What changed in this filing

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Item 1A. Risk Factors

2025-02-25 compared with 2024-02-28 · 832 added, 797 removed, 442 unchanged (79% of the section changed)

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The Company believes that the following

risks could have a material adverse impact on our business, reputation, financial

risks could have a material adverse impact on our business, reputation, operating

results, financial condition and/or

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COMPANY RISKS

We are dependent upon third parties for the manufacture and supply of a significant volume of our products.

We are dependent upon third parties for the manufacture and supply of a significant volume of our products and

where we manufacture products, we are dependent upon third parties

for raw materials and purchased

We obtain a significant volume of the products we distribute from third parties, with whom we generally do not

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aggregate, supply a significant portion of the products we sell.

In 2023, our top 10 health care distribution suppliers

and our single largest supplier accounted for approximately 25% and 4%, respectively, of our aggregate purchases.

Because of our dependence upon such suppliers, our operations are

subject to the suppliers’ ability and willingness

to supply products in the quantities that we require, and the risks include delays

caused by interruption in

production based on conditions outside of our control, including

a supplier’s failure to comply with applicable

government requirements (which may result in product recalls and/or

cessation of sales) or an interruption in the

suppliers’ manufacturing capabilities.

In the event of any such interruption in supply, we would need to identify

and obtain acceptable replacement sources on a timely basis.

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 product, could result in a significant disruption in our

sales and operations, as well as damage

to our relationships with customers and our reputation.

In addition, certain of our suppliers have had their ability to

service certain markets restricted or negatively impacted because

of allegations of forced labor in their supply

Forced labor legislation affecting the supply chain has increased around

the world, and the United States

recently passed the Uyghur Forced Labor Prevention Act.

Our supply chain could be materially disrupted if our

suppliers fail to comply with, or are unable to satisfy our demand

for products, as a result of applicable forced labor

legislation and regulations.

acceptance with acceptable margins.

In 2024, our top 10 Global Distribution and Value-

Added Services suppliers and our single largest supplier accounted for approximately

25% and 4%, respectively, of

our aggregate purchases.

Additionally, where we are the manufacturer of certain dental specialty products we sell

in the areas of oral surgery, implants, orthodontics and endodontics, we are dependent upon third parties for raw

materials and purchased components.

Because of our dependence upon such suppliers, our operations

to the suppliers’ ability and willingness to supply products in the quantities

that we require, and the risks include

delays caused by interruption in production based on conditions outside

of our control, including a supplier’s failure

to comply with applicable government requirements (which may

result in product recalls and/or cessation of sales)

or an interruption in the suppliers’ manufacturing capabilities.

In the event of any such interruption in supply, we

would need to timely identify and obtain acceptable replacement sources.

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.

In recent periods, we

have experienced increased costs and shortages of purchased components,

which has had a negative impact on our

profit margins and on our sales for certain product categories, due to our inability

to fully satisfy demand.

We may be unsuccessful in achieving our strategic growth objectives.

Our 2022 – 2024 BOLD+1 Strategic Plan is defined under “Business, Business

Strategy” above.

continue to execute the BOLD+1 strategic priorities with the next evolution

of our strategic plan.

In particular, we

are focused on continuing to grow our Henry Schein specialty brands

and technology and value-added services

solutions both organically and inorganically, and to drive greater efficiencies.

If we are unable to effectively

implement our strategic plan, we may not achieve our desired return on our

investments through our growth

Our business could be affected by the recently signed Strategic Partnership Agreement.

On January 29, 2025, we announced a strategic investment by

funds affiliated with KKR & Co.

leading global investment firm, and a Strategic Partnership Agreement (the “Partnership

Agreement”) with

In addition to KKR’s current holdings, KKR will make an additional $250 million investment in the

Company’s common stock.

As a result, KKR will become the largest non-index fund stockholder of the Company

with a 12% position.

KKR will also have the ability to purchase additional shares

via open market purchases up to

a total equity stake of 14.9% of the outstanding common shares of

Under the Partnership

Agreement, two representatives of KKR (the “Investor Designees”) will join our

Board of Directors.

Investor Designees will also be nominated by our Board of Directors

to stand for election at our 2025 annual

meeting of stockholders for a term expiring at our 2026 annual meeting

of stockholders.

As part of the Partnership

Agreement, KKR has agreed to customary voting and other provisions.

Consummation of the transactions

contemplated by the Partnership Agreement is subject to customary

closing conditions, including the expiration or

Index to Financial Statements

termination of any waiting period under the Hart-Scott-Rodino Act

and certain foreign regulatory approvals.

Partnership Agreement may have unintended consequences, such as

uncertainty about our management, operations,

or future strategic direction, which could result in the loss of future

business opportunities or negatively impact our

ability to attract and retain qualified talent.

KKR also invests in many different types of

businesses, and has or may

continue to invest in customers, suppliers, joint venture partners, or

other entities that have relationships with the

Company, or in competitors of such entities,

which may create unintended conflicts resulting in a loss of business.

Our future growth (especially for our Global Technology and Global Specialty Products segments) is dependent

upon our ability to develop or acquire and maintain and protect

new products and services and utilize new

technologies that achieve market acceptance with acceptable margins.

Our future success depends on our ability to timely develop (or obtain the right

to sell) competitive and innovative

(particularly for our technology and value-added services segment)

products and services and to market them

quickly and cost-effectively.

Our ability to anticipate customer needs and emerging trends and develop or acquire

new products, services and technologies at competitive prices requires significant

resources, including employees

with the requisite skills, experience and expertise, particularly in our

technology segment, including dental practice

management, patient engagement and demand creation software solutions.

The failure to successfully address these

challenges could materially disrupt our sales and operations.

Additionally, our software and e-services products,

like software products generally, may contain undetected errors or bugs when introduced or as new versions are

Any such defective software may result in increased expenses

related to the software and could adversely

affect our relationships with customers as well as our reputation.

With respect to certain software and e-services

that we develop, we rely primarily upon copyright, trademark and

trade secret laws, as well as contractual and

common law protections and confidentiality obligations.

We cannot provide assurance that such legal protections

will be available, adequate or enforceable in a timely manner to protect

our software or e-services products.

(particularly for our Global Technology and Global Specialty Products segments) products and services and utilize

new technologies, such as artificial intelligence (“AI”) (among other emerging technologies)

and to market them

and/or utilize them quickly and cost-effectively.

Our ability to anticipate customer needs and emerging trends and

develop or acquire new products, services and technologies at competitive

prices requires significant resources,

including employees with the requisite skills, experience and expertise, particularly

in our Global Technology

segment, including dental practice management, patient engagement

and demand creation software solutions.

failure to successfully address these challenges could materially disrupt

our sales and operations.

We have increased and expect to continue to increase our use of AI technologies in various contexts to improve

customer and patient experiences and drive efficiencies in certain areas of our business.

While these innovations

can present benefits to the Company, they also create risks and challenges.

If investments in such emerging

technologies are less successful at attracting and retaining customers than

similar investments by our competitors,

or if we are otherwise unsuccessful at realizing the benefits of these

technological investments generally, this could

have a material adverse effect on our business, financial condition, or operating

Additionally, widely

assessable generative AI that rapidly surpasses our organizational ability to understand

associated risks and

opportunities (including employees’ failure to comply with policies governing

AI usage) could endanger our

intellectual property, lead to misuse of data and cause reputational harm.

Risks inherent in acquisitions, dispositions and joint ventures could

offset the anticipated benefits.

One of our business strategies has been to expand our domestic and

international markets in part through

acquisitions and joint ventures and we expect to continue to make acquisitions

and enter into joint ventures in the

Such transactions require significant management attention,

may place significant demands on our

operations, information systems, legal, regulatory, compliance, financial, and human resources functions, and

is risk that one or more may not succeed.

We cannot be sure, for example, that we will achieve the benefits of

revenue growth that we expect from these acquisitions or joint ventures

or that we will avoid unforeseen additional

costs, taxes, or expenses.

Our ability to successfully implement our acquisition and joint venture

strategy depends

upon, among other things, the following:

One of our business strategies has been to expand in part through acquisitions

and joint ventures and we expect to

continue to make acquisitions and enter into joint ventures in the future.

There is risk that one or more may not

We cannot be sure, for example, that we will achieve the benefits of revenue growth that we expect from

these transactions or that we will avoid unforeseen additional costs, taxes,

Our ability to successfully

implement our acquisition and joint venture strategy depends upon,

among other things, the following:

the availability of suitable acquisition or joint venture candidates at

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be prohibited due to U.S.

foreign antitrust regulations;

antitrust regulations;

the liquidity of our investments and the availability of financing on

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companies we acquire;

our ability to successfully integrate these companies’ operations, services,

products and personnel with

our culture, management policies, legal, regulatory, and compliance policies, cybersecurity systems and

policies, internal procedures, working capital management, financial,

and operational controls and

our ability to successfully integrate these companies’ operations, systems,

services, products and personnel

with our culture, management policies, legal, regulatory and compliance

policies, information technology

and cybersecurity systems and policies, internal procedures, working capital

management, financial,

operational and internal controls and strategies.

