henry schein 2008irpresentation_final

NASDAQ: HSICwww.henryschein.com

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HSIC is the largest distributor of healthcare products and services to office-based practitioners

in North America and Europe

Serving Dental, Physician and Animal Health practitionersBroad range of value-added products and services

• One-stop shop for our customersOperations or affiliates in 20 countries Fortune 500® companyMember of the NASDAQ 100® Index

Corporate Overview

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1995 Worldwide Sales: $616 million

2008 Worldwide Sales: $6.4 billion

Dental52%

Tech4%

Int'l17%

Medical27%

Tech3%

Int'l35%

Dental40%

Medical22%

From Continuing Operations

13 Years as a Public Company

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(1) Includes Animal Health

Share Size Share SizeMarket ($ in billions) ($ in billions)U.S. & Canada Dental 11% $3.0 40% 6.3U.S. Medical (1) 3% 4.8 15% 9.5Europe Dental 5% 2.2 19% 7.2Europe Medical (1) ___ _____ 14% 4.5TOTAL 6% $10.0 23% $27.5

20081995Estimated Market

Serving Large and Growing Markets

Consistent Market Growth

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Attractive Market Dynamics

(1) U.S. Census Bureau

144m

131m

75m

93m

115m

30m

60m

90m

120m

150m

180m

1990 2000 2010 2020 2030

U.S

. Pop

ulat

ion

Age

45-

84 (m

illio

ns)1

45-84 year-old population projected to almost double between 1990-2030

Aging Population Driving Healthcare Spending

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Consistent Growth

Recession Resistant

Fragmented Competitors

Positive Business Environment

Fragmented Customer Base

Markets Served

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4.95.25.76.36.04.8

8.69.08.5

6.86.67.2

5.2

7.46.6

5.0

11.2

5.6

7.57.28.2

9.3

6.7

9.28.57.88.0

17.8

12.0

200820062004200220001998199619941992199019881986198419821980-4%

0%

4%

8%

12%

16%

20%

Dental Services Growth US GDP Growth (constant dollars)

Dental Services GrowthNever recorded a year of negative

growthProjected 2009 Growth:

2.0%

Source: -Dental Services Growth - CMS. -GDP - US Department of Commerce

▪▪

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Physician and Clinical Services Growth

6.26.55.9

7.47.38.5

7.98.5

7.0

5.26.4

5.04.0

4.84.6

6.1

8.4

11.111.011.5

14.0

12.210.9

17.3

12.811.5

10.8

16.615.8

200820062004200220001998199619941992199019881986198419821980

-4%

0%

4%

8%

12%

16%

20%

Physician and Clinical Services Growth US GDP Growth (constant dollars)▪▪Source: -Physician and Clinical Services Growth - CMS. -GDP - US Department of Commerce

Never recorded a year of negative

growth Projected 2009 Growth:6.0%

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EfficiencyProductivityProfitability

Allowing our customers to focus on delivering quality care to their patients

Company Objective

Improve Practice

Our primary objective is to partner with our customers

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Key Company Strengths

1) Unique Sales and Marketing Expertise

2) Centralized Leveragable Infrastructure

3) Broad Product and Services Offering

4) Superior Customer Service

5) Large Practice Management User Base

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1. Unique Sales and Marketing Expertise

• Strong brand identity with over 75 years of experience

• Extensive direct marketing programs • Highly-trained sales professionals

2,800 field sales consultants and specialists1,500 telesales representativesExtensive training to develop consultative selling skills

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Reps visit the website regularlyReps visit the website regularly

Extensive Consultative Selling Skills

Classroom and Web-Based Training

Clinical Techniques

Practice Management

Solutions

Products

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Driving more productive customer interactions

Customer Analysis Tool (CAT)

Proprietary call planning systemColor coding ranks sales activity

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75-80% Utilization……With Capacity for Growth

2. Centralized Leveragable Infrastructure

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3. Broad Product and Services Offering

90,000 SKUs in stock

100,000 special order

itemsavailable

~20,000 proprietary products

Competitive Prices

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Exclusive Product Offerings

17

Design Services

Value-Added Services

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4. Superior Customer Service

