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Thank you JPMorgan Healthcare Conference JANUARY 14, 2025 1
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In accordance with the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995, we provide the following cautionary remarks regarding important factors that, among others, could cause future results to differ materially from the forward-looking statements, expectations and assumptions expressed or implied herein. All forward-looking statements made by us are subject to risks and uncertainties and are not guarantees of future performance. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These statements are generally identified by the use of such terms as “may, ” “could, ” “expect, ” “intend, ” “believe, ” “plan, ” “estimate, ” “forecast, ” “project, ” “anticipate, ” “to be, ” “to make” or other comparable terms. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the documents we file with the Securities and Exchange Commission (SEC), including our Annual Report on Form10-K. Risk factors and uncertainties that could cause actual results to differ materially from current and historical results include, but are not limited to: our dependence on third parties for the manufacture and supply of our products; 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, 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; 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; general global and domestic macro-economic and political conditions, including inflation, deflation, recession, 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, potential trade barriers and terrorism; geopolitical wars; 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; 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, 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 this presentation 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 schedules attached to the presentation, 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. Cautionary Note Regarding Forward-Looking Statements and Use of Non-GAAP Financial Information 2
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Henry Schein Overview #1 global provider of dental merchandise, specialty products, traditional and digital equipment, parts and services and a leading provider of medical products, equipment and services to the alternate care market with $3B+ in corporate and owned brands portfolio and related services (incl. technology) ~26,000 Team Schein Members Serving more than 1 Million Customers ~$13 B Global Net Sales 92 Years in business Operations in 33 Countries Component of S&P 500® Index 7 Years 3 We focus on the success of healthcare practices: Our customers can rely on us to generate higher practice performance, integrate efficient proprietary workflows for an outstanding patient experience, and elevate clinical care.
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Favorable Long Term Macro Trends Should help stimulate Patient Traffic and Demand for Products and Services Demographics • Aging global population Healthcare Developments • Movement of procedures from hospital to physician offices and alternate care sites • Growing awareness of correlation between good oral health and overall health • Expanding healthcare coverage and access to care • Increasing importance of wellness and prevention • Untapped patient demand for healthcare services • Consolidation of practitioners to multiple locations under common management Increased Adoption of Digital Technology • Advancements in practice management software and electronic medical records • Improved clinical workflow driving better patient outcomes • Utilization of AI to improve patient case acceptance and diagnosis • Enhanced patient communications Henry Schein benefits from: • market leadership • broad customer base • large-customer relationships • diversified business portfolio • integrated solutions 4
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2024 Highlights Business Highlights Steadily regaining market share Sales growth in our global dental equipment business, and mid-single- digit growth in implants, biomaterials and endodontic products Acquisitions delivering strong financial results New Restructuring Initiative On target to achieve $75 – $100M annual run-rate savings by end of 2025 Market Conditions Stable market conditions Dental volume growth offset by movement from higher price premium brands to lower price/higher margin corporate brands. Medical market normalizing post- COVID pandemic Capital Strength Strong cashflow and continue to return capital to shareholders through share repurchase program BOLD+1 Strategic Plan Specialties products, technology and value-added services businesses contributed over 40% of total non-GAAP operating income 5
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2022-2024 BOLD+1 Strategic Plan: Successful Execution • BOLD+1 has been adopted by the organization as a “brand” for our transformation to a more agile, customer centric, digital, efficient and high growth, high margin company with synergies generated by leveraging our portfolio of complementary businesses. • Through execution of our 2022-2024 BOLD+1 strategic plan, we have made significant progress transforming from a pure play distribution company, with similar margin challenges as other distribution companies, to a higher growth value-added products and services company • High-growth, high-margin (“HGHM”) businesses, including corporate and owned brands portfolio and related services, now account for approximately 25% of our sales ($3B) • HGHM businesses now account for ~40% of operating income, with another ~10% contribution from private brand product offering 6
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BUILD HGHM BUSINESSES OPERATIONALIZE ONE DISTRIBUTION LEVERAGE ONE SCHEIN DRIVE DIGITAL TRANSFORMATION Successfully Advanced our 2022-2024 BOLD+1 Strategic Priorities – Henry Schein Products • Nemotech case design software acquired with the BioTech acquisition • Restructuring initiatives to combine manufacturing businesses • #2 global endodontics company with accelerating sales - opportunity to further integrate businesses and create efficiencies • #3 global implant company (ex China), gaining market share • Entered the extremity niche of the orthopedic market through the acquisition of TriMed Build We have made significant progress advancing our BOLD+1 strategic priorities, with the following highlights: • Implemented “blended distribution” go-to- market strategies for Henry Schein corporate brand products and services to accelerate sales • Implemented sales channel through distribution business for HS Products (eg Edge Endo) and leverage Henry Schein’s customer base LeverageOperationalize Digital 7
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BUILD HGHM BUSINESSES OPERATIONALIZE ONE DISTRIBUTION LEVERAGE ONE SCHEIN DRIVE DIGITAL TRANSFORMATION Successfully Advanced our 2022-2024 BOLD+1 Strategic Priorities - Distribution • Global eCommerce platform (GEP) launched in the UK and Ireland • Established Digital Revenue team • Henry Schein LinkIT (3-Click Dentistry) poised for growth • AI has started to become a driver for revenue and efficiency, through AI based digital solutions, like Detect AI and Eligibility Pro • Focus on customer segmentation, satisfaction and efficiency • Retain and grow customer base following cyber incident • Restructuring initiatives created significant efficiencies throughout the distribution business, while advancing customer experience • Built a top 5 home health company with annualized sales of over $350M with high operating margin Operationalize Digital • Implemented “blended distribution” go-to- market strategies for Henry Schein corporate brand products and services Leverage 8 • #1 global dental software company with accelerating sales of cloud and digital solutions - accelerated cadence of new product development Build
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Dental Technology & Value-Added ServicesMedical Long-Term Growth Strategy Clear strategic framework to deliver sustainable value creation Increasing penetration with existing customers Grow further Henry Schein products Continued focus on large group practices Digitalization of prosthetic solutions Geographic expansion Increase active U.S. physician practice customers Increase penetration organically and through acquisitions Continued focus on large accounts, health systems and surgery centers Focus on specialty segments and home solutions Create unique offering with supply partners to represent third party brands Continue to generate synergies with broader distribution business Leverage R&D, marketing, and technology across business solutions Further development of new solutions With ~100,000 technology customers worldwide, opportunity to grow revenue per customer 9
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Henry Schein — Resiliency of the Business Note 1: Reconciliations between GAAP and non-GAAP measures can be found in the Financials and Filings section of our investor relations website under the Supplemental Information heading, Long term track record of delivering double-digit earnings growth, with 13% non-GAAP EPS CaGR since IPO1 Some recent headwinds have impacted our business that we are working through, including the cyber incident, macro-economic conditions (specifically higher interest rates impacting equipment sales and high-end procedures) and PPE/Covid Tests volatility We have a track record of transformation, with BOLD+1 representing the latest reinvention to become a higher growth, higher margin company 10
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Henry Schein: Financial Overview 8.7% non-GAAP EPS CAGR from 2018 through Q3 2023 • Volatility of Operating Income as a result of significant headwinds from PPE / COVID-19 test kits, the 2023 cyber incident and macro-economic conditions COVID-19 lockdown began Cyber incident (Oct 2023) 2018 $769 2020 $690 2019 $837 $999 2021 $1,038 2022 2023 $890 Non-GAAP Operating Income (2018-2023) Non-GAAP EPS (2018-2023) 20181 $3.60 2020 $3.52 20191 $4.11 $5.05 2021 $5.38 2022 2023 $4.50 COVID-19 lockdown began Cyber incident (Oct 2023) • EPS results in line with our track record until the cyber incident in Q3 2023 Mid to long-term, we expect to maintain our long-term corporate goals of high single digit / low double-digit earnings growth 11 Note: Corresponding GAAP financial information and reconciliations between GAAP and non-GAAP measures can be found in the Financials and Filings section of our investor relations website, in our quarterly earnings presentation and in attachments to our earnings releases
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• Clear strategic plan to create operating efficiencies and exceptional customer experience while increasing growth in faster growing segments of the business • Proven track record of transformation and long-term, sustainable earnings growth • Leading positions in attractive markets • Scaled platform of highly complementary products, services and technologies drives value by providing practitioners with comprehensive suite of solutions that create efficiencies and better patient outcomes • Opportunities to leverage our existing customer base and gain additional share of wallet • Deep and experienced management team supported by a highly motivated Team Schein Investment Merits BOLD+1 Strategic Plan Accelerating growth and realizing long-term sustainable mid to long-term high single-digit / low double-digit earnings growth, including through strategic acquisitions 12