UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________________

FORM 10-Q

____________________________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED January 25, 2025.


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 0-20572

__________________________________________________________

PATTERSON COMPANIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

____________________________________________________________


Minnesota		41-0886515
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)
1031 Mendota Heights Road
St. Paul	Minnesota	55120
(Address of Principal Executive Offices)		(Zip Code)

(651) 686-1600

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, par value $.01	PDCO	NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November~~February 1917, ~~2024~~2025, there were 88,~~316~~474,000 shares of Common Stock of the registrant issued and outstanding.

Table of Contents

PATTERSON COMPANIES, INC.

INDEX

			Page
PART I - FINANCIAL INFORMATION
Item 1- Financial Statements			3
Condensed Consolidated Balance Sheets			3
Condensed Consolidated Statements of Operations and Other Comprehensive Income			4
Condensed Consolidated Statements of Changes in Stockholders' Equity			5
Condensed Consolidated Statements of Cash Flows			7
Notes to Condensed Consolidated Financial Statements			8
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations			20
Item 3 - Quantitative and Qualitative Disclosures about Market Risk			2627
Item 4 - Controls and Procedures			27
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings			2829
Item 1A - Risk Factors			2829
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds			2831
Item 5 - Other Information			2831
Item 6 - Exhibits			3033
Signatures			3134

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

	October 26, 2024		April 27, 2024
	January 25, 2025		April 27, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	~~157~~134,~~935~~996	$	114,462
Receivables, net of allowance for doubtful accounts of $3,847 and $2,731	532,038		547,287
Receivables, net of allowance for doubtful accounts of $2,518 and $2,731	469,924		547,287
Inventory, net	~~823~~889,~~689~~348		782,898
Prepaid expenses and other current assets	~~328~~343,~~355~~366		334,116
Total current assets	1,~~842~~837,~~017~~634		1,778,763
Property and equipment, net	~~225~~227,~~354~~802		229,081
Operating lease right-of-use assets, net	~~124~~121,~~881~~613		122,295
Long-term receivables, net	~~118~~116,~~702~~839		129,876
Goodwill	~~160~~159,~~084~~622		156,328
Identifiable intangibles, net	~~181~~170,~~158~~523		193,261
Investments	8588,~~962~~649		166,320
Other non-current assets, net	~~107~~109,~~444~~904		120,808
Total assets	$	2,~~845~~832,~~602~~586	$	2,896,732
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	~~731~~644,~~259~~861	$	745,375
Accrued payroll expense	5367,~~010~~946		78,211
Other accrued liabilities	~~167~~136,~~302~~794		167,399
Operating lease liabilities	3326,~~865~~945		32,815
Current maturities of long-term debt	~~125~~126,~~000~~875		122,750
Borrowings on revolving credit	~~234~~302,000		186,000
Total current liabilities	1,~~344~~305,~~436~~421		1,332,550
Long-term debt	~~325~~321,~~396~~763		328,911
Non-current operating lease liabilities	9498,~~294~~053		92,464
Other non-current liabilities	~~118~~117,~~027~~434		141,075
Total liabilities	1,~~882~~842,~~153~~671		1,895,000
Stockholders’ equity:
Common stock, $0.01 par value: 600,000 shares authorized; 88,317 and 89,701 shares issued and outstanding	883		897
Common stock, $0.01 par value: 600,000 shares authorized; 88,454 and 89,701 shares issued and outstanding	885		897
Additional paid-in capital	~~271~~278,~~956~~744		258,679
Accumulated other comprehensive loss	(8596,~~369~~868)		(89,915)
Retained earnings	~~775~~806,~~540~~800		831,483
Total Patterson Companies, Inc. stockholders' equity	~~963~~989,~~010~~561		1,001,144
Noncontrolling interests	~~439~~354		588
Total stockholders’ equity	~~963~~989,~~449~~915		1,001,732
Total liabilities and stockholders’ equity	$	2,~~845~~832,~~602~~586	$	2,896,732

See accompanying notes

Table of Contents

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND OTHER COMPREHENSIVE INCOME

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended

~~Six~~Nine Months Ended

October 26, 2024

October 28, 2023

October 26, 2024

October 28, 2023

January 25, 2025

January 27, 2024

January 25, 2025

January 27, 2024

Net sales

1,~~674~~572,~~375~~411

1,~~652~~616,~~772~~095

34,~~216~~788,~~117~~528

34,~~229~~845,~~517~~612

Cost of sales

1,~~346~~251,~~283~~587

1,~~313~~265,~~746~~089

23,~~575~~827,~~416~~003

23,~~571~~836,~~436~~525

Gross profit

~~328~~320,~~092~~824

~~339~~351,~~026~~006

~~640~~961,~~701~~525

~~658~~1,~~081~~009,087

Operating expenses

~~290~~275,~~456~~383

~~282~~280,~~123~~994

~~573~~849,~~696~~079

~~562~~843,~~956~~950

Operating income

3745,~~636~~441

5670,~~903~~012

67112,~~005~~446

95165,~~125~~137

Other income (expense):

Other income, net

98,~~705~~147

73,~~096~~653

1119,~~419~~566

1822,~~997~~650

Interest expense

(1110,~~798~~753)

(1011,~~642~~725)

(2535,~~021~~774)

(2031,~~154~~879)

Income before taxes

3542,~~543~~835

5361,~~357~~940

5396,~~403~~238

93155,~~968~~908

Income tax expense

811,~~847~~665

1314,~~502~~347

1324,~~068~~733

2237,~~983~~330

Net income

2631,~~696~~170

3947,~~855~~593

4071,~~335~~505

70118,~~985~~578

Net loss attributable to noncontrolling interests

(7385)

(~~103~~110)

(~~149~~234)

(~~207~~317)

Net income attributable to Patterson Companies, Inc.

2631,~~769~~255

3947,~~958~~703

4071,~~484~~739

71118,~~192~~895

Earnings per share attributable to Patterson Companies, Inc.:

Basic

0.3035

0.4252

0.4681

01.7526

Diluted

0.3035

0.4252

0.4681

01.7426

Weighted average shares:

Basic

88,~~158~~306

9492,~~710~~009

88,~~142~~197

9594,~~127~~088

Diluted

8889,~~663~~070

9592,~~156~~519

88,~~724~~871

9594,~~722~~704

Comprehensive income:

Net income

2631,~~696~~170

3947,~~855~~593

4071,~~335~~505

70118,~~985~~578

Foreign currency translation gain

844

(17,589)

4,025

(10,221)

Foreign currency translation (loss) gain

(11,760)

12,538

(7,735)

2,317

Cash flow hedges, net of tax

~~260~~261

~~521~~782

Comprehensive income

2719,~~800~~671

2260,~~526~~392

4464,~~881~~552

61121,~~285~~677

See accompanying notes

Table of Contents

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Non-controlling Interests		Total
	Shares	Amount
Balance at April 29, 2023	96,350	$	964	$	233,706	$	(89,262)	$	972,127	$	1,000	$	1,118,535
Foreign currency translation	—	—		—		7,368		—		—		7,368
Cash flow hedges	—	—		—		261		—		—		261
Net income (loss)	—	—		—		—		31,234		(104)		31,130
Dividends declared ($0.26 per common share)	—	—		—		—		(25,134)		—		(25,134)
Common stock issued	565	5		1,569		—		—		—		1,574
Repurchases of common stock	(1,109)	(11)		—		—		(29,497)		—		(29,508)
Stock-based compensation	—	—		7,015		—		—		—		7,015




