AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 3/6 · 18/10/2026
Moat44
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 2/4 · Customer reach, distribution infrastructure and shipment volume support a modest scale and convenience advantage. Relative cost superiority remains unquantified, and multiple sourcing limits exclusivity.
durability · 2/4 · The established physical network and customer reach support persistence, while internally generated distribution sales demonstrate current relevance. Buyer bargaining power and readily available alternative suppliers limit confidence in long-term protection.
customer dependency · 1/4 · Customers generally use multiple distributors, directly limiting dependence. Value-added services may deepen relationships, but the passages do not demonstrate software switching friction or exclusive purchasing.
erosion resilience · 2/4 · Recent distribution volume growth and expense efficiency support resilience. Realized cyber-related earnings disruption and lower-margin large-group business show vulnerabilities; supplier interruption and online transparency remain risks rather than established losses.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · 1/4 · Disclosed lower-margin terms for large-volume groups provide indirect evidence of weak bargaining power. Recent improvements are attributed to sales volume, business mix and initiatives, rather than demonstrated price realization; no price changes are quantified.
retention · 2/4 · Internally generated distribution and technology sales provide indirect operating evidence of continued demand. They do not establish same-customer retention, and multiple sourcing weakens purchasing dependence.
margin resilience · 2/4 · First-half 2026 gross profit and operating income increased, with some distribution expense efficiency. Mix and initiatives explain improvements, while operating expenses grew faster than sales and large-group terms constrain margins. This demonstrates mixed resilience rather than pricing-driven protection.
contractual freedom · — · The passages do not establish customer contract duration, repricing rights, pass-through provisions or termination terms. Competitive and regulatory pressure alone cannot establish contractual pricing freedom.
Predictability94
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 75.00
- Revenue growth volatility (pp)
- 2.43
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 0.92
Financial strength—
Missing required inputs: netDebtEbitGrade. Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 36.82
- interestCoverageGrade
- 30.48
- currentRatioGrade
- 50.63
- Debt / FCF (x)
- 5.42
- Interest coverage (x)
- 4.35
- Current ratio (x)
- 1.38
Capital allocation—
Missing required inputs: operatingReturn. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- -3.88
- 3-year average SBC / revenue (%)
- 0.31
- cashConversionGrade
- 100.00
Management50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Operating cash generation and completed repurchases are concrete actions, including a repurchase intended to offset investment dilution. However, first-half cash generation declined, debt increased, and realized three-year adjusted ROIC missed its disclosed goal. Repurchase value creation is unestablished.
incentive alignment · 2/4 · Adopted EPS/ROIC incentives and an actual zero payout for the EPS portion of a prior PSU award demonstrate performance consequences. The 2026 CEO mix includes substantial options and time-based awards, while permitted impairment adjustments weaken the link to full economic outcomes. Actual ownership balances are unavailable.
execution · 2/4 · Recent internally generated sales, operating income growth and distribution expense efficiency support execution indirectly through operating results. Cyber-related earnings volatility and missed three-year ROIC goals offset that progress; the results cannot establish the new CEO's durable performance.
governance · 2/4 · Disclosed committee independence, actual meeting attendance, annual director elections and securities restrictions provide substantive safeguards. Supermajority provisions and paid consulting by an investor affiliate introduce counterweights. Proposed board changes are not credited as completed.
Evidence
With 94 years of experience distributing health care products, we have built a vast base of small, mid-sized and large customers in the dental and medical markets, serving more than one million customers worldwide across dental practices, laboratories, physician practices, and ambulatory surgery centers, as well as government, institutional health care clinics, home health providers, and other alternate care clinics.
Item 1, Business: customer reach · Filed 24/02/2026
Our infrastructure, including over 5.4 million square feet of space in 38 strategically located distribution centers and 0.6 million square feet of space in 17 manufacturing facilities around the world, enables us to historically provide rapid and accurate order fulfillment, better serve our customers and increase our operating efficiency.
Item 1, Business: distribution infrastructure and fulfillment · Filed 24/02/2026
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, which we believe is a competitive advantage.
Item 1, Business: management assessment of purchasing convenience · Filed 24/02/2026
We ship an average of approximately 150,000 cartons daily.
Business: average daily carton shipments · Filed 24/02/2026
Supplies and small equipment are generally purchased from more than one distributor, with one generally serving as the primary supplier.
Business: customer multiple sourcing · Filed 24/02/2026
With respect to customer mix, sales to our large-group customers are typically completed at lower gross margins as a result of higher sales volumes, while sales to office-based practitioners generally carry higher gross margins due to lower volumes.
MD&A, Results of Operations: customer mix and gross margins · Filed 04/08/2026
The increase in Global Distribution and Value-Added Services gross profit for the three months ended June 27, 2026 compared to the prior-year-period is due primarily to increased internally generated sales volume as described above.