Furthermore, some of our acquisitions and future acquisitions may give

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financial results individually or in the aggregate.

Additionally, when we decide to sell assets or a business, we may encounter difficulty in finding buyers or

executing alternative exit strategies on acceptable terms in a timely manner, which could delay

the accomplishment

of our strategic objectives.

Alternatively, we may dispose of assets or a business at a price or on terms that are less

than we had anticipated.

Dispositions may also involve continued financial involvement

in a divested business,

such as through transition service agreements, indemnities or other current

or contingent financial obligations.

Under these arrangements, performance by the acquired or divested

business, or other conditions outside our

control, could affect our future financial results.

Additionally, when we decide to sell assets or a business, we may

encounter difficulty in finding buyers or timely executing alternative exit strategies

on acceptable terms, which

could delay the accomplishment of our strategic objectives.

Dispositions may also involve continued financial

Index to Financial Statements

involvement in a divested business, such as through transition service agreements,

indemnities or other current or

contingent financial obligations.

Certain provisions in our governing documents and other documents to

which we are a party may discourage

third parties from seeking to acquire us that might otherwise result in

our stockholders receiving a premium

third parties from seeking to acquire us that might otherwise result

in our stockholders receiving a premium

over the market price of their shares.

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In addition, certain of our employee incentive plans provide

accelerated vesting of stock options and other awards upon termination without

cause within two years following a

change in control, or grant the plan committee discretion to accelerate

awards upon a change of control.

certain agreements between us and our executive officers provide for increased severance

payments and certain

benefits if those executive officers are terminated without cause by us or if they terminate

for good reason, in each

case within two years following a change in control or within ninety days prior

to the effective date of the change in

control or after the first public announcement of the pendency of the change

accelerated vesting of equity awards upon termination without cause within

two years following a change in

control, or grant the plan committee discretion to accelerate awards

upon a change of control.

Further, certain

agreements between us and our executive officers provide for increased severance

payments and certain benefits if

those executive officers are terminated without cause by us or if they terminate

for good reason, in each case within

two years following a change in control or within ninety days prior to the

effective date of the change in control or

after the first public announcement of the pendency of the change

Adverse changes in supplier rebates or other purchasing incentives

could negatively affect our business.

products from

many suppliers

purchasing incentive based on the attainment of certain growth

The terms on which we purchase or sell products from many suppliers may

entitle us to receive a rebate or other

purchasing incentive based on the attainment of certain growth goals.

Suppliers may reduce or eliminate rebates or

branded products

or incentives

conditioned upon

achievement of

incentives offered under their programs, or increase the growth goals or other conditions

we must meet to earn

rebates or incentives to levels that we cannot achieve.

Increased competition either from generic or equivalent

branded products could result in us failing to earn rebates or incentives

that are conditioned upon achievement of

growth goals.

Additionally, factors outside

of our control, such as customer

preferences, consolidation of suppliers

or supply issues, can have a material impact on

our ability to achieve the growth goals established by

our suppliers,

incentives we

have an adverse impact on our business, financial condition or operating

Sales of corporate brand products entail additional risks, including the risk that such sales could

adversely affect

our relationships with suppliers.

certain corporate brand products that are available exclusively from us.

The sale of such products subjects

us to the risks generally encountered by entities that source, market and sell corporate brand products, including but

potential product

liability risks,

voluntary product

recalls, potential

business, financial

products owned by our

suppliers which, consequently,

could adversely impact certain

of our supplier relationships.

Our ability to locate qualified, economically stable suppliers who satisfy our requirements, and to

acquire sufficient

and effective

customer confidence

not diminished.

In addition, we

are exposed to

that our competitors

customers may introduce

private label,

low-cost products

products could

capture significant

market prices

overall, eroding

to develop sourcing

relationships with a

broad and deep

supplier base could

have an adverse

our business, financial condition or operating results.

Additionally, factors outside of our control, such as customer preferences, consolidation of suppliers

or supply issues, can have a material impact on our ability to achieve

the growth goals established by our suppliers,

which may reduce the amount of rebates or incentives we receive.

Sales of corporate brand products and products that we manufacture

entail additional risks, including the risk

that such sales could materially adversely affect our relationships with suppliers.

certain corporate brand products that are available exclusively

The sale of such corporate brand

products and the sale of products that we manufacture subject us to

potential product liability risks, mandatory or

voluntary product recalls, potential supply chain and distribution chain

disruptions and potential intellectual

property infringement risks, among other risks.

In addition, an increase in the sales of our corporate brand products

and our own manufactured products may negatively affect our sales of products

owned by our suppliers which,

consequently, could adversely impact certain of our supplier relationships.

Our ability to locate qualified,

economically stable suppliers who satisfy our requirements, and

to acquire sufficient products in a timely and

effective manner, is critical to ensuring, among other things, that customer confidence is not diminished.

addition, we are exposed to the risk that our competitors or our large customers may

introduce their own private

label, generic, or low-cost products that compete with our products at

lower price points.

Such products could

capture significant market share or decrease market prices overall, eroding

our sales and margins.

Any failure to

develop sourcing relationships with a broad and deep supplier base

could have a material adverse effect on our

business, financial condition or operating results.

Our business could be affected by activist investors.

We actively engage in discussions with our stockholders.

In other cases, stockholders can engage in certain

divisive activist tactics, which can take many forms (including potential

proxy contests).

Some stockholder

activism has resulted in, and could in the future result in, substantial

costs, such as professional fees, and the

diversion of management’s and our Board of Directors’ attention and resources from our businesses and strategic

Index to Financial Statements

Additionally, it could cause uncertainty about our management, operations or future strategic direction,

which could result in the loss of future business opportunities or negatively

impact our ability to attract and retain

qualified talent.

Activists or other stockholders holding a large portion of our outstanding shares

could also have

the ability to exert influence on actions requiring a stockholder vote,

including the election of directors and the

approval of certain extraordinary business transactions.

These risks could cause volatility in the trading price of our

common stock based on factors other than the fundamentals of our

INDUSTRY RISKS

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provide products and services that maintain certain of our customers’ electronic

medical or dental

records (including protected health information of their patients);

medical or dental records

(including protected health information of their patients);

maintain and manage global human resources, compensation and payroll

In addition to health information in our customers’ electronic

medical and dental records, certain of our IS stores

other sensitive personal and financial information, such as healthcare

and other information related to our

employees, as well as other sensitive information such as credit card

There could be an adverse impact on our business, financial condition

or operating results if we do not maintain an

adequate information and technology infrastructure (

, hardware, networks, software, people and processes) to

effectively protect and support the current and future information requirements of the business.

In addition to health

information in our customers’ electronic medical and dental records,

certain of our IS stores other sensitive personal

and financial information, such as health care and other information related

to our employees and individuals we

service, as well as other sensitive information such as credit card

information from our third-party business

partners, that is confidential,

and in many cases subject to privacy laws.

Our IS are vulnerable to, among other things, natural disasters,

power losses, computer viruses, telecommunication

failures, cybersecurity threats and other criminal activity.

partners, that is confidential, and in many cases subject to privacy laws.

Our IS are susceptible to, among other things, natural disasters, power

losses, telecommunication failures,

cybersecurity threats and other criminal activity.

Information security risks have significantly increased

recent years in part because of an overall increase in cyber incidents,

their increased sophistication, and the

involvement of organized crime, hackers, terrorists and foreign state agents.

The healthcare

industry in particular

has been targeted by threat actors seeking to undermine companies’ cybersecurity

defensive measures.

We have processes in place intended to ensure that our security measures keep pace with new and emerging risks.

years in part because of an overall increase in cyber incidents, their increased

sophistication and the involvement of

organized crime, hackers, terrorists and foreign state agents.

In particular, the health care industry has been

targeted by threat actors seeking to undermine companies’ cybersecurity defensive

We have processes in

place intended to ensure that our security measures keep pace with

new and emerging risks.

We regularly review,

monitor and implement multiple layers of security through technology, processes and our

We utilize security technologies designed to protect and maintain the integrity of our IS and data, and our

defenses are monitored and routinely tested internally and by external

Despite these efforts, our facilities

and systems and those of our third-party service providers have been,

and may in the future be, vulnerable to

privacy and security incidents, cybersecurity attacks and data breaches,

acts of vandalism or theft, computer viruses

and other malicious code, misplaced or lost data, programming and/or human

attacks or other acts

undermining IS of third party business partners including our customers,

or other similar events that could impact

the security, reliability and availability of our systems.

monitor and implement multiple layers of security through technology, processes and our people.

security technologies designed to protect and maintain the integrity of

our IS and data, and our defenses are

monitored and routinely tested internally and by external parties.