Balance at July 29, 2023	95,806	958		242,290		(81,633)		948,730		896		1,111,241
Foreign currency translation	—	—		—		(17,589)		—		—		(17,589)
Cash flow hedges	—	—		—		260		—		—		260
Net income (loss)	—	—		—		—		39,958		(103)		39,855
Dividends declared ($0.26 per common share)	—	—		—		—		(24,897)		—		(24,897)
Common stock issued	180	2		3,226		—		—		—		3,228
Repurchases of common stock	(1,897)	(19)		(661)		—		(60,964)		—		(61,644)
Stock-based compensation	—	—		4,635		—		—		—		4,635

Balance at October 28, 2023	94,089	941		249,490		(98,962)		902,827		793		1,055,089
Foreign currency translation	—	—		—		12,538		—		—		12,538
Cash flow hedges	—	—		—		261		—		—		261
Net income (loss)	—	—		—		—		47,703		(110)		47,593
Dividends declared ($0.26 per common share)	—	—		—		—		(23,591)		—		(23,591)
Common stock issued	103	1		1,844		—		—		—		1,845
Repurchases of common stock	(4,101)	(41)		(1,219)		—		(124,055)		—		(125,315)
Stock-based compensation	—	—		3,745		—		—		—		3,745

Balance at January 27, 2024	90,091	901		253,860		(86,163)		802,884		683		972,165
Foreign currency translation	—	—		—		(4,012)		—		—		(4,012)
Cash flow hedges	—	—		—		260		—		—		260
Net income (loss)	—	—		—		—		67,036		(95)		66,941
Dividends declared ($0.26 per common share)	—	—		—		—		(23,521)		—		(23,521)
Common stock issued	107	1		2,462		—		—		—		2,463
Repurchases of common stock	(497)	(5)		(119)		—		(14,916)		—		(15,040)
Stock-based compensation	—	—		2,476		—		—		—		2,476

Balance at April 27, 2024	89,701	$	897	$	258,679	$	(89,915)	$	831,483	$	588	$	1,001,732

See accompanying notes

Table of Contents

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

	Common Stock			AdditionalPaid-inCapital		AccumulatedOtherComprehensiveLoss		RetainedEarnings		Non-controlling Interests		Total
	Shares	Amount
Balance at April 27, 2024	89,701	$	897	$	258,679	$	(89,915)	$	831,483	$	588	$	1,001,732
Foreign currency translation	—	—		—		3,181		—		—		3,181
Cash flow hedges	—	—		—		261		—		—		261
Net income (loss)	—	—		—		—		13,715		(76)		13,639
Dividends declared ($0.26 per common share)	—	—		—		—		(23,221)		—		(23,221)
Common stock issued	385	4		(752)		—		—		—		(748)
Repurchases of common stock	(1,940)	(20)		(403)		—		(49,980)		—		(50,403)
Stock-based compensation	—	—		8,060		—		—		—		8,060
Balance at July 27, 2024	88,146	881		265,584		(86,473)		771,997		512		952,501
Foreign currency translation	—	—		—		844		—		—		844
Cash flow hedges	—	—		—		260		—		—		260
Net income (loss)	—	—		—		—		26,769		(73)		26,696
Dividends declared ($0.26 per common share)	—	—		—		—		(23,226)		—		(23,226)
Common stock issued	171	2		1,968		—		—		—		1,970
Repurchases of common stock	—	—		32		—		—		—		32
Stock-based compensation	—	—		4,372		—		—		—		4,372
Balance at October 26, 2024	88,317	$883	~~883~~	$271,956	~~271,956~~	$(85,369)	~~(85,369)~~	$775,540	~~775,540~~	$439	~~439~~	$963,449	~~963,449~~
Foreign currency translation	—	—		—		(11,760)		—		—		(11,760)
Cash flow hedges	—	—		—		261		—		—		261
Net income (loss)	—	—		—		—		31,255		(85)		31,170
Dividends	—	—		—		—		5		—		5
Common stock issued	137	2		2,607		—		—		—		2,609
Repurchases of common stock	—	—		45		—				—		45
Stock-based compensation	—	—		4,136		—		—		—		4,136
Balance at January 25, 2025	88,454	$	885	$	278,744	$	(96,868)	$	806,800	$	354	$	989,915

See accompanying notes

Table of Contents

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended
	Nine Months Ended
	October 26, 2024		October 28, 2023
	January 25, 2025		January 27, 2024
Operating activities:
Net income	$	4071,~~335~~505	$	70118,~~985~~578
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation	2639,~~272~~693		2336,~~583~~314
Amortization	1929,~~368~~091		1928,~~253~~884
Stock-based compensation	1216,~~432~~568		1115,~~650~~395
Non-cash (gains) losses and other, net	(9,~~369~~695)		34,~~166~~120
Change in assets and liabilities:
Receivables	(~~455~~615,~~290~~136)		(~~487~~744,~~186~~275)
Inventory	(36107,~~665~~461)		(67106,~~416~~328)
Accounts payable	(20101,~~864~~856)		(3043,~~911~~533)
Accrued liabilities	(2816,~~918~~348)		(2414,~~908~~510)
Other changes from operating activities, net	(541,~~976~~429)		(314,~~492~~494)
Net cash used in operating activities	(~~458~~735,~~675~~068)		(~~485~~719,~~276~~849)
Investing activities:
Additions to property and equipment and software	(2646,~~195~~427)		(3351,~~467~~196)
Collection of deferred purchase price receivables	~~497~~731,~~029~~146		~~489~~770,~~452~~319
Payments related to acquisitions, net of cash acquired	(711,~~897~~967)		(1,108)
Sale of investment	86,408		—
Net cash provided by investing activities	~~549~~759,~~345~~160		~~454~~718,~~877~~015
Financing activities:
Dividends paid	(4669,~~219~~165)		(5075,~~331~~021)
Repurchases of common stock	(50,000)		(90214,~~491~~587)
Payments on long-term debt	(13,~~500~~375)		(135,~~500~~250)
Draw on revolving credit	48116,000		~~125~~286,000
Other financing activities	~~850~~3,505		4,~~141~~767
Net cash used in financing activities	(483,~~869~~035)		(1334,~~181~~091)
Effect of exchange rate changes on cash	~~1,672~~(523)		~~(2,203)~~254
Net change in cash and cash equivalents	4320,~~473~~534		(4535,~~783~~671)
Cash and cash equivalents at beginning of period	114,462		159,669
Cash and cash equivalents at end of period	$	~~157~~134,~~935~~996	$	~~113~~123,~~886~~998
Supplemental disclosure of non-cash investing activity:
Retained interest in securitization transactions	$	~~474~~690,~~743~~225	$	~~465~~739,~~058~~382

See accompanying notes

Table of Contents

PATTERSON COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars, except per share amounts, and shares in thousands)

(Unaudited)

Note 1. General

Description of Business

Patterson Companies, Inc. (referred to herein as “Patterson” or in the first person notations “we,” “our,” and “us”) is a value-added specialty distributor serving the U.S. and Canadian dental supply and the U.S., Canadian and U.K. animal health supply markets. Patterson has three reportable segments: Dental, Animal Health and Corporate.

Overview of Transaction with Patient Square

On December 10, 2024, Patterson entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Paradigm Parent, LLC, a Delaware limited liability company (“Parent”), and Paradigm Merger Sub, Inc., a Minnesota corporation and a wholly owned subsidiary of Parent (“Merger Sub”). Parent and Merger Sub are indirect subsidiaries of funds managed and advised by Patient Square Capital, a dedicated health care investment firm. Upon the terms and subject to the conditions of the Merger Agreement, at closing (the “Effective Time”), Merger Sub will merge with and into Patterson, with Patterson continuing as the surviving corporation and as a wholly owned subsidiary of Parent (the “Merger”). At the Effective Time, by virtue of the Merger, each share of common stock of the Company issued and outstanding immediately prior to the Effective Time will be converted automatically into the right to receive $31.35 per share in cash. After the Merger, Patterson will cease to be a publicly traded company and will no longer be obligated to file periodic reports with the SEC.

