in the
business services sector.































































  Table of Contents
35
Selling, General and Administrative
Selling, general and administrative expenses by segment and in

total were as follows:
% of
% of
March 26,
Respective
March 27,
Respective
Increase
2022
Net Sales
2021
Net Sales
$
%
Health care distribution

$
646
21.5
%
$
592
21.3
%
$
54
9.1
%

Technology and value-added services

83
46.4
69
48.0
14
19.2
Total

$
729
22.9
$
661
22.6
$
68
10.2

Selling, general and administrative expenses (including restructuring costs

in the three months ended March 27,
2021) increased $68 million, or 10.2%.
The $54 million increase in selling, general and administrative expenses within

our health care distribution segment was attributable to an increase of $36 million of operating costs and an increase

of $21 million of additional costs from acquired companies, partially offset by a decrease of $3 million in restructuring costs.

The $14 million
increase in selling, general and administrative expenses within our technology

and value-added services segment
was attributable to an increase of $7 million of operating costs and an

increase of $7 million of additional costs
from acquired companies.
As a component of total selling, general and administrative expenses,

selling expenses increased $57 million, or
14.8% to $443 million primarily due to an increase in payroll and payroll

related costs and travel and convention
expenses.

As a percentage of net sales, selling expenses increased to 13.9%

from 13.2%.
As a component of total selling, general and administrative expenses, general

and administrative expenses increased $11 million, or 3.7% to $287 million primarily due to an increase in payroll and payroll related

costs and
travel and convention expenses.

As a percentage of net sales, general and administrative expenses decreased

to

9.0% from 9.3%.
Other Expense, Net
Other expense, net, was as follows:
March 26,
March 27,
Variance
2022
2021
$
%
Interest income

$
2
$
2
$
-
-
%
Interest expense

(7)
(6)
(1)
(16.7)
Other expense, net

$
(5)
$
(4)
$
(1)
(25.0)

Interest expense increased $1 million primarily due to increased interest

rates.

Income Taxes For the three months ended March 26, 2022 our effective tax rate was 24.0% compared

to 25.1% for the prior year
period.

The difference between our effective tax rates and the federal statutory tax rate for the three

months ended
March 26, 2022 primarily relates to state and foreign income taxes and

interest expense as well as share-based
compensation.

The difference between our effective tax rate and the federal statutory tax rate for the three months ended March 27, 2021 was primarily due to state and foreign income

taxes and interest expense.

  Table of Contents
36
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 (which had been temporarily suspended

in April 2020, but were resumed in early
March 2021).

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 7 - 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 anticipate future increases in our working capital requirements. 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.

Net cash provided by operating activities was $93 million for the

three months ended March 26, 2022, compared to
net cash provided by operating activities of $63 million for the comparable

prior year period.

The net change of
$30 million was primarily attributable to higher net income and decreased

working capital, specifically a decrease
in inventory

levels of PPE and COVID-19 related products, and reduced levels

of prepaid inventory and lower
outstanding vendor rebates.

These working capital decreases were partially offset by an increase in accounts receivable balances resulting from increased sales. Net cash used in investing activities was $27 million for the three

months ended March 26, 2022, compared to $223
million for the comparable prior year period.

The net change of $196 million was primarily attributable to decreased payments for equity investments and business acquisitions. Net cash used in financing activities was $62 million for the three

months ended March 26, 2022, compared to net
cash used in financing activities of $120 million for the comparable

prior year period.

The net change of $58
million was primarily due to decreased repurchases of common stock.


























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37
The following table summarizes selected measures of liquidity and capital

resources:
March 26,
December 25,
2022
2021
Cash and cash equivalents

$
126
$
118
Working

capital

(1)
1,686
1,537
Debt:
Bank credit lines

$
90
$
51

Current maturities of long-term debt

3
11
Long-term debt

773
811
Total debt

$
866
$
873
Leases:
Current operating lease liabilities
$
76
$
76
Non-current operating lease liabilities
277
268
(1)

Includes $77 million and $138 million of certain accounts receivable which serve as security for U.S. trade accounts receivable securitization at March 26, 2022 and December 25, 2021, 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 42 days as of March 26, 2022 from 43
days as of March 27, 2021.