Despite these efforts, our facilities and systems

and those of our third-party service providers have been, and may in

the future be, vulnerable to privacy and

security incidents, cybersecurity attacks and data breaches, acts of vandalism

or theft, computer viruses and other

malicious code, misplaced or lost data, programming and/or human errors,

attacks or other acts undermining IS of

third party business partners including our customers, or other similar events

that could impact the security,

reliability and availability of our systems.

In addition, hardware, software or applications developed

internally or procured from third parties may contain defects

in design or manufacture or other problems that could

unexpectedly compromise information security.

As a practical matter, so long as we depend on IS to operate our

business, and our business partners do the same, there can be no guaranty

that such measures will successfully stop

any one particular cybersecurity incident given the constantly evolving

nature of the threat.

We may also incur

substantial costs as we update our cybersecurity defense systems and our general

computer controls to meet

evolving challenges, and legislative or regulatory action related to cybersecurity

may increase our costs to develop

or implement new technology products and services.

A cyberattack that bypasses or compromises our IS cybersecurity / or general

information technology (“IT”)

internally or

procured from third parties may contain defects in design or manufacture

or other problems that could unexpectedly

compromise information security.

As a practical matter, so long as we depend on IS to operate our business, and

our business partners do the same, there can be no guaranty

that such measures will successfully stop any one

particular cybersecurity incident given the constantly evolving nature of

We have incurred and may in

the future incur substantial costs as we update our cybersecurity defense

systems and our general computer controls

Index to Financial Statements

to meet evolving challenges, and legislative or regulatory action related

to cybersecurity may increase our costs to

develop or implement new technology products and services.

A cyberattack that bypasses or compromises our IS cybersecurity and/or

general information technology (“IT”)

controls (including third-party systems we rely on) causing an IS security breach

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customer service, accounts

payable, warehouse management and shipping, and systems tied to internal

controls over financial reporting), the

payable, warehouse management and shipping and systems tied

to internal controls over financial reporting), the

loss or alteration of business, financial and other protected information,

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and reporting controls.

A cyberattack that bypasses or compromises our IS cybersecurity / or general

computer controls or those of third

parties with whom we engage may also lead to claims against us by

affected parties and/or governmental agencies,

and involve fines and penalties, as well as substantial defense and settlement

Any of these impacts may

alone, or collectively, have a material impact on our business.

A successful cyberattack has, and may again in the

future, disrupt our business operations, adversely impact our financial

accounting and reporting of results of

operations, divert the attention of management, and adversely impact

our results of operations.

A cyberattack that

bypasses or compromises our IS cybersecurity and/or general computer

controls or those of third parties with whom

we engage may also lead to claims against us by affected parties and/or governmental

agencies, and involve fines

and penalties, as well as substantial defense and settlement expenses.

Any of these impacts may alone, or

collectively, have a material impact on our business.

A successful cyberattack has, and may again in the future,

disrupt our business operations, adversely impact our financial accounting

and reporting of results of operations,

divert the attention of management, and adversely impact our results of

In addition, we develop products and provide services to our customers

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providers, such as physicians and dentists, are used to store and manage patient

medical or dental records.

customers are subject to laws and regulations which require that they

protect the privacy and security of those

medical or dental records, and when

cloud-based approaches are used, we may be responsible for hosting

those records.

These customers, and in some

cases, we are subject to laws and regulations which require that

they protect the privacy and security of those

records, and our products may be used as part of these customers’ comprehensive

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businesses were mostly unaffected.

Once we became aware of the issue, we took steps to assess, contain

remediate this incident.

We restored affected systems and applications, our distribution operations resumed and we

reactivated our ecommerce platform.

We also notified law enforcement and our employees, customers, suppliers

and investors, informing them of both the incident and management’s efforts to mitigate its impact on our daily

operations and data maintained on the Company’s systems.

Subsequently, on or about November 8, 2023, we

determined that the threat actor obtained personal and sensitive information

maintained on our systems belonging to

certain third parties and since that date we have notified affected parties and potentially

affected parties as

The scope of personal and sensitive data impacted is still under investigation.

On November 22, 2023,

we experienced a related disruption to our ecommerce platform and

related applications, which has since been

The October 2023 cybersecurity incident disrupted key

business operations, adversely impacted our

financial results for the fourth quarter and full year 2023, diverted

attention of management, and caused the

Company to incur significant remediation costs.

We continue to review the effects of the incident on the

Company’s business as we do expect some short-term residual impact on our financial results in 2024.

2024, two putative class actions were filed against us based on the incident

and one of these actions is still pending.

We are spending, and plan to expend in the future, additional resources to continue to protect against, or to address

problems caused by, business interruptions, and data security breaches.

In addition, customers and suppliers may impose additional cybersecurity

requirements on us as a result of the

incident we experienced in October 2023, and some customers and suppliers

have made such requests to date.

cannot guarantee that we will be able to satisfy such additional requirements,

and failure to satisfy such

requirements could result in a loss of revenue or diminished product

availability that could materially affect our

business adversely.

We also may be perceived as a more vulnerable target of the cyber hackers as a result of the

October 2023 incident.

If the Company is subject to more attacks in the future as a result of

the recent incident, this

could materially affect our business adversely.

We maintain cyber insurance, subject to certain retentions and policy limitations.

With respect to the October 2023

cybersecurity incident, we have a $60 million insurance policy, following a $5 million retention.

The October 2023 cybersecurity incident disrupted key business

adversely impacted our financial results for the fourth quarter and full year 2023,

diverted attention of management,

and caused the Company to incur significant remediation costs.

The incident had residual impact on our financial

results in 2024, and we continue to review the effects of the incident on the Company’s business.

We have spent,

and plan to expend in the future, additional resources to continue

to protect against, or to address problems caused

by, business interruptions and data security breaches.

We also may be perceived as a more vulnerable target of the

cyber hackers as a result of the October 2023 incident.

The health care products distribution industry is highly competitive

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traditional health care supply and distribution relationships are being challenged

by electronic online commerce

The continued advancement of online commerce by third

parties will require us to cost-effectively adapt

to changing technologies, to enhance existing services and to differentiate our business

(including with additional

value-added services) to address changing demands of consumers and

our customers on a timely basis.

emergence of such potential competition and our inability to anticipate and

effectively respond to changes on a

timely basis could have a material adverse effect on our business.

by online commerce solutions.

Index to Financial Statements

The continued advancement of online commerce by third parties and online

price transparency requires us to cost-

effectively adapt to changing technologies, to enhance existing services and to differentiate

our business (including

with additional value-added services) to address changing demands

of consumers and our customers.

emergence of such competition and our inability to anticipate and effectively respond to changes on

a timely basis

could have a material adverse effect on our business, financial condition or operating

The health care industry is experiencing changes due to political, economic

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political, economic and regulatory influences.

In recent years, the health care industry has undergone, and is in the process of undergoing,

significant changes

driven by various efforts to reduce costs, including, among other factors:

toward managed care;

purchasing arrangements and consolidation among office-based health care practitioners;

and changes in

reimbursements to customers, including increased attention to value-based payment

arrangements, as well as

growing enforcement activities (and related monetary recoveries) by governmental

Both our profitability

and the profitability of our customers may be materially adversely affected by laws

and regulations reducing

reimbursement rates for pharmaceuticals, medical supplies and devices,

and/or medical treatments or services, or

changes to the methodology by which reimbursement levels are determined.

If we are unable to react effectively to

these and other changes in the health care industry, our business could be materially adversely affected.

greatly expanded health insurance coverage in the United States and has been

the target of litigation and

Congressional reform efforts since its adoption.

Any outcome of future court cases that change the ACA, in

addition to future legislation, regulation, guidance and/or Executive Orders

that do the same, could have a

significant impact on the U.S.

healthcare industry and the ability or willingness

of individuals to engage with it.

Expansion of GPOs, DSOs or provider networks and the multi-tiered

In recent years, the health care industry has been undergoing significant changes driven

by various efforts to reduce

costs, including, among other factors:

trends toward managed care;

purchasing arrangements and

consolidation among office-based health care practitioners;

and changes in reimbursements

to customers, including

increased attention to value-based payment arrangements, as well as enforcement

activities (and related monetary

recoveries) by governmental officials.

Both our profitability and that of our customers may be

materially adversely

affected by laws and regulations reducing reimbursement rates for pharmaceuticals,

medical supplies and devices,

and/or medical treatments or services, or changes to the methodology

by which reimbursement levels are

If we are unable to react effectively to these and other changes in the

health care industry, our business

could be materially adversely affected.