The description of the Merger Agreement and the transactions contemplated thereby contained in this Quarterly Report on Form 10-Q are summaries only and are qualified in their entirety by reference to the full text of the Merger Agreement, which was included as Exhibit 2 to the Company’s Current Report on Form 8-K filed with the SEC on December 11, 2024.

The Merger is expected to close in April 2025, subject to the satisfaction of customary closing conditions, including (i) adoption and approval of the Merger Agreement, including the Merger, by holders of a majority of the Company’s shares of common stock then outstanding; (ii) consummation of the Merger not being restrained, enjoined or prohibited by any law or order of a court of competent jurisdiction or any other governmental entity; (iii) accuracy of the representations and warranties of Patterson, on the one hand, and Parent and Merger Sub, on the other hand, in the Merger Agreement, subject in some instances to materiality or “material adverse effect” qualifiers, at and as of the effective date of the Merger (except for representations and warranties that relate to a specific date or time); (iv) performance or compliance in all material respects by Patterson, on the one hand, and Parent and Merger Sub, on the other hand, of or with their respective covenants and agreements required to be performance or complied with by them under the Merger Agreement on or before the closing date of the Merger; and (v) absence of a continuing Company Material Adverse Effect (as defined in the Merger Agreement). The waiting period for the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, has now expired. Closing of the Merger is not subject to a financing condition.

Basis of Presentation

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments necessary to present fairly the financial position of Patterson Companies, Inc. (referred to herein as "Patterson" or in the first person notations "we," "our," and "us") as of ~~October~~January 2625, ~~2024~~2025, and our results of operations and cash flows for the periods ended ~~October~~January 2625, ~~2024~~2025 and ~~October~~January 2827, ~~2023~~2024. Such adjustments are of a normal, recurring nature. The results of operations for the three and ~~six~~nine months ended ~~October~~January 2625, ~~2024~~2025 are not necessarily indicative of the results to be expected for any other interim period or for the year ending April 26, 2025. These financial statements should be read in conjunction with the financial statements included in our 2024 Annual Report on Form 10-K filed on June 18, 2024.

The unaudited Condensed Consolidated Financial Statements include the assets and liabilities of PDC Funding Company, LLC ("PDC Funding"), PDC Funding Company II, LLC ("PDC Funding II"), PDC Funding Company III, LLC ("PDC Funding III") and PDC Funding Company IV, LLC ("PDC Funding IV"), which are our wholly owned subsidiaries and separate legal entities formed under Minnesota law. PDC Funding and PDC Funding II are fully consolidated special purpose entities established to sell customer installment sale contracts to unaffiliated financial institutions in the normal course of their business. PDC Funding III and PDC Funding IV are fully consolidated special purpose entities established to sell certain receivables to unaffiliated financial institutions. The assets of PDC Funding, PDC Funding II, PDC Funding III and PDC Funding IV would be available first and foremost to satisfy the claims of its creditors. There are no known creditors of PDC Funding, PDC Funding II, PDC Funding III or PDC Funding IV. The unaudited Condensed Consolidated Financial Statements also include the assets and liabilities of Technology Partner Innovations, LLC, which is further described in Note 8.

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consolidated special purpose entities established to sell customer installment sale contracts to unaffiliated financial institutions in the normal course of their business. PDC Funding III and PDC Funding IV are fully consolidated special purpose entities established to sell certain receivables to unaffiliated financial institutions. The assets of PDC Funding, PDC Funding II, PDC Funding III and PDC Funding IV would be available first and foremost to satisfy the claims of its creditors. There are no known creditors of PDC Funding, PDC Funding II, PDC Funding III or PDC Funding IV. The unaudited Condensed Consolidated Financial Statements also include the assets and liabilities of Technology Partner Innovations, LLC, which is further described in Note 8.

Fiscal Year End

We operate with a 52-53 week accounting convention with our fiscal year ending on the last Saturday in April. The ~~second~~third quarter of fiscal 2025 and 2024 represents the 13 weeks ended ~~October~~January 2625, ~~2024~~2025 and ~~October~~January 2827, ~~2023~~2024, respectively. Fiscal 2025 will include 52 weeks and fiscal 2024 included 52 weeks.

Other Income, Net

Other income, net consisted of the following:

Three Months Ended

~~Six~~Nine Months Ended

October 26, 2024

October 28, 2023

October 26, 2024

October 28, 2023

January 25, 2025

January 27, 2024

January 25, 2025

January 27, 2024

Gain on investment

~~3,803~~—

—

3,803

—

(Loss) gain on interest rate swap agreements

~~(724)~~2,298

2(3,~~786~~474)

(42,~~479~~181)

96,~~561~~087

Investment income and other

65,~~626~~849

47,~~310~~127

1217,~~095~~944

916,~~436~~563

Other income, net

98,~~705~~147

73,~~096~~653

1119,~~419~~566

1822,~~997~~650

Comprehensive Income

Comprehensive income is computed as net income including certain other items that are recorded directly to stockholders’ equity. Significant items included in comprehensive income are foreign currency translation adjustments and the effective portion of cash flow hedges, net of tax. Foreign currency translation adjustments do not include a provision for income tax because earnings from foreign operations are considered to be indefinitely reinvested outside the U.S. The income tax expense related to cash flow hedges was $8180 and $8180 for the three months ended ~~October~~January 2625, ~~2024~~2025 and ~~October~~January 2827, ~~2023~~2024, respectively. The income tax expense related to cash flow hedges was $~~161~~241 and $~~161~~241 for the ~~six~~nine months ended ~~October~~January 2625, ~~2024~~2025 and ~~October~~January 2827, ~~2023~~2024, respectively.

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Earnings Per Share ("EPS")

The following table sets forth the computation of the weighted average shares outstanding used to calculate basic and diluted EPS:

Three Months Ended

~~Six~~Nine Months Ended

October 26, 2024

October 28, 2023

October 26, 2024

October 28, 2023

January 25, 2025

January 27, 2024

January 25, 2025

January 27, 2024

Denominator for basic EPS – weighted average shares

88,~~158~~306

9492,~~710~~009

88,~~142~~197

9594,~~127~~088

Effect of dilutive securities – stock options, restricted stock and stock purchase plans

~~505~~764

~~446~~510

~~582~~674

~~595~~616

Denominator for diluted EPS – weighted average shares

8889,~~663~~070

9592,~~156~~519

88,~~724~~871

9594,~~722~~704

Potentially dilutive securities representing ~~2,233~~942 and ~~1,321~~997 shares for the three and ~~six~~nine months ended ~~October~~January 2625, ~~2024~~2025 and 1,~~427~~057 and 1,~~299~~231 shares for the three and ~~six~~nine months ended ~~October~~January 2827, ~~2023~~2024 were excluded from the calculation of diluted EPS because their effects were anti-dilutive using the treasury stock method.

Revenue Recognition

Revenues are generated from the sale of consumable products, equipment and support, software and support, technical service parts and labor, and other sources. Revenues are recognized when or as performance obligations are satisfied. Performance obligations are satisfied when the customer obtains control of the goods or services.

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Consumable product, equipment, software and parts sales are recorded upon delivery, except in those circumstances where terms of the sale are FOB shipping point, in which case sales are recorded upon shipment. Technical service labor is recognized as it is provided. Revenue derived from equipment support and software services is recognized ratably over the period in which the support and services are provided.

In addition to revenues generated from the distribution of consumable products under arrangements (buy/sell agreements) where the full market value of the product is recorded as revenue, we earn commissions for services provided under agency agreements. The agency agreement contrasts to a buy/sell agreement in that we do not have control over the transaction, as we do not have the primary responsibility of fulfilling the promise of the good or service and we do not bill or collect from the customer in an agency relationship. Commissions under agency agreements are recorded when the services are provided.