MD&A: distribution internally generated sales volume · Filed 04/08/2026
There is no guarantee that we would be able to obtain such alternative sources of supply on a timely basis, if at all, and an extended interruption in supply, particularly of a high-sales volume and/or high- margin product, could result in a significant disruption in our sales and operations, as well as damage to our relationships with customers and our reputation.
Risk factors: replacement supply and customer relationships · Filed 24/02/2026
The increase in gross margin rates was attributable primarily to favorable business mix and early benefits from our value creation initiatives.
MD&A: distribution gross margin improvement drivers · Filed 04/08/2026
Operating Expenses Operating expenses (consisting of selling, general and administrative expenses; depreciation and amortization; and restructuring and related costs) by segment were as follows: % of % of June 27, Respective June 28, Respective Increase 2026 Sales 2025 Sales $ % Global Distribution and Value -Added Services $ 563 19.3 % $ 529 19.4 % $ 34 6.3 % Global Specialty Products 171 40.8 159 41.4 12 7.2 Global Technology 77 42.8 69 41.0 8 12.7 Corporate 40 n/a 34 n/a 6 n/a 851 24.6 791 24.4 60 7.7 Adjustments (1) 79 n/a 74 n/a 5 n/a Total operating expenses $ 930 26.9 $ 865 26.7 $ 65 7.5 (1) Adjustments represent items excluded from segment operating income to enable comparison of financial results between periods.
MD&A: segment operating expenses and sales ratios · Filed 04/08/2026
price transparency requires us to cost-
Risk factors: online price transparency; passage fragment · Filed 24/02/2026
The main factors in the 0% payout were volatility in earnings during the 2023-2025 performance period, primarily driven by the cyber incident that occurred in October 2023 and broader economic factors.
Compensation discussion: realized cyber incident and earnings volatility · Filed 08/04/2026
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in millions, except share and per share data) (unaudited) Three Months Ended Six Months Ended June 27, June 28, June 27, June 28, 2026 2025 2026 2025 Net sales $ 3,458 $ 3,240 $ 6,826 $ 6,408 Cost of sales 2,357 2,224 4,655 4,392 Gross profit 1,101 1,016 2,171 2,016 Operating expenses: Selling, general and administrative 831 778 1,640 1,516 Depreciation and amortization 70 64 137 126 Restructuring and related costs 29 23 41 48 Operating income 171 151 353 326 Other income (expense): Interest income 8 9 15 15 Interest expense (43) (38) (82) (73) Other, net 1 (1) 1 (2) Income before taxes, equity in earnings of affiliates and noncontrolling interests 137 121 287 266 Income taxes (34) (31) (72) (66) Equity in earnings (loss) of affiliates, net of tax (1) 4 (1) 7 Net income 102 94 214 207 Less: Net income attributable to noncontrolling interests (8) (8) (13) (11) Net income attributable to Henry Schein, Inc.
Condensed consolidated statements of income: first-half and second-quarter results · Filed 04/08/2026
The increase in Global Technology gross profit is the result primarily of higher internally generated sales.
MD&A: technology internally generated sales · Filed 04/08/2026
The increase in gross margin rates was due to product mix.
MD&A: technology gross margin improvement attributed to mix · Filed 04/08/2026
Global efforts to contain health care costs continue to exert pressure on product pricing.
Risk factors: ongoing product pricing pressure · Filed 24/02/2026
Net cash provided by operating activities was $145 million for the six months ended June 27, 2026, compared to net cash provided by operating activities of $157 million for the prior year.
MD&A, Liquidity: operating cash generation · Filed 04/08/2026
Table of Contents 50 The following table summarizes selected measures of liquidity and capital resources: June 27, December 27, 2026 2025 Cash and cash equivalents $ 157 $ 156 Working capital (1) 1,112 1,236 Debt: Bank credit lines $ 1,024 $ 764 Current maturities of long-term debt 138 33 Long-term debt 2,300 2,310 Total debt $ 3,462 $ 3,107 Leases: Current operating lease liabilities $ 76 $ 78 Non-current operating lease liabilities 275 251 (1) Includes $526 million and $491 million of certain accounts receivable which serve as security for U.S.
MD&A, Liquidity: debt and working capital · Filed 04/08/2026
From March 3, 2003 through June 27, 2026, we repurchased $6.3 billion, or 112,094,874 shares, under our common stock repurchase programs, with $455 million available as of June 27, 2026 for future share repurchases.
MD&A, Stock Repurchases: completed cumulative purchases · Filed 04/08/2026
Shortly thereafter, we initiated a $250 million accelerated share repurchase program to offset the resulting dilution.
MD&A, Financing: repurchase intended to offset investment dilution · Filed 04/08/2026
The three-year average ROIC goal for the 2023 LTIP PSUs was a range of 12-14% and the actual three-year average ROIC goal was 11.4% (as adjusted).
Compensation discussion: realized three-year adjusted ROIC versus goal · Filed 08/04/2026
Such awards vested with an achievement of 79.1% of the EPS performance goal and a payout equal to 0% for that portion of the 2023 PSU award.