The ACA greatly expanded health insurance coverage

in the United States

and has been the target of legal and political challenges since its adoption.

Any outcome of these challenges that

changes the ACA could have a significant impact on the U.S.

industry and the ability or willingness of

individuals to engage with it.

Expansion of GPOs, DSOs, MSOs or provider networks and the multi-tiered

costing structure may place us at a

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The multi-tiered costing structure continues to expand as many large integrated health

care providers and others with significant purchasing power, such as GPOs and DSOs, demand more favorable

pricing terms.

Additionally, the formation of provider networks, GPOs and DSOs may shift purchasing decisions

to entities or persons with whom we do not have a historical relationship

and may threaten our ability to compete

effectively, which could in turn negatively impact our financial results.

In addition, such organizations may

establish direct relationships with manufacturers, thereby either eliminating

or reducing the services historically

provided by distributors.

care providers and others with significant purchasing power, such as GPOs, DSOs and MSOs, demand

favorable pricing terms.

Additionally, the formation of provider networks, GPOs, DSOs and MSOs may shift

purchasing decisions to entities or persons with whom we do not have a historical

relationship and may threaten our

ability to compete effectively, which could in turn negatively impact our financial results.

In addition, such

organizations may establish direct relationships with manufacturers, thereby

either eliminating or reducing the

services historically provided by distributors.

Although we are seeking to obtain similar terms from manufacturers

to access lower

prices demanded by GPO and DSO contracts or other contracts,

and to develop relationships with existing and

emerging provider networks, GPOs and DSOs, we cannot guarantee that such terms will

be obtained or contracts

to access lower prices demanded by GPO, DSO and MSO contracts or

other contracts, and to develop relationships

with existing and emerging provider networks, GPOs, DSOs and MSOs, we

cannot guarantee that such terms will

be obtained or contracts executed.

Increases in shipping costs or service issues with our third-party shippers

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or operating results.

While we have recently experienced increases in the cost of shipping,

While we have recently experienced increases in shipping costs,

we do not expect these

additional expenses to be material to our results.

However, it is possible that such costs could be material in the

Similarly, strikes or other service interruptions by those shippers, including at transportation centers or

shipping ports, could cause our operating expenses to rise and materially

adversely affect our ability to deliver

products on a timely basis.

additional expenses to be material to our results now, however, they could be material in the future.

strikes or other service interruptions by those shippers, including at transportation

centers or shipping ports, could

cause our operating expenses to rise and materially adversely affect our ability

to deliver products on a timely basis.

Index to Financial Statements

MACRO-ECONOMIC AND POLITICAL RISKS

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outlook of the United States, Europe, Asia and other parts of the

world could materially adversely affect our results

of operations and financial condition.

These uncertainties, include, among other things:

election results;

changes to laws and policies governing foreign trade, tariffs and sanctions, or greater

restrictions on

imports and exports;

supply chain disruptions;

changes in laws and policies governing health care or data privacy;

changes to the relationship between the United States and China;

sovereign debt levels;

the inability of political institutions to effectively resolve actual or perceived

economic, currency or

budgetary crises or issues;

consumer confidence;

unemployment levels (and a corresponding increase in the uninsured

and underinsured population);

changes in regulatory and tax regulations;

interest rate fluctuations, and strengthening of the dollar, which have and will continue to

results of operations;

availability of capital;

increases in fuel and energy costs;

the effect of inflation on our ability to procure products and our ability to increase

prices over time and

pass through to our customers price increases we may receive;

changes in tax rates and the availability of certain tax deductions;

increases in labor costs or health care costs;

the threat or outbreak of war, 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 in laws and policies governing manufacturing, development, and

investment in territories and

countries where we do business.

world could have a material adverse effect our

business, financial condition or operating results.

These uncertainties, include, among other things, those listed

under “Managements Discussion and Analysis of Financial Condition and

Results of Operations, Cautionary Note

Regarding Forward-Looking Statements.”

Additionally, changes in government, government debt and/or budget crises may lead to reductions in government

spending in certain countries, which could reduce overall health care spending

and/or higher income or corporate

taxes, which could depress spending overall.

Recessionary or inflationary conditions and depressed levels of

consumer and commercial spending may also cause customers to

reduce, modify, delay,

or cancel plans to purchase

our products and may cause suppliers to reduce their output or change

their terms of sale.

We have experienced

inflationary pressures, including higher freight costs and interest expense.

Although inflation impacts both our

revenues and costs, the depth and breadth of our product portfolio often

allows us to offer lower-cost national brand

solutions or corporate brand alternatives to our more price-sensitive

customers who are unable to absorb price

increases, thus positioning us to protect our gross profit.

The strengthening of the dollar, likewise, has impacted

our revenues and costs, but neither inflation nor exchange rates have

materially impacted our results of operations

in fiscal year 2023.

We generally sell products to customers with payment terms.

If customers’ cash flow or

operating and financial performance deteriorate, or if they are unable to

make scheduled payments or obtain credit,

they may not be able to, or may delay, payment to us.

Likewise, for similar reasons suppliers may restrict credit or

impose different payment terms.

and/or lead to higher income or

corporate taxes, which could depress spending overall.

Recessionary or inflationary conditions and depressed

levels of consumer and commercial spending may also cause customers

to reduce, modify, delay,

or cancel plans to

purchase our products and may cause suppliers to reduce their output

or change their terms of sale.

experienced inflationary pressures, including higher freight costs and

interest expense, and pressures resulting from

the strengthening of the dollar, which have and continue to impact our results of operations.

We generally sell

products to customers with payment terms.

If customers’ cash flow or operating and financial performance

deteriorate, or if they are unable to make scheduled payments or obtain

credit, they may not be able to, or may

delay, payment to us.

Likewise, for similar reasons suppliers may restrict credit or impose

different payment terms.

AND LITIGATION RISKS

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of political changes.

When we discover

situations of non-compliance we seek to remedy them and bring

the affected area back into compliance.

with respect to the applicable laws, regulations and guidance described below

may require us to update or revise

our operations, services, marketing practices, and compliance programs

and controls, and may impose additional

and unforeseen costs on us, pose new or previously immaterial risks to us, or

may otherwise have a material

adverse effect on our business.

respect to the applicable laws, regulations and guidance described below

may require us to update or revise our

operations, services, marketing practices, and compliance programs

and controls, and may impose additional and

unforeseen costs on us, pose new or previously immaterial risks to us, or

may otherwise have a material adverse

effect on our business.

There can be no assurance that current and future government

regulations will not

adversely affect our business, and we cannot predict new regulatory priorities, the

form, content or timing of

regulatory actions, and their impact on the health care industry and on our

business and operations.

Global efforts toward healthcare cost containment continue to exert pressure on

product pricing.

In the United

States, in addition to other government efforts to control health care costs, there has been

increased scrutiny on drug

pricing and concurrent efforts to control or reduce drug costs by Congress, the President,

executive branch agencies

and various states.

We and our subsidiaries may be required to report drug pricing data under federal laws and

At the state level, several states have adopted laws, that may

apply to some of our operations, that

regulations will not adversely

affect our business, and we cannot predict new regulatory priorities, the form, content

or timing of regulatory

actions, and their impact on the health care industry and on our business

and operations.

Global efforts to contain health care costs continue to exert pressure on product pricing.

In the United States, there

has been increased scrutiny on drug pricing and concurrent efforts to control or

reduce drug costs by Congress, the

President, executive branch agencies and various states.

We may be required to report drug pricing data under

federal laws and regulations.

states have adopted laws, that may apply to some of

our operations, that

require drug manufacturers, including re-packagers or re-labelers, to provide

advance notice of certain price

increases and to report information relating to those price increases, while

others have taken legislative or

administrative action to establish prescription drug affordability boards or

multi-payer purchasing pools to reduce

the cost of prescription drugs.

At the federal level, several related bills have been introduced

and regulations

proposed which, if enacted or finalized, respectively, would impact drug pricing and related costs.

increases and to report information relating to price increases, while

others have established prescription drug

affordability boards or multi-payer purchasing pools to reduce the cost of prescription

At the federal level,

for example, the Inflation Reduction Act of 2022, among other things,

requires drug manufacturers that raise certain

of their drug prices faster than the rate of inflation to pay rebates to Medicare,

and over time will authorize the

federal government to negotiate directly with drug manufacturers to

lower the prices of certain brand-name drugs

covered by Medicare.

These various evolving efforts create uncertainty and may adversely affect our business.

Under the Sunshine Act, we are required to collect and report detailed

information regarding certain financial

relationships we have with covered recipients, including physicians, dentists,

teaching hospitals, and certain other

non-physician practitioners.

We and our subsidiaries may be required to report information under certain state

transparency laws that address circumstances not covered by the Sunshine

Act, and some of these state laws, as

well as the federal law, can be unclear.