Estimates for returns, damaged goods, rebates, loyalty programs and other revenue allowances are made at the time the revenue is recognized based on the historical experience for such items. The receivables that result from the recognition of revenue are reported net of related allowances. We maintain a valuation allowance based upon the expected collectability of receivables held. Estimates are used to determine the valuation allowance and are based on several factors, including historical collection data, economic trends and credit worthiness of customers. Receivables are written off when we determine the amounts to be uncollectible, typically upon customer bankruptcy or non-response to continuous collection efforts. The portions of receivable amounts that are not expected to be collected during the next twelve months are classified as long-term.

Receivables from vendors earned as a result of volume rebates and reimbursements for customer pricing contracts and promotions are recorded as a reduction of cost of sales in the period in which the related revenue is recognized. We estimate the vendor receivables earned but not received based on sales forecasts, transactional data and historical vendor collection trends.

We offer customer financing contracts on equipment purchases by creditworthy customers. For financing contracts at a below-market interest rate, we record a subsidy as a reduction to net sales in the period the contract is originated. The subsidy on below-market rate contracts is estimated based on analyses of current publicly-available interest rate trends. We do not consider contracts with a term of one year or less to have a significant financing component and do not record a subsidy for these contracts.

We generally sell our customers’ financing contracts to unaffiliated financial institutions in the normal course of our business. These financing arrangements are accounted for as a sale of assets under the provisions of ASC 860, Transfers and Servicing. We receive the proceeds of the contracts upon sale to financial institutions, with a portion of the proceeds held by the financial institutions as a deferred purchase price (DPP) as security against eventual performance of the portfolio. Customer financing net sales include the impact of changes in interest rates on DPP receivables, as the average interest rate in our contract portfolio may not fluctuate at the same rate as interest rate markets, resulting in an increase or reduction of gain on contract sales. We enter into an interest rate swap to hedge a portion of the related interest rate risk. These agreements do not qualify for hedge accounting, and the gains or losses on an interest rate swap are reported in other income and expense in our Condensed Consolidated Statements of Operation and Other Comprehensive Income.

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performance of the portfolio. Customer financing net sales include the impact of changes in interest rates on DPP receivables, as the average interest rate in our contract portfolio may not fluctuate at the same rate as interest rate markets, resulting in an increase or reduction of gain on contract sales. We enter into an interest rate swap to hedge a portion of the related interest rate risk. These agreements do not qualify for hedge accounting, and the gains or losses on an interest rate swap are reported in other income and expense in our Condensed Consolidated Statements of Operation and Other Comprehensive Income.

Our financing business is described in further detail in Note 4 to the Condensed Consolidated Financial Statements.

Patterson has a relatively large, dispersed customer base and no single customer accounts for more than 10% of consolidated net sales. In addition, the equipment sold to customers under finance contracts generally serves as collateral for the contract and the customer provides a personal guarantee as well.

Net sales do not include sales tax as we are considered a pass-through conduit for collecting and remitting sales tax.

Contract Balances

Contract balances represent amounts presented in our Condensed Consolidated Balance Sheets when either we have transferred goods or services to the customer or the customer has paid consideration to us under the contract. These contract balances include accounts receivable, contract assets and contract liabilities.

Contract asset balances as of ~~October~~January 2625, ~~2024~~2025 and April 27, 2024 were $2,~~012~~114 and $1,373, respectively. Our contract liabilities primarily relate to advance payments from customers, upfront payments for software and support provided over time, and options that provide a material right to customers, such as our customer loyalty programs. At October 26, 2024 and April 27, 2024, contract liabilities of $36,284 and $37,399 were reported in other accrued liabilities, respectively. Contract liabilities are recognized as revenue when the performance obligation has been performed, which primarily occurs during the subsequent 12 months. During the six months ended October 26, 2024, we recognized $21,121 of the amount previously deferred at April 27, 2024.

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At January 25, 2025 and April 27, 2024, contract liabilities of $35,472 and $37,399 were reported in other accrued liabilities, respectively. Contract liabilities are recognized as revenue when the performance obligation has been performed, which primarily occurs during the subsequent 12 months. During the nine months ended January 25, 2025, we recognized $30,928 of the amount previously deferred at April 27, 2024.

Recently Issued Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses". This ASU requires new disclosures of additional disaggregation of certain expense captions into specific categories. The new standard is effective for annual disclosures in fiscal year 2028 and interim disclosures in fiscal year 2029, with early adoption permitted. We currently are evaluating the impact of adopting this pronouncement.

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". This ASU requires additional disclosures related to rate reconciliation and income taxes paid. The new standard is effective for annual disclosures in fiscal year 2026, with early adoption permitted. We currently are evaluating the impact of adopting this pronouncement.

In November 2023, the FASB issued ASU No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures". This ASU requires disclosures of significant segment expenses and other segment items. Disclosures about a reportable segment's profit or loss and assets will be required for both annual and interim periods. This ASU also requires disclosure of the title and position of Chief Operating Decision Maker ("CODM") and an explanation of how the CODM uses the reported measures of profit or loss in assessing performance and allocating resources. The new standard is effective for annual disclosures in fiscal year 2025 and interim disclosures in fiscal year 2026, with early adoption permitted. We currently are evaluating the impact of adopting this pronouncement.

Note 2. Acquisitions

During the second quarter of fiscal 2025, we acquired Infusion Concepts Limited, a U.K. market leader in the supply of high-performance infusion, drainage and critical care products that benefit the veterinary profession and their animal patients. This strategic purchase expands the portfolio with high-quality products for veterinary customers. Also during the second quarter of fiscal 2025, we acquired substantially all of the assets of Mountain Vet Supply, a regional production animal veterinary distributor in the U.S. The benefits of the purchase include an established over-the-counter retail location which we will leverage with our existing infrastructure and distribution network.

10The total purchase price for these acquisitions is $9,496, which includes holdbacks of $1,979 that will be paid within 18 months of the respective closing dates and working capital adjustments of $380, which are due from sellers. As of the acquisition dates, we have recorded $6,841 of identifiable intangibles, $3,913 of goodwill and net tangible liabilities of $878 in our Consolidated Balance Sheets related to these acquisitions. Intangible assets was decreased by $360 and goodwill was decreased by $20 subsequent to acquisition dates as a result of working capital adjustments and valuation procedures. A portion of the goodwill is deductible for income tax purposes. Goodwill was recorded within the Animal Health segment and represents the expected benefit of integrating these value-added platforms with our existing operations. We have included their results of operations in our financial statements since the date of acquisition within the Animal Health segment. The accounting for these acquisitions is not complete because certain information and analysis that may impact our initial valuations are still being obtained or reviewed. The acquisitions were not deemed significant and did not materially impact our financial statements, and, therefore, pro forma results are not provided.

~~Table~~During the third quarter of ~~Contents~~fiscal 2025, we used $4,070 to pay holdbacks following our acquisition of substantially all of the assets of Relief Services for Veterinary Practitioners and Animal Care Technologies (RSVP and ACT) and Dairy Tech, Inc. The payments were due on the 24-month anniversaries of the closing dates. During the first quarter of fiscal 2024, we used $1,108 to pay a holdback following our acquisition of substantially all of the assets of Miller Vet Holdings, LLC. The payment was due on the 24-month anniversary of the closing date.

The total purchase price for these acquisitions is $9,876, which includes holdbacks of $1,979 that will be paid within 18 months of the respective closing dates. As of the acquisition dates, we have recorded $6,841 of identifiable intangibles, $3,913 of goodwill and net tangible liabilities of $878 in our Consolidated Balance Sheets related to these acquisitions. A portion of the goodwill is deductible for income tax purposes. Goodwill was recorded within the Animal Health segment and represents the expected benefit of integrating these value-added platforms with our existing operations. We have included their results of operations in our financial statements since the date of acquisition within the Animal Health segment. The accounting for these acquisitions is not complete because certain information and analysis that may impact our initial valuations are still being obtained or reviewed. The acquisitions were not deemed significant and did not materially impact our financial statements, and, therefore, pro forma results are not provided.

