Henry Schein Reports Record First Quarter 2019 Financial Results from Continuing Operations

Henry Schein, Inc. (Nasdaq: HSIC), the world’s largest provider of
health care solutions to office-based dental and medical practitioners,
today reported record first quarter financial results from continuing
operations. Note that results from continuing operations exclude
contributions from Henry Schein’s former Animal Health business, which
was spun off in February 2019 to form a new publicly traded company,
Covetrus.

Net sales from continuing operations for the quarter ended March 30,
2019, were $2.4 billion, an increase of 3.8% compared with the first
quarter of 2018. The 3.8% increase consisted of 6.6% growth in local
currencies and a 2.8% decline related to foreign currency exchange. In
local currencies, internally generated sales increased 4.3% and
acquisition growth was 2.3%. Excluding approximately $15.0 million in
corporate revenues from product sales to Covetrus under the transition
services agreement entered into in connection with the Animal Health
spin-off, normalized internal sales growth in local currencies was 3.7%
(see Exhibit A for details of sales growth and a reconciliation of this
non-GAAP measure to GAAP sales).

Net income attributable to Henry Schein, Inc. from continuing operations
for the first quarter of 2019 was $118.4 million, or $0.78 per diluted
share, compared with prior-year net income from continuing operations of
$111.5 million, or $0.72 per diluted share. Non-GAAP net income from
continuing operations for the first quarter of 2019 was $120.6 million,
or $0.80 per diluted share, compared with non-GAAP net income from
continuing operations of $113.6 million, or $0.74 per diluted share, for
the first quarter of 2018. Non-GAAP results for the first quarter of
2019 and 2018 exclude certain items noted in Exhibit B, which provides a
reconciliation of GAAP net income from continuing operations and diluted
EPS from continuing operations to non-GAAP net income and diluted EPS
from continuing operations.

“We are pleased with our performance to date as we execute on our 2018
to 2020 strategic plan. We have completed the first quarter of what we
have characterized as a transition year as we continue to separate
operations of our former Animal Health business. Throughout this
transition, we believe we gained market share in both of our global
Dental and Medical businesses, and are confident that Henry Schein is
well-positioned for operational success over the long-term,” said
Stanley M. Bergman, Chairman of the Board and Chief Executive Officer of
Henry Schein.

“We will continue to focus on supporting our customers around the world
with the broadest array of products and services, along with innovative
technology that expands our value-added solutions offering while
pursuing new investment opportunities,” Mr. Bergman continued.

Dental sales of $1.5 billion decreased 0.1%, consisting of 3.8% growth
in local currencies and a 3.9% decline related to foreign currency
exchange. In local currencies, internally generated sales increased 3.2%
and acquisition growth was 0.6%. The 3.2% internal growth in local
currencies included 2.7% growth in North America and 4.0% growth
internationally.

“First quarter dental consumables internal sales growth in North America
was 2.5%, reflecting modest market-share gains in a stable end market.
Dental equipment internal sales growth of 3.3% in local currencies
improved sequentially, driven by double-digit growth in CAD/CAM
equipment sales,” commented Mr. Bergman. “Internationally, dental
consumables internal sales in local currencies had robust growth of
5.5%. Dental equipment internal sales in local currencies declined by
1.2%, due largely to the timing of the International Dental Show (IDS)
in Cologne, Germany, in March, which customarily results in lower
international equipment sales in the first quarter that typically
accelerate in the second quarter.”

Medical sales of $683.7 million increased 6.8%, consisting of 7.0%
growth in local currencies and a 0.2% decline related to foreign
currency exchange. In local currencies, internally generated sales
increased 5.1% and acquisition growth was 1.9%.

“We were pleased with Medical internal sales growth of 5.1% in local
currencies during the first quarter, despite a fairly light influenza
season that adversely impacted patient office visits,” remarked Mr.
Bergman. “We are well-positioned in our partnerships with large group
practices, independent physician offices, and alternate sites of care,
which are driving our continued market-share gains.”

Technology and Value-Added Services sales from continuing operations of
$115.5 million increased 35.1%, consisting of 36.8% growth in local
currencies and a 1.7% decline related to foreign currency exchange. In
local currencies, internally generated sales increased 2.1% and
acquisition growth was 34.7%.

“Technology and Value-Added Services growth in the first quarter was
primarily driven by the formation of Henry Schein One. North America
internal sales growth in local currencies was 0.9%. Internal sales
increased by 7.0% in local currencies in our international business.
With a single connected platform in Henry Schein One, we are helping our
customers leverage technology solutions to automate tasks, share data,
and better communicate with their patients. We expect these solutions
will drive long-term growth in our technology, as well as our
distribution businesses,” said Mr. Bergman.

Stock Repurchase Plan

The Company repurchased approximately 2.5 million shares of its common
stock during the first quarter at an average price of $59.45 per share,
or a total of approximately $150 million. The impact of the repurchase
of shares on first quarter 2019 diluted EPS was immaterial. At the end
of the first quarter of 2019, Henry Schein had approximately $250
million authorized and available for future stock repurchases.

Restructuring Program

Henry Schein previously disclosed a comprehensive restructuring
initiative designed to increase profitability by improving business
efficiencies, reducing redundancies and maximizing the Company’s
infrastructure. The Company recorded a pretax restructuring charge in
the first quarter of 2019 of $4.6 million, or $0.02 per diluted share.
These charges primarily include severance pay, facility closing costs,
and outside professional and consulting fees directly related to the
restructuring.

2019 EPS Guidance

Henry Schein today raises 2019 non-GAAP financial guidance. At this time
the Company is not providing GAAP guidance as it is unable to provide an
accurate estimate of costs related to its restructuring initiative on
full-year 2019 financial results. Guidance is as follows:

• 2019 non-GAAP diluted EPS from continuing operations attributable to
  Henry Schein, Inc. is expected to be $3.38 to $3.50, reflecting growth
  of 7% to 10% compared with 2018 non-GAAP diluted EPS from continuing
  operations of $3.17. This compares to prior guidance of $3.38 to
  $3.46, reflecting growth of 7% to 9%. The Company’s Animal Health
  business was spun off to shareholders as of February 7, 2019, and that
  business is classified as a discontinued operation for all current and
  prior periods presented.
• Guidance for 2019 non-GAAP diluted EPS attributable to Henry Schein,
  Inc. is for current continuing operations as well as completed or
  previously announced acquisitions, and does not include the impact of
  potential future acquisitions, if any. Guidance also assumes foreign
  exchange rates that are generally consistent with current levels.

The Company has provided guidance for 2019 diluted EPS on a non-GAAP
basis as noted above. A reconciliation to the Company’s projected 2019
diluted EPS prepared on a GAAP basis is not provided because the Company
is unable to provide such reconciliation for an estimate of
restructuring costs without unreasonable effort. The inability to
provide a reconciliation is due to the uncertainty and inherent
difficulty predicting the occurrence, the financial impact, and the
periods in which the non-GAAP adjustments may be recognized.

The Company’s 2019 diluted EPS prepared on a GAAP basis will include the
impact of such items as restructuring charges and any litigation
settlement expenses and the tax effect of all such items. Management
does not believe these items are representative of the Company’s
underlying business performance. For the same reasons, the Company is
unable to address the probable significance of the unavailable
information, which could be material to future results.

First Quarter 2019 Conference Call Webcast

The Company will hold a conference call to discuss first quarter 2019
financial results today, beginning at 10:00 a.m. Eastern time.
Individual investors are invited to listen to the conference call
through Henry Schein’s website at www.henryschein.com.
In addition, a replay will be available beginning shortly after the call
has ended.

About Henry Schein, Inc.

Henry Schein, Inc. (Nasdaq: HSIC) is a solutions company for health care
professionals powered by a network of people and technology. With more
than 19,000 Team Schein
Members worldwide, the Company’s network of trusted advisors
provides more than 1 million customers globally with more than 300
valued solutions that improve operational success and clinical outcomes.
Our Business, Clinical, Technology, and Supply Chain solutions help
office-based dental and medical practitioners
work more efficiently so they can provide quality care more effectively.
These solutions also support dental
laboratories, government
and institutional health care clinics, as well as other alternate
care sites.

Henry Schein operates through a centralized and automated distribution
network, with a selection of more than 120,000 branded products and
Henry Schein private-brand products in stock, as well as more than
180,000 additional products available as special-order items.

A FORTUNE 500 Company and a member of the S&P 500® and the Nasdaq 100®
indexes, Henry Schein is headquartered in Melville, N.Y., and has
operations or affiliates in 31 countries. The Company’s sales from
continuing operations reached $9.4 billion in 2018, and have grown at a
compound annual rate of approximately 13 percent since Henry Schein
became a public company in 1995.

For more information, visit Henry Schein at www.henryschein.com,
Facebook.com/HenrySchein,
and @HenrySchein
on Twitter.

Cautionary Note Regarding Forward-Looking Statements and Use of
Non-GAAP Financial Information

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
identified by the use of such terms as “may,” “could,” “expect,”
“intend,” “believe,” “plan,” “estimate,” “forecast,” “project,”
“anticipate” or other comparable terms. A full discussion of our
operations and financial condition, including factors that may affect
our business and future prospects, is contained in documents we have
filed with the United States Securities and Exchange Commission, or SEC,
and will be contained in all 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: effects of a highly competitive and consolidating market;
our dependence on third parties for the manufacture and supply of our
products; our dependence upon sales personnel, customers, suppliers and
manufacturers; our dependence on our senior management; fluctuations in
quarterly earnings; 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 conditions; risks associated with currency
fluctuations; risks associated with political and economic uncertainty;
disruptions in financial markets; volatility of the market price of our
common stock; changes in the health care industry; implementation of
health care laws; failure to comply with regulatory requirements and
data privacy laws; risks associated with our global operations;
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; litigation risks; new or
unanticipated litigation developments; the dependence on our continued
product development, technical support and successful marketing in the
technology segment; our dependence on third parties for certain
technologically advanced components; increased competition by third
party online commerce sites; risks from disruption to our information
systems; cyberattacks or other privacy or data security breaches;
certain provisions in our governing documents that may discourage
third-party acquisitions of us; and changes in tax legislation. 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.

Included within the press release 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 this press
release, 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. 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.

(TABLES TO FOLLOW)

Note: Certain prior quarter amounts have been reclassified to conform to
the current period presentation.

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. 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. Earnings per
share numbers may not sum due to rounding.

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