We are also subject to foreign regulations requiring transparency of certain

interactions between suppliers and their customers.

While we believe we have substantially compliant programs

and controls in place satisfying the above laws and requirements,

such compliance imposes additional costs on us

and the requirements are sometimes unclear.

In the United States, government actions to seek to increase health-

related price transparency may also affect our business.

relationships we have with covered recipients (

, physicians, dentists, teaching hospitals, other health care

practitioners).

We may be required to report information under state transparency laws that address circumstances

not covered by the Sunshine Act.

We are also subject to similar foreign transparency laws.

While we believe we

Index to Financial Statements

have substantially compliant programs and controls in place satisfying

the above laws and requirements, such

compliance imposes additional costs on us and the requirements

are sometimes unclear.

Our business is subject to additional requirements under various local, state,

federal and international laws and

federal and foreign laws and

regulations applicable to the sale and distribution of, and third-party payment

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Act, the FDC Act, the Federal Drug Quality and Security Act, including DSCSA,

Section 361 of the Public Health

Services Act and Section 401 of the Consolidated Appropriations Act

of the Social Security Act.

things, such laws, and the regulations promulgated thereunder:

regulate the introduction, manufacture, advertising, marketing and promotion,

sampling, pricing and

reimbursement, labeling, packaging, storage, handling, returning or

recalling, reporting, and

distribution of, and record keeping for drugs, HCT/P products and

medical devices,

requirements with respect to unique medical device identifiers;

subject us to inspection by the FDA and DEA and similar state authorities;

regulate the storage, transportation and disposal of certain of our products

that are considered

and Section 361 of the Public

Health Services Act.

Among other things, such laws and the regulations promulgated

regulate the introduction, manufacture, advertising, marketing, promotion,

sampling, pricing,

reimbursement, labeling, packaging, storage, handling, returning,

recalling, reporting, distribution of, and

recordkeeping for drugs, HCT/P products and medical devices, including

unique device identifiers;

subject us to inspection by the FDA, OSHA, and DEA and similar state

regulate the storage, transportation and disposal of

hazardous materials;

require us to advertise and promote our drugs and devices in accordance

with applicable FDA

requirements;

require us to report average sales price (ASP) for drugs or biologicals payable

under Medicare Part B to

CMS with or without a Medicaid drug rebate agreement;

with FDA regulations;

require us to report average sales price (ASP) to CMS for drugs or biologicals

payable under Medicare Part

B with or without a Medicaid drug rebate agreement;

require registration with the FDA and the DEA and various state agencies;

require record keeping and documentation of transactions involving drug

require us to design and operate a system to identify and report suspicious

orders of controlled

substances to the DEA and certain states;

orders of controlled substances

to the DEA and certain states;

require us to manage returns of products that have been recalled and subject

us to inspection of our

recall procedures and activities;

us to inspection of our recall

procedures and activities;

impose on us reporting requirements if a pharmaceutical, HCT/P product or

medical device causes

serious illness, injury or death;

medical device causes an

adverse event, serious illness, injury or death;

require manufacturers, wholesalers, re-packagers and dispensers of prescription

drugs to identify and

trace certain prescription drugs as they are distributed;

drugs to identify and trace

certain prescription drugs as they are distributed;

require the licensing of prescription drug wholesalers and third-party

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mandate compliance with standards for the recordkeeping, storage,

and handling of prescription drugs,

and associated reporting requirements.

The FDA has become increasingly active in addressing the regulation of

computer software and digital health

products intended for use in health care settings.

The Cures Act, signed into law on December 13, 2016, among

other things, amended the medical device definition to exclude certain software

from FDA regulation, including

certain clinical decision support software.

On September 27, 2019, the FDA issued a suite of guidance documents

on digital health products, which incorporated applicable Cures Act standards,

and on September 28, 2022, the

FDA subsequently finalized certain of these guidance documents, including

regarding the types of clinical decision

support tools and other software that are exempt from regulation by the FDA as

medical devices, and the FDA

continues to issue new guidance in this area.

Certain of our businesses involve the development and

software and related products to support physician and dental practice management,

and it is possible that the FDA

or foreign government authorities could determine that one or more of our products

is subject to regulation as a

medical device, which could subject us or one or more of our businesses to

substantial additional requirements,

costs and potential enforcement actions or liabilities for noncompliance with

handling and documentation of

transactions involving prescription drugs and associated reporting requirements.

The FDA regulates certain computer software and digital health products intended

for use in health care settings,

including, for example, AI and machine learning-enabled medical devices

and the cybersecurity of medical devices.

Certain of our businesses involve the development and sale of

software and related products to support physician

and dental practice management, and it is possible that the FDA or

foreign government authorities could determine

that one or more of our products is subject to regulation as a medical device,

which could subject our businesses to

substantial additional requirements, costs, potential enforcement actions

or liabilities for noncompliance with

respect to these products.

imaging software is regulated as a medical device which subjects our businesses

to substantial additional

requirements, costs and potential enforcement actions or liabilities for noncompliance

with respect to these

Applicable federal, state, local, and foreign laws and regulations also may require

us to meet various standards

relating to, among other things, licensure or registration, program eligibility, procurement, third-party

reimbursement, sales and marketing practices, product integrity, and supply tracking to product manufacturers,

product labeling, personnel, privacy and security of health or other personal

information, installation, maintenance

and repair of equipment and the importation and exportation of products.

The FDA and DEA, as well as CMS

(including with respect to complex Medicare reimbursement requirements

applicable to our specialty home medical

supplies business) and state Medicaid agencies, have recently increased

their regulatory and enforcement activities

and, in particular, the DEA has heightened enforcement activities due to the opioid crisis in the United States.

business is also subject to requirements of similar and other foreign governmental

laws and regulations affecting

our operations abroad.

For example, some of our imaging software is

regulated as a medical device which

subjects our businesses to substantial additional requirements, costs

and potential enforcement actions or liabilities

for noncompliance with respect to these products.

Applicable federal, state, local and foreign laws and regulations also may

require us to meet various standards

relating to, among other things, licensure, registration, program eligibility, procurement, third-party reimbursement,

sales and marketing practices, product integrity and supply

tracking to product manufacturers, product labeling,

personnel, privacy and security of health or other personal information,

installation, maintenance and repair of

equipment and the importation and exportation of products.

The FDA and DEA, as well as CMS (including with

respect to complex Medicare reimbursement requirements applicable to our

specialty home medical supplies

business) and state Medicaid agencies, have recently increased their regulatory

and enforcement activities and, in

particular, the DEA has heightened enforcement activities due to the opioid crisis in the United

The failure to comply with any of these laws or regulations, or new interpretations

of existing laws and regulations,

or the imposition of any additional laws and regulations, could

materially adversely affect our business.

to us associated with complying with the various applicable statutes

and regulations, as they now exist and as they

may be modified, could be material.

of them, or the imposition of any

additional laws and regulations, could materially adversely affect our business.

The costs to us associated with

complying with the various applicable statutes and regulations, as they now

exist and as they may be modified,

could be material.

Allegations by a governmental body that we have not complied

laws could have a material adverse effect on our businesses.

While we believe that we are substantially compliant

with applicable laws and regulations, and believe we have adequate

compliance programs and controls in place to

ensure substantial compliance, if it is determined that we have not complied

with these laws, we are potentially

subject to warning letters, substantial civil and criminal penalties,

mandatory recall of product, seizure of product

and injunction, consent decrees and suspension or limitation of payments

to us, product sale and distribution.

enter into settlement agreements to resolve allegations of non-compliance, we

could be required to make settlement

payments or be subject to civil and criminal penalties, including

fines and the loss of licenses.

Non-compliance

with government requirements could also adversely affect our ability to participate

in important federal and state

with these laws could have a

material adverse effect on our businesses.

While we believe that we are substantially compliant with

laws and regulations, and have adequate compliance programs and controls

in place to ensure substantial

Index to Financial Statements

compliance, if it is determined that we have not complied with these laws,

we are potentially subject to warning

letters, substantial civil and criminal penalties, mandatory recall of product,

seizure of product and injunction,

consent decrees and suspension or limitation of payments to us, product

sale and distribution.

If we enter into

settlement agreements to resolve allegations of non-compliance, we

could be required to make settlement payments

or be subject to civil and criminal penalties, including fines and

the loss of licenses.

Non-compliance with

government requirements could also adversely affect our ability to participate in

important federal and state

government health care programs, such as Medicare and Medicaid,

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The EU Medical Device Regulation (“MDR”) may adversely affect our business.

The EU MDR, applicable since May 26, 2021, significantly modifies and intensifies

the regulatory compliance

requirements for the medical device industry as a whole.