During the three months ended March 26, 2022, we wrote off approximately $3 million of fully reserved accounts receivable against our trade receivable reserve.

Our inventory turns from operations
decreased to 4.7 as of March 26, 2022 from 5.2 as of March 27, 2021.

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 19 years, some of
which may include options to extend the leases for up to 10 years.

As of March 26, 2022, our right-of-use assets
related to operating leases were $331 million and our current and non-current

operating lease liabilities were $76
million and $277 million, respectively.
Stock Repurchases
On March 8, 2021, we announced the reinstatement of our share repurchase

program.

From March 3, 2003 through March 26, 2022, we repurchased $4.0 billion,

or 81,068,993 shares, under our
common stock repurchase programs, with $200 million available as of March

26, 2022 for future common stock
share repurchases.
During the fiscal quarter ended March 26, 2022,

we did not repurchase any shares of our common stock because

we

had a 10b5-1 plan that did not result in any shares being repurchased during

the quarter.

We intend to put in place
an additional plan effective May 4, 2022.
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38
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 25, 2021,

except accounting policies adopted
as of December 26, 2021, which are discussed in

Note 2-Critical Accounting Policies, Accounting Pronouncements

Adopted and Recently Issued Accounting Standards

of the Notes to the Consolidated Financial Statements included
under Item 1.
Accounting Standards Update
For a discussion of accounting standards updates that have been adopted

or will be adopted, see

Note 2-Critical

Accounting Policies, Accounting Pronouncements Adopted

and Recently Issued Accounting Standards of the Notes to the Consolidated Financial Statements included under Item 1. ITEM 3.

QUANTITATIVE

AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our exposure to market risk

from that disclosed in Item 7A of our Annual
Report on Form 10-K for the year ended December 25, 2021.
  Table of Contents
39
ITEM 4.

CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of management, including

our principal executive officer and
principal financial officer, we evaluated the effectiveness of the design and
operation of our disclosure controls and
procedures as of the end of the period covered by this quarterly report

as such term is defined in Rules 13a-15(e)
and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as

amended (the "Exchange Act").

Based

on this evaluation, our management, including our principal executive officer and principal

financial officer,
concluded that our disclosure controls and procedures were effective as of March

26, 2022, to ensure that all
material information required to be disclosed by us in reports that we file

or submit under the Exchange Act is
accumulated and communicated to them as appropriate to allow timely

decisions regarding required disclosure and
that all such information is recorded, processed, summarized and reported

within the time periods specified in the
SEC's rules and forms.
Changes in Internal Control over Financial Reporting
The combination of continued acquisition integrations and system

implementation undertaken during the quarter and carried over from prior quarters when considered in the aggregate, represents

a material change in our internal
control over financial reporting.
During the three months ended March 26, 2022, post-acquisition integration

related activities continued for our
dental and medical businesses acquired during prior quarters.

These acquisitions, the majority of which utilize
separate information and financial accounting systems, have been

included in our consolidated financial statements
since their respective dates of acquisition.

In addition, during the quarter ended March 26, 2022, we completed the

systems implementation activities to
upgrade the warehouse management system for our Australian dental

business.

All continued acquisition integrations and systems implementation involve

necessary and appropriate change-
management controls that are considered in our quarterly assessment of

the design and operating effectiveness of
our internal control over financial reporting.
Limitations of the Effectiveness of Internal Control
A control system, no matter how well conceived and operated, can provide

only reasonable, not absolute, assurance
that the objectives of the internal control system are met.

Because of the inherent limitations of any internal control system, no evaluation of controls can provide absolute assurance that all control

issues, if any, within a company
have been detected.
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40
PART

II.

OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

For a discussion of Legal Proceedings, see

Note 9-Legal Proceedings

of the Notes to the Condensed Consolidated
Financial Statements included under Item 1.

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