Slide 1: Henry Schein Q4 2020
VA HENRY SCHEIN” @ on Us” Q4 2020
Slide 2: Safe Harbor Provision
Safe Harbor Provision 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,
Slide 3: Safe Harbor Provision: COVID-19
Safe Harbor Provision: COVID-19 This slide presentation reflects historical data through 2020. Henry Schein’s business, as with the global business community, has been significantly impacted by the COVID-19 pandemic. Given uncertainties related to the pandemic, past results should not be interpreted
Slide 4: Henry Schein – At a Glance
Henry Schein – At a Glance Largest Distributor of Health Care Products and Services to Office-based Dental and Medical Practitioners 2020 GLOBAL SERVING MORE THAN FORTUNE 500 S&P 500 NET SALES >19,000 1 MILLION 16 5 $10.1 TEAM SCHEIN CUSTOMERS YEARS YEARS BILLION MEMBERS 2018 FORBES AMERICA'S BEST 2
Slide 5: Leading Market Positions
Leading Market Positions Consistent Historical Growth • Track record of solid, long-term growth (pre-COVID-19) Fragmented Customer Base • More than 1 million customers Fragmented Competitors • Small number of large, national competitors • Approximately half the target markets served by smaller compa
Slide 6: Positive Market Trends
Positive Market Trends Demographic Trends • Aging population represents increasing need for health care services • Connection between good oral health and overall health Technological Improvements • Software and services • Prosthetic solutions • Patient communications • Telemedicine Focus on Prevent
Slide 7: Improve Practice Efficiency
Company Objective Our primary objective is to partner with our customers Efficiency Improve Productivity Practice Profitability Allowing our customers to focus on delivering quality care to their patients 7
Slide 8: Global Distribution Network
Global Distribution Network Distribution Centers • 9 Core North American Distribution Centers serving Dental and Medical • 8 Distribution Centers in Europe serving Dental and Medical • 4 Distribution Centers in Australia/New Zealand serving Dental • 7 Distribution Centers in Asia/Rest of World servi
Slide 9: Henry Schein’s High-Touch, Value-Added Market Approach
Henry Schein’s High-Touch, Value-Added Market Approach Full-service provider of supplies, equipment, and services Our strategy is focused on delivering EDUCATION solutions that enable SERVICE & SUPPORT our customers to provide the best quality patient care while optimizing the efficiency of their pr
Slide 10: Dental Market Position
Dental Market Position Only global dental distributor and solutions company for general practitioners, specialists, and laboratories • #1 in sales in North America • #1 in sales in Europe • #1 in sales in Australia/New Zealand • #1 in sales in Brazil Active customers (approximate) • 90% of U.S. dent
Slide 11: Dental Market
Dental Market 2020 Henry Schein Global Dental Sales by Geography $5.9B or 59% of Net Sales Market Share: North America (58%) North America: 35% to 40% 59% 30% Europe: 20+% Europe (30%) Australia/New Zealand: 30% Rest of World (12%) 12% Product sales exclude sales to Covetrus Market share represents
Slide 12: Dental Specialty Markets
Dental Specialty Markets Implants • High-margin business • Historically faster growth than core dental market Market Share: 10% • Ability to leverage existing relationships with specialty practitioners • General practitioners increasingly performing specialty procedures Orthodontics • Focus on ortho
Slide 13: Dental Market – Long Term Growth Strategy
Dental Market – Long Term Growth Strategy • Increasing penetration with existing customers • Geographic expansion • Advancing technology solutions, centered on practice management software • Greater penetration of specialty markets • Continued focus on large group practices • Digitalization of prost
Slide 14: Dental Market – Key Acquisitions
Dental Market – Key Acquisitions Key Acquisitions Description LTM Revenue* Casa Schmidt (2021) Expands dental distribution in Spain/Portugal $42M TDSC.com (2020) Expands distribution in N.A. online channel $20M Cliniclands (2019) Entry into dental market in Sweden $10M Wuhan (2019) Expands our denta