The EU MDR significantly modified the regulatory compliance requirements

for the medical device industry as a

Among other things, the EU MDR:

strengthens the rules on placing devices on the market and reinforces surveillance

once they are

strengthens the rules on placing devices on the market and reinforces

surveillance thereafter;

establishes explicit provisions on manufacturers’ responsibilities

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performance and safety of devices placed on the market;

improves the traceability of medical devices throughout the supply chain to the end-user

through a unique identification number;

sets up a central database to provide patients, healthcare professionals and

the public with

comprehensive information on products available in the EU;

improves the traceability of medical devices throughout the supply chain to

the end-user or patient through

a unique identification number;

sets up a central database (EUDAMED) to provide patients, health care

professionals and the public with

comprehensive information on devices, importers, and distributors registered

strengthens rules for the assessment of certain high-risk devices, such

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undergo an additional check by experts before they are placed on the market;

identifies importers and distributors and medical device products through

registration in a database

(EUDAMED not due, for the time being, until the end of 2027 at

the earliest, as mentioned above).

In particular, the EU MDR imposes strict requirements for the confirmation that a product

meets the regulatory

requirements, including regarding a product’s clinical evaluation and a company’s quality systems, and for the

distribution, marketing and sale of medical devices, including post-market surveillance.

As mentioned above,

pursuant to Regulation 2023/607 and subject to certain conditions, medical devices

that (i) obtained a certificate

under the EU Medical Device Directive from May 25, 2017, (ii) which was

still valid on May 26, 2021, and (iii)

has not been subsequently withdrawn may, for the moment, continue to be placed on the market or put into service

until December 31, 2027 for higher risk devices or December 31, 2028 for medium

and lower risk devices.

Nevertheless, EU MDR requirements regarding the distribution,

marketing and sale including quality systems and

post-market surveillance have to be observed by manufacturers, importers

and distributors as of the application date

(i.e., May 26, 2021).

The modifications created by the EU MDR may have an impact

on the way we design and

manufacture products and the way we conduct our business in

contains specific provisions in the event of interruption or discontinuation

of supply of a device.

The EU MDR imposes strict requirements for the confirmation that a

product meets the regulatory requirements,

including regarding a product’s clinical evaluation and a company’s quality systems, and for the distribution,

marketing and sale of medical devices, including post-market surveillance.

Pursuant to Regulation 2023/607 and

subject to certain conditions, medical devices that (i) obtained

a certificate under the EU Medical Device Directive

from May 25, 2017, (ii) which was still valid on May 26, 2021, and (iii)

has not been subsequently withdrawn may

continue to be placed on the market or put into service until December

31, 2027 for higher risk devices or

December 31, 2028 for medium and lower risk devices.

The modifications

created by the EU MDR may have an

impact on the way we design and manufacture products and the way we

conduct our business in the EEA.

If we fail to comply with laws and regulations relating to health care

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Some of these laws, referred to as “false

claims laws,” prohibit the submission or causing the submission of false or fraudulent

claims for reimbursement to

claims laws,” prohibit the submission or causing the submission of false or

fraudulent claims for reimbursement to

federal, state and other health care payers and programs.

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the referral of a patient or

ordering, purchasing, leasing or arranging for, or recommending ordering, purchasing or leasing of,

ordering, purchasing, leasing or arranging for, or recommending ordering, purchasing or leasing

services that are paid for by federal, state and other health care payers and programs.

Certain additional state and

federal laws, such as the federal Physician Self-Referral Law, commonly known as the “Stark Law,” prohibit

physicians and other health care professionals from referring a patient

to an entity with which the physician (or

family member) has a financial relationship, for the furnishing of certain designated

health services (for example,

durable medical equipment and medical supplies), unless an exception applies.

Violations of Anti-Kickback

statutes or the Stark Law may be enforced as violations of the federal False Claims

federal laws, such as the federal Physician Self-Referral Law (“Stark Law”),

prohibit physicians and other health

care professionals from referring a patient to an entity with which

the physician (or family member) has a financial

relationship, for the furnishing of certain designated health services

(for example, durable medical equipment and

medical supplies), unless an exception applies.

The fraud and abuse laws and regulations have been subject to heightened

enforcement activity over the past few

years, and significant enforcement activity has been the result of “relators” who

serve as whistleblowers by filing

complaints in the name of the United States (and if applicable, particular states)

under applicable false claims laws,

and who may receive up to 30% of total government recoveries.

Penalties under fraud and abuse laws may be

severe, including treble damages and substantial civil penalties under

the federal False Claims Act, as well as

potential loss of licenses and the ability to participate in federal and state

health care programs, criminal penalties,

or imposition of a corporate compliance monitor, which could have a material adverse effect on our business.

these measures may be interpreted or applied by a prosecutorial, regulatory or

judicial authority in a manner that

could require us to make changes in our operations or incur substantial defense

and settlement expenses.

unsuccessful challenges by regulatory authorities or private relators could result

in reputational harm and the

incurring of substantial costs.

Most states have adopted similar state false claims laws, and these state

their own penalties which may be in addition to federal False Claims

Act penalties, as well as other fraud and abuse

With respect to measures of this type, the United States government (among others) has expressed concerns

financial relationships between suppliers on the one hand and physicians,

dentists, and other health care providers,

on the other.

years, often as the result of “relators” who serve as whistleblowers by filing

complaints in the name of the United

States (and if applicable, particular states) under applicable false claims

laws, and who may receive up to 30% of

total government recoveries.

Penalties under fraud and abuse laws may be severe, including treble damages

substantial civil penalties under the federal False Claims Act, as

well as potential loss of licenses and the ability to

participate in federal and state health care programs, criminal penalties,

or imposition of a corporate compliance

Index to Financial Statements

monitor, which could have a material adverse effect on our business.

Also, these measures may be interpreted or

applied by a prosecutorial, regulatory or judicial authority in a

manner that could require us to make changes in our

operations or incur substantial defense and settlement expenses.

Even unsuccessful challenges by regulatory

authorities or relators could result in reputational harm and the incurring of

substantial costs.

Most states have

adopted similar state false claims acts, and these state laws have their

own penalties which may be in addition to

federal False Claims Act penalties, and other fraud and abuse laws.

The United States government (among others) has expressed concerns

about financial relationships between

suppliers or manufacturers on the one hand and physicians, dentists

and other health care providers, on the

As a result, we regularly review and revise our marketing practices

as necessary to facilitate

as necessary to facilitate compliance.

Our aspirations, goals and disclosures related to environmental, social

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that could have an adverse impact on us.

including on our stock price.

California has adopted stringent new climate disclosure requirements,

as has the EU,

and the SEC appears about to adopt expansive new disclosure requirements

on climate change.

In the EU, the Directive No.

California has adopted stringent new climate disclosure requirements, as

As of April 4, 2024, the SEC

has temporarily suspended implementation of its climate disclosure rules.

In the EU, Directive No.

2019/1937 of October 23, 2019,

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This Directive covers whistleblowers reporting

breaches of certain EU laws, in particular as regards public health, the above-mentioned

Directive No.

Regulation No.

726/2004 or, as regards data protection, the GDPR.

The Directive protects a wide range of people

and includes former employees.

All private companies with 50 or more employees are required

to create effective

internal reporting channels.

All EU Member States other than Poland and Estonia have now implemented

We also are subject to the requirements of the new Directive No.

2022/2464 on corporate sustainability reporting

(“CSR Directive”) adopted on December 14, 2022 and which has to be

implemented by EU members states by July

6, 2024, at the latest.

By amending Directives No.

2004/109, No.

and Regulation No.

537/2014, the CSR Directive strengthens the existing rules on non-financial

reporting by setting new requirements

for large companies to publish sustainability-related information and, in particular, disclose details about

and impacts on environmental matters.

also are subject to certain United States and foreign laws and regulations

concerning the conduct of our foreign

breaches of EU laws and regulations and protects a wide range of people

including former employees.

companies with 50 or more employees are required to create effective internal reporting

All EU Member

States have now implemented the Directive.

We also are subject to the requirements of Directive No.

2022/2464 on corporate sustainability reporting (“CSRD”)

that became effective on January 5, 2023.

CSRD requires in-scope companies to report on sustainability-related

information that is material from a financial risk or opportunity perspective

to their business and from an impact

perspective on the environment or society.

The materiality of sustainability matters is subjective and

interpreted differently by various stakeholders.

CSRD, its transposition into national EU Member State law, and

associated guidance are evolving and reporting requirements may change,

which may further increase the costs of

complying with CSRD.

CSRD has not yet been fully implemented by all EU Member States.

We also are subject to certain United States and foreign laws and regulations concerning the conduct of our foreign

operations, including the U.S.

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and other anti-bribery laws and laws pertaining to the accuracy of our internal

books and records, which have been

the focus of increasing enforcement activity globally in recent years.

Our businesses are generally subject to

numerous other laws and regulations that could impact our financial

results, including, without limitation,

securities, antitrust, consumer protection, and marketing laws and regulations.