During the first quarter of fiscal 2024, we used $1,108 to pay a holdback following our acquisition of substantially all of the assets of Miller Vet Holdings, LLC. The payment was due on the 24-month anniversary of the closing date.

Note 3. Receivables Securitization Program

We are party to certain receivables purchase agreements (the “Receivables Purchase Agreements”) with MUFG Bank, Ltd. ("MUFG") (f.k.a. The Bank of Tokyo-Mitsubishi UFJ, Ltd.), under which MUFG acts as an agent to facilitate the sale of certain Patterson receivables (the “Receivables”) to certain unaffiliated financial institutions (the “Purchasers”). The sale of these receivables is accounted for as a sale of assets under the provisions of ASC 860, Transfers and Servicing. We utilize PDC Funding III and PDC Funding IV to facilitate the sale to fulfill requirements within the agreement. We use a daily unit of account for these Receivables.

The proceeds from the sale of these Receivables comprise a combination of cash and a deferred purchase price (“DPP”) receivable. The DPP receivable is ultimately realized by Patterson following the collection of the underlying Receivables sold to the Purchasers. The amount available under the Receivables Purchase Agreements fluctuates over time based on the total amount of eligible Receivables generated during the normal course of business, with maximum availability of $200,000 as of October 26, 2024, of which $200,000 was utilized.

We have no retained interests in the transferred Receivables, other than our right to the DPP receivable and collection and administrative service fees. We consider the fees received adequate compensation for services rendered, and accordingly have recorded no servicing asset or liability. As of October 26, 2024 and April 27, 2024, the fair value of outstanding trade receivables transferred to the Purchasers under the facility and derecognized from the Condensed Consolidated Balance Sheets were $381,826 and $400,626, respectively. Sales of trade receivables under this facility were $1,742,720 and $1,824,520, and cash collections from customers on receivables sold were $1,761,226 and $1,850,208 during the six months ended October 26, 2024 and October 28, 2023, respectively.

The DPP receivable is recorded at fair value within the Condensed Consolidated Balance Sheets within prepaid expenses and other current assets. The difference between the carrying amount of the Receivables and the sum of the cash and fair value of the DPP receivable received at time of transfer is recognized as a gain or loss on sale of the related Receivables inclusive of bank fees and allowance for credit losses. In operating expenses in the Condensed Consolidated Statements of Operations and Other Comprehensive Income, we recorded losses of $3,876 and $3,736 during the three months ended October 26, 2024 and October 28, 2023, respectively, and $7,385 and $7,160 during the six months ended October 26, 2024 and October 28, 2023, respectively, related to the Receivables.

The following rollforward summarizes the activity related to the DPP receivable:

	Six Months Ended
		October 26, 2024		October 28, 2023
Beginning DPP receivable balance		$	198,827	$	227,946
Non-cash additions to DPP receivable		443,307		445,567
Cash collections on DPP receivable		(460,894)		(471,511)
Ending DPP receivable balance		$	181,240	$	202,002

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facilitate the sale of certain Patterson receivables (the “Receivables”) to certain unaffiliated financial institutions (the “Purchasers”). The sale of these receivables is accounted for as a sale of assets under the provisions of ASC 860, Transfers and Servicing. We utilize PDC Funding III and PDC Funding IV to facilitate the sale to fulfill requirements within the agreement. We use a daily unit of account for these Receivables.

We have no retained interests in the transferred Receivables, other than our right to the DPP receivable and collection and administrative service fees. We consider the fees received adequate compensation for services rendered, and accordingly have recorded no servicing asset or liability. As of January 25, 2025 and April 27, 2024, the fair value of outstanding trade receivables transferred to the Purchasers under the facility and derecognized from the Condensed Consolidated Balance Sheets were $363,068 and $400,626, respectively. Sales of trade receivables under this facility were $2,560,313 and $2,681,935, and cash collections from customers on receivables sold were $2,597,755 and $2,725,094 during the nine months ended January 25, 2025 and January 27, 2024, respectively.

The DPP receivable is recorded at fair value within the Condensed Consolidated Balance Sheets within prepaid expenses and other current assets. The difference between the carrying amount of the Receivables and the sum of the cash and fair value of the DPP receivable received at time of transfer is recognized as a gain or loss on sale of the related Receivables inclusive of bank fees and allowance for credit losses. In operating expenses in the Condensed Consolidated Statements of Operations and Other Comprehensive Income, we recorded losses of $2,701 and $3,110 during the three months ended January 25, 2025 and January 27, 2024, respectively, and $10,086 and $10,270 during the nine months ended January 25, 2025 and January 27, 2024, respectively, related to the Receivables.

The following rollforward summarizes the activity related to the DPP receivable:


	Nine Months Ended
		January 25, 2025		January 27, 2024
Beginning DPP receivable balance		$	198,827	$	227,946
Non-cash additions to DPP receivable		640,842		697,887
Cash collections on DPP receivable		(678,004)		(740,664)
Ending DPP receivable balance		$	161,665	$	185,169

Note 4. Customer Financing

As a convenience to our customers, we offer several different financing alternatives, including a third party program and a Patterson-sponsored program. For the third party program, we act as a facilitator between the customer and the third party financing entity with no on-going involvement in the financing transaction. Under the Patterson-sponsored program, equipment purchased by creditworthy customers may be financed up to a maximum of $2,000. We generally sell our customers’ financing contracts to unaffiliated financial institutions in the normal course of our business. These financing arrangements are accounted for as a sale of assets under the provisions of ASC 860, Transfers and Servicing. We use a monthly unit of account for these financing contracts.

We operate under an agreement to sell a portion of our equipment finance contracts to commercial paper conduits with MUFG serving as the agent. We utilize PDC Funding to fulfill a requirement of participating in the commercial paper conduit. We receive the proceeds of the contracts upon sale to MUFG. At least 15.0% of the proceeds are held by the conduit as security against eventual performance of the portfolio. This percentage can be greater and is based upon certain ratios defined in the agreement with MUFG. The capacity under the agreement with MUFG at ~~October~~January 2625, ~~2024~~2025 was $525,000.

We service the financing contracts for which we are paid a servicing fee. The servicing fees we receive are considered adequate compensation for services rendered. Accordingly, no servicing asset or liability has been recorded.

The portion of the purchase price for the receivables held by the conduits is deemed a DPP receivable, which is paid to PDC Funding as payments on the customers’ financing contracts are collected by Patterson from customers. The difference between the carrying amount of the receivables sold under these programs and the sum of the cash and fair value of the DPP receivable received at time of transfer is recognized as a gain or loss on sale of the related receivables and recorded in net sales in the Condensed Consolidated Statements of Operations and Other Comprehensive Income. Expenses incurred related to customer financing activities are recorded in operating expenses in our Condensed Consolidated Statements of Operations and Other Comprehensive Income.

During the six months ended October 26, 2024 and October 28, 2023, we sold $108,672 and $115,266 of contracts under these arrangements, respectively. In net sales in the Condensed Consolidated Statements of Operations and Other Comprehensive Income, we recorded a gain of $3,164 and a loss of $3,953 during the three months ended October 26, 2024 and October 28, 2023, respectively, related to these contracts sold. In net sales in the Condensed Consolidated Statements of Operations and Other Comprehensive Income, we recorded a gain of $9,845 and a loss of $12,880 during the six months ended October 26, 2024 and October 28, 2023, respectively, related to these contracts sold. Cash collections on financed receivables sold were $168,139 and $141,353 during the six months ended October 26, 2024 and October 28, 2023, respectively. Unamortized discounts of $3,011 and $3,097 were recorded as of October 26, 2024 and April 27, 2024, respectively, which represent subsidies on contracts with below-market interest rates.