• 24/7 ordering by mail, fax, telephone, CD-Rom and Web

• Customer Service Statistics:North America Worldwide

Order fulfillment 99% 99%Orders shipped same day 99% 99%Orders delivered in 2 days 99% 99%Orders delivered next day 90% 95%Order accuracy 99.9% 99.9%

• 2008 Web sales up over 20%

• Innovative Customer Loyalty programs

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Innovative Customer Loyalty Programs

• Designed to attract, retain, and reward preferred customers

• Over 28,000 U.S. Dental members and 7,000 U.S. Medical members and 6,000 International

• Drives faster sales and electronic ordering growth

• Similar programs active in 9 international markets

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5. Practice Management Solutions

Active Base of Over 60,000 Users

Helping our customers become more efficient and profitable

• #1 in customer satisfaction• Integrates with digital

equipment• Provides cross-selling

opportunities

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Key Strategies for Future Growth

• Expand value-added products and services • Practice management software• Financing, Credit card processing and e-claims• Continuing education

• Increase customer penetration• Customer loyalty programs• Equipment sales and repair services

• Increase number of new customers• Increase number of field sales consultants

Transition from a Pure Distribution Company

Goal - Partner With Customers to Improve Quality of Care

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Key Strategies for Future Growth

• Continue to develop the specialty business• Implants, orthodontics, surgical, dermatology and pediatrics

• Expand product and service offering• Additional exclusive and semi-exclusive distribution

agreements

• Realize sourcing synergies and supply chain initiatives• Globalize inventory management• Increase sales of Henry Schein proprietary products

• Pursue strategic acquisitions

Pursue Complementary Initiatives…

… To Accelerate Sales and Operating Income Growth

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Recent Acquisitions

DNA Anthos

• Provides entrée into orthodontic market• Expands dental specialties group• Sales of $30 million

• Leading Czech Republic Animal Health distributor• Provides base of operation for expansion into Eastern Europe• Makes Henry Schein largest Pan-European Animal Health distributor• Sales of $70 million

• Italian distribution arm of Cefla Dental (equipment manufacturer)• Leading distributor of Anthos dental equipment in Italy, nation’s largest installed user

base• Five-year exclusive agreement with Cefla to distribute Anthos in most regions of Italy• Sales of $43 million

• Full-service provider of Medical consumables, equipment and technical services primarily to physicians

• Complements current Henry Schein German operations and provides coverage where there previously was limited presence

• Sales of $36 million

Medka

Noviko

Acquired 10 companies in Q4 2008 with annual sales of $280 million. The more significant acquisitions include:

Ortho Organizers

Financial Update

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Safe Harbor Provision

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements.

Certain portions of this presentation include information that is forward-looking. Certain risks and uncertainties could cause our future results to differ materially from the forward-looking statements, expectations and assumptions expressed or implied in this presentation. Such forward-looking statements should not be relied upon as a prediction of actual results.

We undertake no duty and have no obligation to update such forward-looking statements, and we refer you to the cautionary language contained in our filings with the Securities and Exchange Commission.

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20%

27%

29bp

30%

18%

Sales

Operating Income

Operating Margin

Net Income

Diluted EPS

$616.2

$19.3

3.1%

$9.1

$0.34

1995

$6,394.9

$442.8

6.9%

$270.0

$2.96

Compound Annual

Growth Rate2008

From continuing operations and excluding certain non-recurring items.

Growth Since Going Public

($ in millions, except per share data)

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Full Year 2008

2008 Growth2007 ($ in millions, except per share data)

Sales $6,394.9 $5,904.4 8.3%

Operating Income $442.8 $387.9 14.2%

Operating Margin 6.92% 6.57% 35 bp

Net Income $270.0 $236.1 14.4%

Diluted EPS $2.96 $2.59 14.3%


Financial Highlights

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Net Sales

3,795

4,5265,036

5,9046,395

$1,000

$3,000

$5,000

$7,000

2004 2005 2006 2007 2008

($ in millions)

From Continuing Operations

19%19%

11%

17%

CAGR 14%

8%

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Long-Term Financial Objectives