In the EU, both active and passive bribery are criminalized.

The EU Council Framework Decision 2003/568/JHA

of 22 July 2003

books and records.

Our businesses

are generally subject to numerous other laws and regulations that

could impact our financial results, including,

without limitation, securities, antitrust, consumer protection and marketing

laws and regulations.

In the EU, both active and passive corruption in the private sector are

criminalized.

The EU Council Framework

Decision 2003/568/JHA of 22 July 2003

on combating corruption in the private sector

establishes more detailed rules on the liability of

legal persons and deterrent sanctions.

However, the liability of legal persons is regulated at a national level.

establishes more detailed

rules on the liability of legal persons and deterrent sanctions.

However, the liability of legal persons is regulated at

a national level.

Failure to comply with fraud and abuse laws and regulations, and other

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could materially adversely affect our business.

While we believe that we are substantially compliant with applicable fraud and

abuse and other laws and

regulations, and believe we have adequate compliance programs and controls

in place to ensure substantial

compliance, we cannot predict whether changes in applicable law, or interpretation of laws, or changes in our

services or marketing practices in response to changes in applicable law or

interpretation of laws, could have a

material adverse effect on our business.

While we believe that we are substantially compliant with applicable

laws and regulations, and believe we have

adequate compliance programs and controls in place to ensure substantial

compliance, we cannot predict whether

changes in applicable law, or interpretation of laws, or changes in our services or marketing practices in response

changes in applicable law or interpretation of laws, could have a material

adverse effect on our business.

Index to Financial Statements

If we fail to comply with laws and regulations relating to the collection,

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Our businesses that involve physician and dental practice management

products, and our specialty home medical

supply businesses, include electronic information technology systems

that store and process personal health,

clinical, financial, and other sensitive information of individuals.

These information technology systems may be

vulnerable to breakdown, wrongful intrusions, data breaches and

malicious attack, which could require us to

expend significant resources to eliminate these problems and address

related security concerns, and could involve

claims against us by private parties and/or governmental agencies.

products, equipment and our specialty home

medical supplies businesses, and our self-funded employee benefits programs

include information technology (IT)

systems that store and process personal health, clinical, financial, and

other sensitive information of individuals.

These IT systems may be vulnerable to breakdown, wrongful intrusions, data

breaches and malicious attack, which

could require us to expend significant resources to eliminate these

problems and address related security concerns,

and could involve claims against us by private parties and/or governmental agencies.

We are directly or indirectly subject to numerous and evolving federal, state, local and foreign laws and regulations

that protect the privacy and security of personal information, such as HIPAA, CAN-SPAM, TCPA,

Section 5 of the

FTC Act, the CCPA, and the CPRA that became effective on January 1, 2023.

Laws and regulations relating to

privacy and data protection are continually evolving and subject to

potentially differing interpretations.

requirements may not be harmonized, may be interpreted and applied in

a manner that is inconsistent from one

jurisdiction to another or may conflict with other rules or our practices.

Our businesses’ failure to comply with

these laws and regulations could expose us to breach of contract claims, substantial

fines, penalties and other

liabilities and expenses, costs for remediation and harm to our reputation.

Also, evolving laws and regulations in

this area could restrict the ability of our customers to obtain, use or disseminate patient

information, or could

require us to incur significant additional costs to re-design our products

to reflect these legal requirements, which

could have a material adverse effect on our operations.

that protect the privacy and security of personal information (including

health data), such as HIPAA, CAN-SPAM,

TCPA, Section 5 of the FTC Act, the CCPA

and various other privacy laws that have or will soon come into

Laws and regulations relating to privacy and data protection are

continually evolving and subject to potentially

differing interpretations, including those relating to AI.

These requirements may not be harmonized, may be

interpreted and applied in a manner that is inconsistent from one jurisdiction

to another or may conflict with other

rules or our practices.

In addition, cybersecurity laws such as the federal Cyber Incident

Reporting for Critical

Infrastructure Act of 2022, proposed Federal Acquisition Regulations and

amendments to SEC reporting

requirements may require us to provide notifications about cybersecurity

incidents in limited timeframes and before

investigations are complete.

Our businesses’ failure to comply with these laws and regulations

could expose us to

breach of contract claims, substantial fines, penalties and other

liabilities and expenses, costs for remediation and

harm to our reputation.

Evolving laws and regulations in this area could restrict the

ability of our customers to

obtain, use or disseminate patient information, or could require us

to incur significant additional costs to re-design

our products to reflect these legal requirements, which could have

a material adverse effect on our operations.

In addition, the European Parliament and the Council of the EU adopted

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of the personal data and the right to object to the processing.

On August 20, 2021, China promulgated the PIPL, which took effect on November

The PIPL imposes

specific rules for processing personal information and it also specifies

that the law shall also apply to personal

information activities carried out outside China but for the purpose

of providing products or services to PRC

Any non-compliance with these laws and regulations may subject

us to fines, orders to rectify or terminate

any actions that are deemed illegal by regulatory authorities, other penalties,

as well as reputational damage or legal

proceedings against us, which may affect our business, financial condition or results

of operations.

carries maximum penalties of CNY50 million or 5% of the annual revenue

of entities that process personal data.

In the United States, the CCPA, which increases the privacy protections afforded California residents, became

effective January 1, 2020.

The CCPA generally requires companies, such as us, to institute additional protections

regarding the collection, use and disclosure of certain personal information

of California residents.

with the obligations imposed by the CCPA depends in part on how particular regulators interpret and apply them.

Regulations were released in August of 2020, but there remains some

uncertainty about how the CCPA will be

interpreted by the courts and enforced by the regulators.

If we fail to comply with the CCPA or if regulators assert

that we have failed to comply with the CCPA, we may be subject to certain fines or other penalties and litigation,

any of which may negatively impact our reputation, require us to expend

significant resources, and harm our

Furthermore, California voters approved the CPRA on November 3,

2020, which will amend and expand

the CCPA, including by providing consumers with additional rights with respect to their personal information, and

creating a new state agency to enforce CCPA and CPRA.

The CPRA came into effect on January 1, 2023, applying

to information collected by businesses on or after January 1, 2022.

Other states, as well as the federal government, have increasingly

considered the adoption of similarly expansive

personal privacy laws, backed by significant civil penalties for non-compliance.

While we believe we have

substantially compliant programs and controls in place to comply with

the GDPR, CCPA, PIPL and CPRA

requirements, our compliance with data privacy and cybersecurity laws

is likely to impose additional costs on us,

and we cannot predict whether the interpretations of the requirements, or

changes in our practices in response to

Despite Brexit, the UK also has data protection laws

equivalent to the GDPR).

Switzerland enacted FADP.

Uncertainty about compliance with these data protection

laws remains, with the possibilities that data protection authorities located

in different EU Member States may

interpret GDPR differently, or requirements of national laws may vary between the EU Member States, or guidance

on GDPR and compliance practices may be often updated or otherwise revised.

Any of these events will increase

the complexity and costs of processing personal data in the European Economic

Area, UK or Switzerland or

concerning individuals located in these jurisdictions.

Effective November 1, 2021, China’s PIPL imposes specific rules for processing personal information and specifies

that the law shall also apply to personal information activities carried

out outside China but for the purpose of

providing products or services to PRC citizens.

Any non-compliance with these laws and regulations may

us to fines, orders to rectify or terminate any actions that are deemed

illegal by regulatory authorities, other

penalties, reputational damage, or legal proceedings against us, which

may affect our business, financial condition

or results of operations.

The PIPL carries maximum penalties of CNY50 million or

5% of the annual revenue of

entities that process personal data.

Data protection laws in other countries are also quickly

evolving, with many

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countries having updated, or are in the process of updating, their

laws to bring them more in line with the model

created by GDPR.

In the United States, the CCPA, effective January 1, 2020, establishes a privacy framework for covered businesses

such as ours by, among other things, creating an expanded definition of personal information, establishing new data

privacy rights for California residents and creating a new and potentially

severe statutory damages framework for

violations of the CCPA, as well as potentially severe statutory damages and private a right of action against

businesses that suffer a data security breach due to their violation of a duty to

implement reasonable security

procedures and practices.

This private right of action may increase the

likelihood of, and risks associated with, data

breach litigation.

In addition, California voters adopted the CPRA (effective January 1, 2023)

which enhances and

strengthens regulatory requirements and individual protections that currently

exist under the CCPA.

have enacted or are considering enacting similar privacy laws, which may

subject us to additional requirements and

restrictions that could have an impact on our business.

Comprehensive privacy laws in a number of other states are

now in effect, and similarly enacted broad laws relating to privacy, data protection, and information security that

will come into effect later in 2025 and 2026, further complicating our privacy compliance

obligations through the

introduction of increasingly disparate requirements across the various

jurisdictions in which we operate.