Included in cash and cash equivalents in the Condensed Consolidated Balance Sheets are $31,149 and $33,813 as of October 26, 2024 and April 27, 2024, respectively, which represent cash collected from previously sold customer financing contracts that have not yet been settled. Included in current receivables in the Condensed Consolidated Balance Sheets are $56,297 and $74,430 as of October 26, 2024 and April 27, 2024, respectively, of finance contracts we have not yet sold. A total of $539,182 of finance contracts receivable sold under the arrangements was outstanding at October 26, 2024. Since the internal financing program began in 1994, bad debt write-offs have amounted to less than 1% of the loans originated.

The following rollforward summarizes the activity related to the DPP receivable:

	Six Months Ended
		October 26, 2024		October 28, 2023
Beginning DPP receivable balance		$	114,259	$	102,979
Non-cash additions to DPP receivable		31,436		19,491
Cash collections on DPP receivable		(36,135)		(17,941)
Ending DPP receivable balance		$	109,560	$	104,529

The arrangements require us to maintain a minimum current ratio and maximum leverage ratio. We were in compliance with those covenants at October 26, 2024.

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During the nine months ended January 25, 2025 and January 27, 2024, we sold $193,443 and $197,712 of contracts under these arrangements, respectively. In net sales in the Condensed Consolidated Statements of Operations and Other Comprehensive Income, we recorded a loss of $2,058 and a gain of $9,117 during the three months ended January 25, 2025 and January 27, 2024, respectively, related to these contracts sold. In net sales in the Condensed Consolidated Statements of Operations and Other Comprehensive Income, we recorded a gain of $7,787 and a loss of $3,763 during the nine months ended January 25, 2025 and January 27, 2024, respectively, related to these contracts sold. Cash collections on financed receivables sold were $248,951 and $211,827 during the nine months ended January 25, 2025 and January 27, 2024, respectively. Unamortized discounts of $2,178 and $3,097 were recorded as of January 25, 2025 and April 27, 2024, respectively, which represent subsidies on contracts with below-market interest rates.

Included in cash and cash equivalents in the Condensed Consolidated Balance Sheets are $32,360 and $33,813 as of January 25, 2025 and April 27, 2024, respectively, which represent cash collected from previously sold customer financing contracts that have not yet been settled. Included in current receivables in the Condensed Consolidated Balance Sheets are $48,586 and $74,430 as of January 25, 2025 and April 27, 2024, respectively, of finance contracts we have not yet sold. A total of $553,111 of finance contracts receivable sold under the arrangements was outstanding at January 25, 2025. Since the internal financing program began in 1994, bad debt write-offs have amounted to less than 1% of the loans originated.

The following rollforward summarizes the activity related to the DPP receivable:


	Nine Months Ended
		January 25, 2025		January 27, 2024
Beginning DPP receivable balance		$	114,259	$	102,979
Non-cash additions to DPP receivable		49,383		41,495
Cash collections on DPP receivable		(53,142)		(29,655)
Ending DPP receivable balance		$	110,500	$	114,819

The arrangements require us to maintain a minimum current ratio and maximum leverage ratio. We were in compliance with those covenants at January 25, 2025.

Note 5. Derivative Financial Instruments

We are a party to certain offsetting and identical interest rate cap agreements entered into to fulfill certain covenants of the equipment finance contract sale agreements. The interest rate cap agreements also provide a credit enhancement feature for the financing contracts sold by PDC Funding to the commercial paper conduit.

The interest rate cap agreements are entered into periodically to maintain consistency with the dollar maximum of the sale agreements and the maturity of the underlying financing contracts. As of ~~October~~January 2625, ~~2024~~2025, PDC Funding had purchased an interest rate cap from a bank with a notional amount of $525,000 and a maturity date of July 2032. We sold an identical interest rate cap to the same bank.

These interest rate cap agreements do not qualify for hedge accounting treatment and, accordingly, we record the fair value of the agreements as an asset or liability and the change in fair value as income or expense during the period in which the change occurs.

In January 2014, we entered into a forward interest rate swap agreement with a notional amount of $250,000 and accounted for it as a cash flow hedge, in order to hedge interest rate fluctuations in anticipation of refinancing the 5.17% senior notes due March 25, 2015. These notes were repaid on March 25, 2015 and replaced with new $250,000 3.48% senior notes due March 24, 2025. A cash payment of $29,003 was made in March 2015 to settle ~~the interest rate swap. This amount is recorded in other comprehensive income (loss), net of tax, and is recognized as interest expense over the life of the related debt.~~

We utilize forward interest rate swap agreements to hedge against interest rate fluctuations that impact the amount of net sales we record related to our customer financing contracts. These interest rate swap agreements do not qualify for hedge accounting treatment and, accordingly, we record the fair value of the agreements as an asset or liability and the change in fair value as income or expense during the period in which the change occurs.

As of April 27, 2024, the remaining notional amount for interest rate swap agreements was $565,420, with the latest maturity date in fiscal 2031. During the six months ended October 26, 2024, we entered into forward interest rate swap agreements with a notional amount of $102,444. As of October 26, 2024, the remaining notional amount for interest rate swap agreements was $536,867, with the latest maturity date in fiscal 2032.

Net cash receipts of $6,115 and $7,244 were received during the six months ended October 26, 2024 and October 28, 2023, respectively, to settle a portion of our assets and liabilities related to interest rate swap agreements. These receipts are reflected as cash flows in the Condensed Consolidated Statements of Cash Flows within net cash used in operating activities.

The following presents the fair value of derivative instruments included in the Condensed Consolidated Balance Sheets:

Derivative type	Classification	October 26, 2024		April 27, 2024
Assets:
Interest rate contracts	Prepaid expenses and other current assets	$	2,654	$	5,781
Interest rate contracts	Other non-current assets, net	5,908		21,193
Total asset derivatives		$	8,562	$	26,974
Liabilities:
Interest rate contracts	Other accrued liabilities	$	796	$	259
Interest rate contracts	Other non-current liabilities	4,844		13,198
Total liability derivatives		$	5,640	$	13,457

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the interest rate swap. This amount is recorded in other comprehensive income (loss), net of tax, and is recognized as interest expense over the life of the related debt.

As of April 27, 2024, the remaining notional amount for interest rate swap agreements was $565,420, with the latest maturity date in fiscal 2031. During the nine months ended January 25, 2025, we entered into forward interest rate swap agreements with a notional amount of $189,008. As of January 25, 2025, the remaining notional amount for interest rate swap agreements was $545,964, with the latest maturity date in fiscal 2032.

Net cash receipts of $4,248 and $10,893 were received during the nine months ended January 25, 2025 and January 27, 2024, respectively, to settle a portion of our assets and liabilities related to interest rate swap agreements. These receipts are reflected as cash flows in the Condensed Consolidated Statements of Cash Flows within net cash used in operating activities.