Slide 15: Medical Market Position
Medical Market Position #2 U.S. distributor to healthcare providers in multiple segments: alternate-site practices, ambulatory surgery centers, laboratory, public safety, government and health systems U.S. market focus – long term growth strategy • Approximately 55% of U.S. physician practices are a
Slide 16: Medical Market
Medical Market 2020 Henry Schein Global Medical Sales by Geography $3.6B or 36% of Net Sales U.S. Market Share: Approximately 20% North America (97%) 97% Market information excludes certain specialty and oncology pharmaceutical products, software, and certain other services Europe (3%) Key Acquisiti
Slide 17: Technology & Value-Added Services Market Position
Technology & Value-Added Services Market Position Practice Management Solutions Financial Services • Two-thirds of revenue is recurring • Full-service provider of financial services - Technical support • Providing Value-Added Services to clients - E-claims and credit card processing • U.S. penetrati
Slide 18: Technology & Value-Added Solutions
Technology & Value-Added Solutions 2020 Henry Schein Global Technology & Value-Added Services by Geography Key Acquisitions/JVs Description LTM Revenue* Dentally (2020) Expands international software presence $2M Elite Computer Italia (2019) Establishes software presence in Italy $6M $514M or 5% of
Slide 19: Henry Schein One
Henry Schein One Patient Experience Circle • Henry Schein One offers integrated solutions that simplify each step of the patient experience • Presence in 12 countries • Approximately 1,800 team members 19
Slide 20: Henry Schein One Solutions Portfolio
Henry Schein One Solutions Portfolio Platforms – Practice Management Systems Office Spend Opportunity: $100-$1000+/month Support, Consulting, Business Analytics Virtual Business Services Office Spend Opportunity: Office Spend Opportunity: Office Spend Opportunity: $200-$2000+/month $200-$400/month $
Slide 21: Henry Schein ESG Priorities
Henry Schein ESG Priorities We believe in a Higher Ambition Model of sustained, long term economic success is directly connected to creating shared value for each of our constituents, while making a positive difference in the world. Environmental Social Governance • Taking energy efficiency measures
Slide 22: Financial Performance
VA HENRY SCHEIN” @ onUs Financial Performance
Slide 23: Growth Since Going Public
Growth Since Going Public Non-GAAP(1) ($ in millions, except per share data) 1995 2020 Compound Annual Growth Rate Net Sales $583.6 $10,119.1 12.1% Operating Income1 $18.3 $567.4 14.7% Operating Margin1 3.13% 5.61% 10 bps* Net Income1 $8.6 $425.3 16.9% Diluted EPS1 $0.16 $2.97 12.4% Split Adjusted F
Slide 24: Annual Financial Performance
Annual Financial Performance Non-GAAP(1) ($ in millions, except per share data) 2019 2020 Delta Net Sales $9,985.8 $10,119.1 1.3% Operating Income1 $733.0 $567.4 (22.6%) Operating Margin1 7.34% 5.61% (173) bps Net Income1 $523.6 $425.3 (18.8%) Diluted EPS1 $3.51 $2.97 (15.4%) From Continuing Operati
Slide 25: Q4 2020 Financial Highlights
Q4 2020 Financial Highlights Non-GAAP1 ($ in millions, except per share data) Q4 2019 Q4 2020 Delta Sales $2,668.9 $3,165.7 18.6% Operating Income1 $195.3 $185.6 (5.0%) Operating Margin1 7.32% 5.86% (146) bps Net Income1 $143.0 $143.6 0.4% Diluted EPS1 $0.97 $1.00 3.1% From Continuing Operations. In
Slide 26: Diversified Sales in Complementary Markets
Diversified Sales in Complementary Markets 2020 Worldwide Sales: $10.1 Billion BY PRODUCT BY GEOGRAPHY 59% 74% 36% Dental (59% or $5.9B) North America (74%) 19% Medical (36% or $3.6B) Europe (19%) Rest of World (7%) 7% Tech/VAS (5% or $514M) 5% Product sales exclude sales to Covetrus 25
Slide 27: Sales Highlights
Sales Highlights Long-Term Financial Goal Goal: NET SALES Grow faster than end market growth rates (organic) ($ in Millions) $12,000 Result: Sales Growth $10,119 $9,986 2017 2018 2019 2020 $9,418 $8,883 $6,000 Internal 1 4.6% 4.0% 4.4% 0.8% Extra Week Impact (1.5)% n/a n/a n/a Acquisition 4.3% 1.5%
Slide 28: Operating Income and Margin Highlights
Operating Income and Margin Highlights NON-GAAP OPERATING INCOME Long-Term Financial Goal ($ in Millions) $800 Goal: $733 $693 • Continued operating margin expansion $675 $567 Result: $500 1995 2020 Operating Margin 3.1%(1) 5.6%(1) $0 2017 2018 2019 2020 From Continuing Operations. Excludes animal h
Slide 29: Earnings Highlights
Earnings Highlights NON-GAAP EARNINGS PER Long-Term Financial Goal DILUTED SHARE Goal: $4.00 Continued year-over-year EPS growth, including share $3.51 repurchases and acquisitions $3.17 $2.97 $2.89 $2.00 Result: 1995 2020 Diluted EPS $0.16(1) $2.97(1) (CAGR of 12.4%) $0 2017 2018 2019 2020 Split Ad
Slide 30: Cash Flow
Cash Flow Long-Term Financial Goal Goal: • Cash flow from continuing operations to exceed net income From Continuing Operations. See the appendix of this slide set for a reconciliation of GAAP and non-GAAP measures. 30
Slide 31: Cash Return to Shareholders
Cash Return to Shareholders $700M $550M $600M $525M $500M $450M $400M $300M $200M* $200M $74M** $100M $0 2016 2017 2018 2019 2020 * Blackout in part of 2018 due to spin-off of animal health business ** Impacted by COVID-19 31
Slide 32: Strong Balance Sheet
Strong Balance Sheet December 26, 2020 ($ in millions) Cash & Equivalents $421.2 Working Capital $1,508.3 Total Assets $7,792.5 Total Debt $699.0 Equity $3,984.4 DSO Year-to-Date 46.0 days Inventory Turns Year-to-Date 5.1x Net Debt to Non-GAAP TTM EBITDA 0.57x From Continuing Operations. 32
Slide 33: Investment Merits
Investment Merits • Multiple organic and M&A growth strategies • Proven financial track record • Operating model goals for long-term growth • Experienced Management Team 33
Slide 34: Appendix
APPENDIX 34
Slide 35: GAAP & Non-GAAP Reconciliations: Growth Since Going Public
GAAP & Non-GAAP Reconciliations Growth Since Going Public Henry Schein, Inc. Fourth Quarter 2020 Analyst Presentation Growth Since Going Public From Continuing Operations (in millions, except per share data) Reconciling Items Special Management Compensation Net Gain on Sale of GAAP Basis Costs Restr
Slide 36: GAAP & Non-GAAP Reconciliations: Annual Financial Performance
GAAP & Non-GAAP Reconciliations Annual Financial Performance Henry Schein, Inc. Fourth Quarter 2020 Analyst Presentation Full Year 2020 Financial Highlights From Continuing Operations (in millions, except per share data) Reconciling Items Net Gain on Sale Tax Credit Related of Equity to Animal Healt
Slide 37: GAAP & Non-GAAP Reconciliations: Q4 2020 Financial Highlights
GAAP & Non-GAAP Reconciliations Q4 2020 Financial Highlights Henry Schein, Inc. Fourth Quarter 2020 Analyst Presentation Q4 2020 - Financial Highlights From Continuing Operations (in millions, except per share data) Reconciling Items 2019 Restructuring Credits and 2020 GAAP Basis Restructuring Costs
Slide 38: GAAP & Non-GAAP Reconciliations: Operating Income
GAAP & Non-GAAP Reconciliations Operating Income Henry Schein, Inc. Fourth Quarter 2020 Analyst Presentation Operating Income and Margin Highlights From Continuing Operations (in millions, except per share data) GAAP Reconciling Items Non-GAAP 2018 2019 2020 2018 2019 2020 2018 2019 2020 Net Sales $
Slide 39: GAAP & Non-GAAP Reconciliations: Earnings Highlights
GAAP & Non-GAAP Reconciliations Earnings Highlights Henry Schein, Inc. Fourth Quarter 2020 Analyst Presentation Earnings Highlights From Continuing Operations (in millions, except per share data) GAAP EPS GAAP Net Income 2018 2019 2020 2018 2019 2020 GAAP Earnings per share $ 2.80 $ 4.69 $ 2.81 GAAP
Slide 40: GAAP & Non-GAAP Reconciliations: Net Debt to EBITDA
GAAP & Non-GAAP Reconciliations Net Debt to Non-GAAP TTM EBITDA Henry Schein, Inc. Fourth Quarter 2020 Analyst Presentation Net Debt to EBITDA From Continuing Operations (in millions, except ratio) Twelve Months Ending December 2020 Reconciling Items Impairment Charges and GAAP Letters of Credit Cas
Slide 41: GAAP & Non-GAAP Reconciliations: Tax Rate
GAAP & Non-GAAP Reconciliations Tax Rate Henry Schein, Inc. Fourth Quarter 2020 Analyst Presentation Income Tax Rate Reconciliation From Continuing Operations (in millions, except tax rate) Q4 2020 Pretax income Tax Expense Tax Rate Income Tax Rate - GAAP $ 169.9 $ (29.4) 17.31% Add back Non-GAAP Ad