Additionally, certain other states have enacted specific health data privacy laws and other states are considering

similar legislation.

Congress is considering legislation that may preempt some or

all of such U.S.

state privacy

laws, but which may also provide a more expansive private right of action

for privacy claims than exists under

current state laws.

The evolving complexity of privacy and data security legislation in

the United States may complicate our

compliance efforts and further increase our risk of regulatory enforcement, penalties

and litigation.

believe we have substantially compliant programs and controls in place

to comply with privacy laws domestically

and internationally, our compliance with data privacy and cybersecurity laws is likely to impose additional costs

us, and we cannot predict whether the interpretations of the requirements,

or changes in our practices in response to

new requirements or interpretations of the requirements, could have a

material adverse effect on our business.

Further, countries are applying their data and consumer protection laws to AI, particularly generative

considering and implementing specific legal frameworks with respect

to AI, for example the EU AI Act 2024

(which as with the GDPR, will have extra-territorial effect).

Any failure or perceived failure by us to comply with

such requirements could have an adverse impact on our business.

Anticipated further evolution of regulations and

legislation on this topic may substantially increase the penalties

to which we could be subject in the event of any

non-compliance.

Compliance with these laws is challenging, constantly evolving

and time consuming and federal

regulators, state attorneys general and plaintiff’s attorneys have been and will

likely continue to be active in this

We may incur substantial expense in complying with legal obligations to be imposed by new regulations

and we may be required to make significant changes to our solutions and

expanding business operations, all of

which may adversely affect our operations.

We also sell products and services that health care providers, such as physicians and dentists, use to store and

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In order to maintain

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certification of our EHR products, we must satisfy the changing governmental

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fraud and abuse laws, including the False

Additionally, effective September 1, 2023, the OIG for HHS issued a final rule implementing civil

money penalties for information blocking as established by the Cures Act.

OIG incorporated regulations published

by ONC as the basis for enforcing information blocking penalties.

Additionally, effective September 1, 2023, the HHS-OIG issued a final rule implementing civil money

penalties for information blocking as established by the Cures Act.

OIG incorporated regulations published by

ONC as the basis for enforcing information blocking penalties.

Each information blocking violation carries a $1

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Moreover, in order to satisfy our customers and comply with evolving legal requirements, our products

incorporate increasingly complex functionality, such as with respect to reporting and information blocking.

Although we believe we are positioned to accomplish this, the effort may involve

increased costs, and our failure to

implement product modifications, or otherwise satisfy applicable standards,

could have a material adverse effect on

our business.

incorporate increasingly complex functionality, such as reporting and information blocking.

Although we believe

we are positioned to accomplish this, the effort may involve increased costs, and

our failure to implement product

modifications, or otherwise satisfy applicable standards, could have a

material adverse effect on our business.

Additionally, as electronic medical devices are increasingly connected to each other and to other technology, the

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in cases as a result of our distribution of

Additionally, we own interests in companies that manufacture certain dental and medical products.

result, we could be subject to the potential risk of product liability, intellectual property infringement or other

claims relating to the manufacture and distribution of products by

those entities.

In addition, as our corporate brand

business continues to grow, purchasers of such products may increasingly seek recourse directly from us, rather

than the ultimate product manufacturer, for product-related claims.

Another potential risk we face in the

distribution of our products is liability resulting from counterfeit or tainted products

infiltrating the supply chain.

addition, some of the products that we transport and sell are considered hazardous

handling of such materials or accidents involving the transportation

of such materials could subject us to liability or

at least legal action that could harm our reputation.

Additionally, we own and own interests in companies that manufacture certain dental and medical

As a result, we could be subject to the potential risk of product liability, intellectual property

infringement or other claims relating to the manufacture and distribution

of products by those entities.

as our corporate brand business continues to grow, purchasers of such products may increasingly seek recourse

directly from us, rather than the ultimate product manufacturer, for product-related claims.

Another potential risk

we face in the distribution of our products is liability resulting from counterfeit

or tainted products infiltrating the

supply chain.

In addition, some of the products that we transport and sell are

considered hazardous materials.

improper handling of such materials or accidents involving the transportation

of such materials could subject us to

liability or at least legal action that could harm our reputation.

Customs policies or legislative import restrictions could hinder the Company’s ability to import goods necessary

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government enforcement actions and reputational harm.

While the Company has policies against and seeks to

avoid the import of goods that are manufactured in whole or in part by forced

labor or through human trafficking,

as a result of legislative and governmental policy initiatives, we may be

subject to increasing potential delays,

added costs, supply chain disruption and other restrictions.

Certain of our suppliers have had their ability to service

certain markets restricted or negatively impacted because of allegations

of forced labor in their supply chain.

the Company has policies against and seeks to avoid the import of goods

that are manufactured in whole or in part

Index to Financial Statements

by forced labor or through human trafficking, as a result of legislative and governmental

policy initiatives, we may

be subject to increasing potential delays, added costs, supply chain disruption

and other restrictions.

GENERAL RISKS

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and extreme weather (“disasters”).

example, as a global healthcare solutions company, the COVID-19 pandemic and the governmental responses

had, and may again have, a material adverse effect on our business, results of operations

and cash flows and may

result in a material adverse effect on our financial condition and liquidity.

The impacts and potential impacts from

the COVID-19 pandemic included, and could include as a result of other disasters,

the following, among other

significant volatility in supply, demand and selling prices for personal protective equipment (PPE), test

kits and related products;

reduction in peoples’ ability and willingness to be in public;

reduction in peoples’ ability and willingness to seek elective care;

interrupted operations of industries that use or manufacture the products

we distribute;

impact of adapted business practices;

significant changes in political conditions;

volatility in the financial market;

unavailability or impairment of our manufacturing, distribution, or other

facilities, or firmwide systems

such as our information systems.

The impact from disasters may also exacerbate other risks discussed herein,

any of which could have a material

adverse effect on us.

Our global operations are subject to inherent risks that could materially

adversely affect our business.

example, as a global health care solutions company, the COVID-19 pandemic and the governmental responses

had a material adverse effect on our business, financial condition, operating results

and cash flows.

and potential impacts from the COVID-19 pandemic included, and could include

as a result of other disasters,

adverse impacts such as significant volatility in supply, demand and selling prices, interrupted operations of

industries that use or manufacture the products we distribute for personal

protective equipment (PPE), test kits and

related products, reduction in peoples’ ability and willingness to be in

public, impact of adapted business practices,

volatility in the financial markets, and unavailability or impairment

of our manufacturing, distribution, or other

facilities, or firmwide systems such as our IS.

Our global operations are subject to inherent risks that could materially adversely

affect our business.

Our global operations are subject to risks that could materially adversely affect our business,

The risks that our

global operations are subject to include, among other things:

including, among

other things:

difficulties and costs relating to staffing and managing foreign operations;

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longer payment cycles of foreign customers and difficulty of collecting receivables

jurisdictions;

in foreign jurisdictions;

repatriation of cash from our foreign operations to the United States;

regulatory requirements, including, without limitation, anti-bribery, anti-corruption and laws pertaining

to the accuracy of our internal books and records;

litigation risks, new or unanticipated litigation developments and

the status of litigation matters;

regulatory requirements, including, without limitation, anti-bribery, anti-corruption and laws pertaining to

the accuracy of our internal books and records;

litigation risks;

unexpected difficulties in importing or exporting our products and import/export

tariffs, quotas,

sanctions or penalties;

tariffs, quotas, sanctions

or penalties;

limitations on our ability under local laws to protect our intellectual

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risks associated with climate change, including physical risks such as

impacts from extreme weather

events and other potential physical consequences, regulatory and technological

impacts from extreme weather events

and other potential physical consequences, regulatory and technological

requirements, market

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management, and our revenues and profitability

depend on our relationships with capable sales representatives,

service technicians, and other personnel who

interact directly with our customers, as well as customers, suppliers

and manufacturers of the products that we

depend on our relationships with capable personnel, as well as

customers, suppliers and manufacturers of the

products that we distribute.

Our future success is substantially dependent upon the efforts and abilities of

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We do not currently have “key man” life insurance

Index to Financial Statements

policies on any of our employees.

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Additionally, our future revenues and profitability depend on our ability to maintain satisfactory relationships with

qualified sales representatives, service technicians, and other personnel

who interact directly with our customers, as

well as customers, suppliers, and manufacturers.

If we fail to maintain our existing relationships with such persons

or fail to acquire relationships with such key persons in the future,

our business may be materially adversely

qualified personnel, as well as customers, suppliers and manufacturers.

If we fail to maintain our existing

relationships with such persons or fail to acquire relationships with such key

persons in the future, our business may

be materially adversely affected.

Disruptions in the financial markets may materially adversely

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors