HENRY SCHEIN INC (HSIC)

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Cautionary Note Regarding Forward-Looking Statements

In accordance with the “Safe Harbor” provisions of the Private 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 Form 10-K, and will be

contained in subsequent periodic filings we make with the SEC.

These documents identify in detail important risk

factors that could cause our actual performance to differ materially from 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, including

anticipated results of restructuring and

value creation initiatives; risks related to the Strategic Partnership Agreement with

KKR Hawaii Aggregator L.P.

entered into in January 2025; transitions in senior company leadership

(including, without limitation, the transition

to our new Chief Executive Officer); our ability to develop or acquire and

maintain and protect new products

(particularly technology and specialty products) and services and utilize

new technologies that achieve market

acceptance with acceptable margins; transitional challenges associated with acquisitions

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; political,

economic and regulatory influences on

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, fluctuations in energy pricing

and the value of the U.S.

dollar as compared to foreign currencies and changes to other economic

indicators; 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;

the threat or outbreak of war

(including, without limitation, geopolitical wars), terrorism or public unrest

(including, without limitation, the wars

in Ukraine and Iran, the Israel-Gaza war and other unrest and threats in the 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, including changes to international

trade agreements and the current

imposition of (and the potential for additional) tariffs by the U.S. on numerous

countries and retaliatory tariffs;

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36

supply chain disruption; 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.

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 About Media Center page

of our website.

Recent Developments

Chairman and Chief Executive Officer

On January 12, 2026, we announced the appointment of Frederick

M. Lowery as CEO, effective March 2, 2026.

In

connection with his appointment, Mr. Lowery joined our Board of Directors.

Mr. Lowery succeeded Stanley M.

Bergman, who served as CEO through March 1, 2026 (at which time Mr. Bergman retired as CEO).

Mr. Bergman

retired as Chairman of the Board as of the end of the 2026 annual meeting of

stockholders, and the Board approved

the appointment of Mr. Bergman as Chairman Emeritus effective upon his retirement as Chairman.

The Board

appointed William K. “Dan” Daniel as Chairman following the Company’s 2026 annual meeting of stockholders.

Tariffs and Related Economic Conditions

The U.S. has adopted new and increased tariffs on imports from countries, and

the scope, applicability and legal

basis for these tariffs continue to evolve through legislative and executive

actions, exemptions and ongoing judicial

challenges.

Although the U.S. Supreme Court invalidated certain tariffs imposed

under the International

Emergency Economic Powers Act (IEEPA), the U.S. government has subsequently implemented additional tariff

measures under other statutory authorities, and further changes to U.S. trade

policy remain possible.

Some

countries have imposed, or may impose, retaliatory tariffs or other restrictions on imports

from the U.S.

These

developments, and anticipated future developments, have created a

volatile environment for global trade, and new

trade policies with individual countries.

It is unclear whether, or the extent to which, the current tariffs on trade

with numerous countries will remain in place, or change, the exceptions

that may apply, and their timing.

The tariffs did not have an adverse material impact on our results of operations during

fiscal year 2025 and the six

months ended June 27, 2026, although sales of U.S. dental equipment were

temporarily impacted by market

uncertainty related to tariffs in the second half of the quarter ended June 28, 2025.

During the three and six months ended June 27, 2026 we received an

immaterial amount of refunds of certain tariffs

previously paid in the United States.

We received additional refunds after June 27, 2026, and we expect to

recognize the net impact of these refunds in our financial statements during

the quarter ending September 26, 2026.

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37

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, home health providers, and

other alternate care clinics.

We

believe

that we have a strong brand identity due to our more than 94 years of experience

distributing health care products.

We

are headquartered in Melville, New York, employ more than 25,000 people (of which more than 13,000 are

based outside of the United States) and have operations or affiliates in 34 countries and

territories.

Our broad

global footprint has evolved over time through our organic growth as well as through

contribution from strategic

acquisitions.

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.

As a distributor, we market and sell branded products as well as our own corporate brand portfolio of

cost-effective,

high-quality consumable merchandise products.

We

also manufacture, source and sell a range of company-owned

manufactured products, primarily implants, biomaterial products, endodontics, handpiece

and small equipment,

hand instrument and repair, restoratives, orthodontics, wound care, orthopedics and dental lab products.

We

have

achieved scale in these global businesses primarily through acquisitions, as

manufacturers of these products

typically do not utilize a distribution channel to serve customers.

Our reportable segments consist of: (i) Global Distribution and Value-Added Services; (ii) Global Specialty

Products; and (iii) Global Technology.

Global Distribution and Value-Added Services includes distribution to the global dental and medical markets of

national brand and corporate brand

[Excerpt truncated for page length; source filing is linked above.]

ITEM 7.

Management’s Discussion and Analysis of Financial Condition and Results of

Operations

Cautionary Note Regarding Forward-Looking Statements

In accordance with the “Safe Harbor” provisions of the Private 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 this Annual Report

on Form 10-K, and in particular the risks discussed under the caption

“Risk Factors” in Item 1A of this report and

those that may be discussed in other documents we file with

the Securities and Exchange Commission (“SEC”).

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, including

anticipated results of restructuring and

value creation initiatives; risks related to the Strategic Partnership Agreement

with KKR Hawaii Aggregator L.P.

entered into in January 2025; transitions in senior company leadership;

our ability to develop or acquire and

maintain and protect new products (particularly technology and specialty

products) and services and utilize new

technologies that achieve market acceptance with acceptable margins; transitional

challenges associated with

acquisitions 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;

political, economic and regulatory influences on 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, fluctuations in

energy pricing and the value of the U.S. dollar as compared to foreign currencies

and changes to other economic

indicators; 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; the threat or outbreak of war (including, without

limitation, geopolitical wars), 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, including changes to

international trade agreements and the current imposition of (and the

potential for additional) tariffs by the U.S. on

numerous countries and retaliatory tariffs; supply chain disruption; litigation

risks; new or unanticipated litigation

developments and the status of litigation matters; our dependence on

our senior management (including, without

Table of Contents

Index to Financial Statements

49

limitation, the transition to a new Chief Executive Officer), 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.

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 About Media Center page

of our website.

Recent Developments

Chief Executive Officer

On January 12, 2026, we announced the appointment of Frederick

M. Lowery as our new CEO, effective March 2,

2026, at which time Mr. Lowery will join our Board of Directors.

Mr. Lowery succeeds Stanley M. Bergman, who

will remain as our CEO through March 1, 2026, at which time Mr. Bergman will retire as CEO, but will remain as

Chairman of the Board.

Cyber Incident

As previously reported, in October 2023 Henry Schein experienced

a cyber incident that primarily affected the

operations of our North American and European dental and medical

distribution businesses.

During the years ended December 28, 2024 and December 30, 2023, we had

a sales decrease in our dental and

medical distribution businesses, which we believe was primarily a

result of lower sales to episodic customers

following the cyber incident.

With respect to the October 2023 cyber incident, we had a $60 million insurance policy, following a $5 million

retention.

During the years ended December 27, 2025, December 28, 2024

and December 30, 2023, we incurred $0

million, $9 million and $11 million, respectively, of direct expenses related to the cyber incident, mostly consisting

of professional fees.

During the years ended December 27, 2025 and December

28, 2024, we received insurance

proceeds of $20 million and $40 million, respectively, representing insurance recovery of losses related to the cyber

incident.

The expenses and insurance recoveries related to the cyber incident

are included in the selling, general

and administrative line in our consolidated statements of income.

Tariffs and Related Economic Conditions

The U.S. has adopted new and increased tariffs on imports from countries, which

tariffs remain subject to

frequently evolving exemptions and modifications, as well as to court

challenges, including a recent invalidation in

the Supreme Court of many of the tariffs.

Some countries have imposed retaliatory tariffs and other restrictions on

imports from the U.S.

These developments, and anticipated future developments,

have created a volatile

environment for global trade, and new trade policies with individual countries.

It is unclear whether, or the extent

to which, the current tariffs on trade with numerous countries will remain in place,

or change, the exceptions that

may apply, and their timing.

The tariffs did not have a material impact on our results of operations during fiscal

year 2025, although sales of

U.S. dental equipment were temporarily impacted by market uncertainty

related to tariffs in the second half of the

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Index to Financial Statements

50

quarter ended June 28, 2025.

It is unclear whether, or the extent to which, the current tariffs on trade with

numerous countries will remain in place, or change, the exceptions that

may apply, and their timing.

One Big Beautiful Bill Act

In the United States, the OBBBA, signed into law on July 4, 2025, includes

a number of provisions that are

expected to result in reductions in the number of Medicaid enrollees, which

will reduce utilization of services and

covered products generally.

There are also several provisions that will reduce federal funding to state

Medicaid

programs.

The OBBBA, in combination with tariffs, will likely have an adverse impact on

utilization, Medicaid

payment and cost of production (if foreign components are used).

The OBBBA also includes changes to corporate tax rates, limitations

on certain deductions and modifications to

international tax provisions.

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Index to Financial Statements

51

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, home health providers, and

other alternate care clinics.

We

believe

that we have a strong brand identity due to our more than 94 years of experience

distributing health care products.

We

are headquartered in Melville, New York, employ more than 25,000 people (of which approximately 13,000 are

based outside of the United States) and have operations or affiliates in 34 countries and

territories.

Our broad

global footprint has evolved over time through our organic growth as well as through

contribution from strategic

acquisitions.

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 w

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]