¹Local currency ²Adjusted for extra week in 2005³Adjusted to exclude sales of certain lower-margin pharmaceutical products

2004 2005 2006² 2007 2008³Internal 8% 8% 7% 7% 4%Acquisition 11% 11% 5% 7% 6%

Total Sales Growth 19% 19% 12% 14% 10%As originally reported except as noted

Actual Sales Growth¹

Future sales growth will be a balance of internal growth and acquisitions

Goal:• To continue to grow internal sales faster

than market

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Strategic Acquisitions

Key Strategic Benefit2005

• Ash Temple Expands presence in Canadian Dental market $100m• Halas / Shalfoon Strengthens position in Australia and New Zealand $60m

2006• NLS Animal Health Expands presence in U.S. Veterinary market $110m• Darby Companies Strengthens U.S. Dental, Medical and Lab presence $220m• Provet Expands presence in European Veterinary market $50m

2007• Software of Provides leading position in U.K. Dental Software market $20m

Excellence• W&J Dunlop Expands presence in European Veterinary market $340m

2008• Minerva Dental Expands full-service dental presence in U.K. $40m

2009• Noviko Expands Veterinary presence in the Czech Republic $70m• DNA Anthos Strengthens Dental equipment presence in Italy $43m• Medka Expands Medical presence in Germany $36m• Ortho Organizers Provides entrée into orthodontic market $30m

Successfully integrated over 30 acquisitions since 2000

Revenue1

1 Represents the approximate revenue in the fiscal year prior to acquisition or expectation for revenue contribution in the 12 months immediately following acquisition date.

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$205$262

$305

$388$443

$0

$100

$200

$300

$400

$500

2004 2005 2006 2007 2008

($ in Millions)

Operating Income and Margin

28%


16%

27%14%

5.4% 5.8% 6.1% 6.6% 6.9%Operating Margin

-6%

CAGR 21%

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Actual Results: 1995 2008

Operating Margin 3.1% 6.9%



Average 29 bp annual increase since going public

Goals:• Balanced internal and acquisition sales growth

• Continued operating margin expansion

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Diluted EPS and Net Income

$1.39$1.70

$2.04

$2.59$2.96

$0.00

$1.00

$2.00

$3.00

2004 2005 2006 2007 2008

-3%22%

20%

27%


$122.5 $150.7 $183.5 $236.1 $270.0Net Income

CAGR 21%

14%

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Actual Results:

1995 2008

EPS $.34 $2.96

All amounts from continuing operations and excluding certain non-recurring items.

18% CAGR since going public

Goals:• Balanced internal and acquisition sales growth• Continued operating margin expansion

• Predictable Earnings Per Share growth

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Operating Cash Flow

$191.0

$37.8

$254.8

$50.8

$235.3

$67.0

$270.2

$56.8

$384.6

$50.9

$0.0

$100.0

$200.0

$300.0

$400.0

2004 2005 2006 2007 2008Operating Cash Flow Capital Expenditures

($ in Millions)

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Goals:

• Balanced internal and acquisition sales growth• Continued operating margin expansion• Predictable Earnings Per Share growth

All amounts are from continuing operations restated to exclude certain non-recurring items and restructuring costs.

Since 2004 operating cash flow has exceeded net income by over $381 million

• Strong cash flow from operations

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Strong Balance Sheet

Cash & Equiv.

Working Capital

Total Assets

Total Debt

Equity

DSO

Inventory Turns

Net Debt to Total Capitalization Ratio

32.6%29.6%

25.3%

20.4%18.1%

0%

10%

20%

30%

40%

2004 2005 2006 2007 2008

Debt to Total Capitalization Ratio$369.6

$882.6

$3,599.6

$428.0

$1,932.2

43.0 days

6.2x

2.9%

($ in millions)

December 27, 2008

HSIC has a $400m 5-year committed credit line at an attractive interest rate.

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Investment Merits

• Leading presence in fragmented growing markets

• Providing high quality service to office-based healthcare practitioners

• Strong brand recognition

• Highly experienced management team

• Excellent growth opportunities

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