Compensation discussion: actual zero payout on EPS portion of 2023 PSU award · Filed 08/04/2026
• Adjusted weighting of performance goals under 2025 LTIP: In March 2025, the Compensation Committee adjusted the percentage of the performance goals under the LTIP to be 50% three-year cumulative EPS goal and 50% three-year average ROIC goal as opposed to 75% and 25%, respectively, for the 2024 LTIP.
Compensation discussion: adopted 2025 LTIP EPS and ROIC weights · Filed 08/04/2026
Allocation and Vesting Schedules The following table summarizes the allocation and vesting structure for our annual long-term incentive (“LTI”) equity awards to employee groups during the 2025 and 2026 plan years, and for our CEO’s 2026 sign-on equity award: Employee Group Plan Year Award Allocation Vesting Structure CEO 2026 25 % RSU (time) 4 -year graded ( 25 %/year) 25 % PSU (performance) 3 -year cliff 50 % Stock Options 4 -year graded ( 25 %/year) 2026 (Sign-On) 100 % RSU (time) 3 -year graded ( 33 -1/3%/year) 2025 35 % RSU (time) 4 -year cliff 65 % PSU (performance) 3 -year cliff Executive Management Committee (succeeded by the Henry Schein Leadership Team in July 2026) 2026 50 % RSU (time) 4 -year graded ( 25 %/year) 50 % PSU (performance) 3 -year cliff 2025 50 % RSU (time) 4 -year cliff 50 % PSU (performance) 3 -year cliff Vice Presidents 2026 80 % RSU (time) 4 -year graded ( 25 %/year) 20 % PSU (performance) 3 -year cliff 2025 80 % RSU (time) 50 % at 3rd year / 50 % at 4th year 20 % PSU (performance) 3 -year cliff Director Level 2026 100 % RSU (time) 4 -year graded ( 25 %/year) 2025 100 % RSU (time) 50 % at 3rd year / 50 % at 4th year Table of Contents HENRY SCHEIN, INC.
Note 11, Stock-Based Compensation: 2025 and 2026 award allocation and vesting · Filed 04/08/2026
● Foreign exchange fluctuations. ● Intangible impairment charges.
Note 11: permitted PSU performance adjustments · Filed 04/08/2026
Each of the Audit Committee, Compensation Committee and Nominating and Governance Committee is comprised solely of independent directors, and each of the Regulatory, Compliance and Cybersecurity Committee and Strategic Advisory Committee is currently comprised solely of independent directors.
Corporate Governance: committee independence as disclosed April 8, 2026 · Filed 08/04/2026
During fiscal 2025, each director attended at least 75% of the meetings of the Board of Directors and committees on which such directors served, in each case during the term for which the director served.
Corporate Governance: actual fiscal 2025 meeting attendance · Filed 08/04/2026
The Board believes that this proposal should be evaluated in the context of the Company’s overall commitment to strong corporate governance that is responsive to the views and concerns of our stockholders, as evidenced by the following practices: • Annual election of all directors; • Majority voting standard and resignation policy for directors in uncontested elections; • Reduction in the number of non-independent directors from four in 2022 to two currently; • Addition of eight new independent directors since 2021; • Strong, independent Lead Director role; • Regularly scheduled executive sessions of independent directors without management present; • Board and committee oversight of risk; • Director time commitment policy; • Subject to some exceptions, an expectation that directors retire at the end of their term during which they reach the age of 80; • Orientation and continuing education program for directors; 75 • Annual board and committee self-assessments; • Complete director access to senior management; • Prohibition on hedging and pledging of our securities by executives and non-employee directors; • Significant director and executive stock ownership guidelines; and • Proactive and continued engagement with stockholders on a wide range of topics.
Corporate Governance: elections, ownership guidelines and securities restrictions · Filed 08/04/2026
Our Charter and By-laws only require higher than a majority vote standard in a limited number of instances, including: • Our Charter requires (i) 80% stockholder approval to amend the voting rights of our common stock, (ii) 66-2/3% stockholder approval to amend the composition and powers of the Board and (iii) 60% stockholder approval to approve mergers, consolidations or sales of substantially all of the Company’s assets (and 60% stockholder approval to amend such provision).
Shareholder proposal discussion: existing supermajority requirements · Filed 08/04/2026
During 2025, we incurred costs of approximately $2,500,000 related to this engagement and anticipate continuing to use KKR Capstone’s services through the end of fiscal 2026.
Related-party transactions: incurred consulting engagement costs · Filed 08/04/2026
KKR Capstone is a KKR affiliate owned and controlled by KKR.
Related-party transactions: consulting affiliate ownership · Filed 08/04/2026
We support our dental and medical professionals through the many SKUs that we offer, as well as through important value-added services, including practice management software, electronic claims processing, financial services and continuing education, all designed to help maximize a practitioner’s efficiency.
Business: practice software and value-added services · Filed 24/02/2026