The following presents the fair value of derivative instruments included in the Condensed Consolidated Balance Sheets:


Derivative type	Classification	January 25, 2025		April 27, 2024
Assets:
Interest rate contracts	Prepaid expenses and other current assets	$	2,340	$	5,781
Interest rate contracts	Other non-current assets, net	5,156		21,193
Total asset derivatives		$	7,496	$	26,974
Liabilities:
Interest rate contracts	Other accrued liabilities	$	475	$	259
Interest rate contracts	Other non-current liabilities	3,667		13,198
Total liability derivatives		$	4,142	$	13,457

The following tables present the pre-tax effect of derivative instruments on the Condensed Consolidated Statements of Operations and Other Comprehensive Income:

Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)

Three Months Ended

~~Six~~Nine Months Ended

Derivatives in cash flow hedging relationships

Statements of operations location

~~October~~January 2625, ~~2024~~2025

~~October~~January 2827, ~~2023~~2024

~~October~~January 2625, ~~2024~~2025

~~October~~January 2827, ~~2023~~2024

Interest rate contracts

Interest expense

(341)

(~~682~~1,023)

Amount of Gain (Loss) Recognized in Income on Derivatives

Three Months Ended

~~Six~~Nine Months Ended

Derivatives not designated as hedging instruments

Statements of operations location

~~October~~January 2625, ~~2024~~2025

~~October~~January 2827, ~~2023~~2024

~~October~~January 2625, ~~2024~~2025

~~October~~January 2827, ~~2023~~2024

Interest rate contracts

Other income, net

~~(724)~~2,298

2(3,~~786~~474)

(42,~~479~~181)

96,~~561~~087

There were no gains or losses recognized in other comprehensive income (loss) on cash flow hedging derivatives during the three and ~~six~~nine months ended ~~October~~January 2625, ~~2024~~2025 or ~~October~~January 2827, ~~2023~~2024.

We recorded no ineffectiveness during the three and ~~six~~nine month periods ended ~~October~~January 2625, ~~2024~~2025 and ~~October~~January 2827, ~~2023~~2024. As of ~~October~~January 2625, ~~2024~~2025, the estimated pre-tax portion of accumulated other comprehensive loss that is expected to be reclassified into earnings over the next twelve months is $~~568~~227, which will be recorded as an increase to interest expense.

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Note 6. Fair Value Measurements

Fair value is the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties. The fair value hierarchy of measurements is categorized into one of three levels based on the lowest level of significant input used:

Level 1 - Quoted prices in active markets for identical assets and liabilities at the measurement date.

Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 - Unobservable inputs for which there is little or no market data available. These inputs reflect management’s assumptions of what market participants would use in pricing the asset or liability.

Our hierarchy for assets and liabilities measured at fair value on a recurring basis is as follows:

October 26, 2024

January 25, 2025

Total

Level 1

Level 2

Level 3

Assets:

Cash equivalents

142,~~346~~648

—

DPP receivable - receivables securitization program

~~181~~161,~~240~~665

—

~~181~~161,~~240~~665

DPP receivable - customer financing

~~109~~110,~~560~~500

—

~~109~~110,~~560~~500

Derivative instruments

87,~~562~~496

—

87,~~562~~496

—

Total assets

~~313~~282,~~708~~309

142,~~346~~648

87,~~562~~496

~~290~~272,~~800~~165

Liabilities:

Derivative instruments

54,~~640~~142

—

54,~~640~~142

—

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	April 27, 2024
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	4,685	$	4,685	$	—	$	—
DPP receivable - receivables securitization program	198,827		—		—		198,827
DPP receivable - customer financing	114,259		—		—		114,259
Derivative instruments	26,974		—		26,974		—
Total assets	$	344,745	$	4,685	$	26,974	$	313,086
Liabilities:
Derivative instruments	$	13,457	$	—	$	13,457	$	—

Cash equivalents – We value cash equivalents at their current market rates. The carrying value of cash equivalents approximates fair value and maturities are less than three months.

DPP receivable – receivables securitization program – We value this DPP receivable based on a discounted cash flow analysis using unobservable inputs, which include the estimated timing of payments and the credit quality of the underlying creditor. Significant changes in any of the significant unobservable inputs in isolation would not result in a materially different fair value estimate. The interrelationship between these inputs is insignificant.

DPP receivable - customer financing – We value this DPP receivable based on a discounted cash flow analysis using unobservable inputs, which include a forward yield curve, the estimated timing of payments and the credit quality of the underlying creditor. Significant changes in any of the significant unobservable inputs in isolation would not result in a materially different fair value estimate. The interrelationship between these inputs is insignificant.

Derivative instruments – Our derivative instruments consist of interest rate cap agreements and interest rate swaps. These instruments are valued using inputs such as interest rates and credit spreads.

Certain assets are measured at fair value on a non-recurring basis. These assets are not measured at fair value on an ongoing basis, but are subject to fair value adjustments under certain circumstances. We adjust the carrying value of our non-marketable equity securities to fair value when observable transactions of identical or similar securities occur, or due to an impairment.

We had an investment in Vetsource, a commercial partner and leading home delivery provider for veterinarians. The investment was valued based on the selling price of the portion of the investment we sold in the first quarter of fiscal 2022. The carrying value of the investment was $56,849 as of April 27, 2024. Concurrent with the sale completed in the first quarter of fiscal 2022, we obtained rights that would allow us, under certain circumstances, to require another shareholder of Vetsource to purchase our remaining shares. The carrying value of this put option, which was subject to a floor, as of April 27, 2024 was $25,757, and was reported within investments in our Condensed Consolidated Balance Sheets. Concurrent with obtaining this put option, we also granted rights to the same Vetsource shareholder allowed such shareholder, under certain circumstances, to require us to sell our remaining shares at fair value. In the second quarter of fiscal 2025, the VetSource shareholder exercised the option and purchased Patterson's investment in VetSource. We recorded a pre-tax gain of $3,803 in other income, net in our Condensed Consolidated Statements of Operations and Other Comprehensive Income as a result of this sale. The cash received of $86,408 is reported within investing activities in our Condensed Consolidated Statements of Cash Flows.

Our debt is not measured at fair value in the Condensed Consolidated Balance Sheets. The estimated fair value of our debt as of October 26, 2024 and April 27, 2024 was $449,608 and $448,287, respectively, as compared to a carrying value, net of deferred debt issuance costs, of $450,396 and $451,661 at October 26, 2024 and April 27, 2024, respectively. The fair value of debt was measured using a discounted cash flow analysis based on expected market based yields (i.e., level 2 inputs).

The carrying amounts of receivables, net of allowances, accounts payable, and certain accrued and other current liabilities approximated fair value at October 26, 2024 and April 27, 2024.

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Our debt is not measured at fair value in the Condensed Consolidated Balance Sheets. The estimated fair value of our debt as of January 25, 2025 and April 27, 2024 was $447,918 and $448,287, respectively, as compared to a carrying value, net of deferred debt issuance costs, of $448,638 and $451,661 at January 25, 2025 and April 27, 2024, respectively. The fair value of debt was measured using a discounted cash flow analysis based on expected market based yields (i.e., level 2 inputs).

The carrying amounts of receivables, net of allowances, accounts payable, and certain accrued and other current liabilities approximated fair value at January 25, 2025 and April 27, 2024.

Note 7. Income Taxes

The effective income tax rate for the three months ended ~~October~~January 2625, 2025 and January 27, 2024 was 2427.92% ~~compared~~and ~~to 25~~23.32% ~~for the three months ended October 28~~, ~~2023~~respectively. The ~~change~~increase in the rate was primarily due to the ~~benefit~~impact of ~~purchased~~provision ~~transferable~~to ~~federal~~return ~~tax~~adjustments ~~credits~~in the prior year quarter as compared to the current quarter.

The effective income tax rate for the ~~six~~nine months ended ~~October~~January 2625, ~~2024~~2025 and ~~October~~January 2827, ~~2023~~2024 was 2425.57% and 23.9%, respectively. The ~~rate~~increase ~~was~~in ~~impacted~~the byrate ais ~~favorable~~primarily ~~income~~due ~~tax~~to ~~reserve~~a ~~adjustment~~less ~~offset~~favorable byimpact of excess tax benefits associated with stock~~-based~~ compensation in the current year as compared to the prior year.

The Organization for Economic Cooperation and Development (“OECD”) has published a framework to implement a global minimum income tax rate of 15% through its Base Erosion and Profit Shifting Pillar Two project (“BEPS Pillar Two”). This new legislation became effective in certain countries where the Company operates starting in fiscal 2025. We continue to evaluate the impact of this new legislation. At this time, we do not expect the impact of this legislation to be material to our effective tax rate.

Note 8. Technology Partner Innovations, LLC ("TPI")

In fiscal 2019, we entered into an agreement with Cure Partners to form TPI, which offers a cloud-based practice management software, NaVetor, to its customers. We have determined that TPI is a variable interest entity, and we consolidate the results of operations of TPI as we have concluded that we are the primary beneficiary of TPI. Since TPI was formed, there have been no changes in ownership interests. No additional net assets were contributed during the ~~six~~nine months ended ~~October~~January 2625, ~~2024~~2025 or fiscal year ended April 27, 2024. As of ~~October~~January 2625, ~~2024~~2025, we had noncontrolling interests of $~~439~~354 on our Condensed Consolidated Balance Sheets.

Net loss attributable to the noncontrolling interest was $7385 and $~~103~~110 for the three months ended ~~October~~January 2625, ~~2024~~2025 and ~~October~~January 2827, ~~2023~~2024, respectively and $~~149~~234 and $~~207~~317 for the ~~six~~nine months ended ~~October~~January 2625, ~~2024~~2025 and ~~October~~January 2827, ~~2023~~2024, respectively.

Note 9. Segment and Geographic Data

We present three reportable segments: Dental, Animal Health and Corporate. Dental and Animal Health are strategic business units that offer similar products and services to different customer bases. Dental provides a virtually complete range of consumable dental products, equipment, software, turnkey digital solutions and value-added services to dentists, dental laboratories, institutions, and other healthcare professionals throughout North America. Animal Health is a leading, full-line distributor in North America and the U.K. of animal health products, services and technologies to both the production-animal and companion-pet markets. Our Corporate segment is comprised of general and administrative expenses, including home office support costs in areas such as information technology, finance, legal, human resources and facilities. In addition, customer financing and other miscellaneous sales are reported within Corporate results. Corporate assets consist primarily of cash and cash equivalents, accounts receivable, property and equipment and long-term receivables. We evaluate segment performance based on operating income. The costs to operate the fulfillment centers are allocated to the operating units based on the through-put of the unit.

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added services to dentists, dental laboratories, institutions, and other healthcare professionals throughout North America. Animal Health is a leading, full-line distributor in North America and the U.K. of animal health products, services and technologies to both the production-animal and companion-pet markets. Our Corporate segment is comprised of general and administrative expenses, including home office support costs in areas such as information technology, finance, legal, human resources and facilities. In addition, customer financing and other miscellaneous sales are reported within Corporate results. Corporate assets consist primarily of cash and cash equivalents, accounts receivable, property and equipment and long-term receivables. We evaluate segment performance based on operating income. The costs to operate the fulfillment centers are allocated to the operating units based on the through-put of the unit.

The following table provides a breakdown of sales by geographic region:

Three Months Ended

~~Six~~Nine Months Ended

October 26, 2024

October 28, 2023

October 26, 2024

October 28, 2023

January 25, 2025

January 27, 2024

January 25, 2025

January 27, 2024

Consolidated net sales

United States

1,~~396~~306,~~411~~696

1,~~383~~335,~~152~~821

23,~~658~~964,~~277~~973

24,~~674~~010,~~523~~344

United Kingdom

~~195~~180,~~164~~784

~~180~~187,~~460~~735

~~390~~570,~~210~~994

~~372~~559,~~071~~806

Canada

8284,~~800~~931

8992,~~160~~539

~~167~~252,~~630~~561

~~182~~275,~~923~~462

Total

1,~~674~~572,~~375~~411

1,~~652~~616,~~772~~095

34,~~216~~788,~~117~~528

34,~~229~~845,~~517~~612

Dental net sales

United States

~~561~~543,~~577~~490

~~573~~577,~~794~~516

1,~~060~~604,~~534~~024

1,~~084~~661,~~044~~560

Canada

5052,~~105~~838

5259,~~587~~621

~~101~~154,~~505~~343

~~109~~169,~~637~~258

Total

~~611~~596,~~682~~328

~~626~~637,~~381~~137

1,~~162~~758,~~039~~367

1,~~193~~830,~~681~~818

Animal Health net sales

United States

~~826~~759,~~729~~503

~~807~~746,~~589~~624

12,~~580~~340,~~666~~169

12,~~590~~336,~~255~~879

United Kingdom

~~195~~180,~~164~~784

~~180~~187,~~460~~735

~~390~~570,~~210~~994

~~372~~559,~~071~~806

Canada

32,~~695~~093

3632,~~573~~918

6698,~~125~~218

73106,~~286~~204

Total

1972,~~054,588~~380

1967,~~024,622~~277

23,~~037~~009,~~001~~381

23,~~035~~002,~~612~~889

Corporate net sales

United States

83,~~105~~703

111,~~769~~681

1720,~~077~~780

~~224~~11,905

Total

83,~~105~~703

111,~~769~~681

1720,~~077~~780

~~224~~11,905

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The following table provides a breakdown of sales by categories of products and services:

Three Months Ended

~~Six~~Nine Months Ended

October 26, 2024

October 28, 2023

October 26, 2024

October 28, 2023

January 25, 2025

January 27, 2024

January 25, 2025

January 27, 2024

Consolidated net sales

Consumable

1,~~347~~242,~~208~~015

1,~~319~~262,~~363~~290

23,~~625~~867,~~621~~636

23,~~635~~897,~~088~~378

Equipment

~~215~~229,~~735~~432

~~230~~245,~~293~~262

~~375~~604,~~021~~453

~~394~~639,~~264~~526

Value-added services and other

~~111~~100,~~432~~964

~~103~~108,~~116~~543

~~215~~316,~~475~~439

~~200~~308,~~165~~708

Total

1,~~674~~572,~~375~~411

1,~~652~~616,~~772~~095

34,~~216~~788,~~117~~528

34,~~229~~845,~~517~~612

Dental net sales

Consumable

~~348~~327,~~908~~637

~~346~~350,~~492~~953

~~693~~1,~~025~~020,662

~~698~~1,~~539~~049,492

Equipment

~~185~~195,~~153~~897

~~200~~211,~~127~~352

~~319~~514,~~011~~908

~~337~~549,~~676~~028

Value-added services and other

7772,~~621~~794

7974,~~762~~832

~~150~~222,~~003~~797

~~157~~232,~~466~~298

Total

~~611~~596,~~682~~328

~~626~~637,~~381~~137

1,~~162~~758,~~039~~367

1,~~193~~830,~~681~~818

Animal Health net sales

Consumable

~~998~~914,~~300~~378

~~972~~911,~~871~~337

12,~~932~~846,~~596~~974

12,~~936~~847,~~549~~886

Equipment

3033,~~582~~535

3033,~~166~~910

5689,~~010~~545

5690,~~588~~498

Value-added services and other

2524,~~706~~467

2122,~~585~~030

4872,~~395~~862

4264,~~475~~505

Total

1972,~~054,588~~380

1967,~~024,622~~277

23,~~037~~009,~~001~~381

23,~~035~~002,~~612~~889

Corporate net sales

Value-added services and other

83,~~105~~703

111,~~769~~681

1720,~~077~~780

~~224~~11,905

Total

83,~~105~~703

111,~~769~~681

1720,~~077~~780

~~224~~11,905

The following table provides a breakdown of operating income (loss) by reportable segment:

Three Months Ended

~~Six~~Nine Months Ended

October 26, 2024

October 28, 2023

October 26, 2024

October 28, 2023

January 25, 2025

January 27, 2024

January 25, 2025

January 27, 2024

Operating income (loss)

Dental

3342,~~660~~079

5553,~~277~~630

60102,~~718~~797

93147,~~947~~577

Animal Health

2931,~~621~~976

2632,~~346~~104

5486,~~988~~964

5688,~~039~~143

Corporate

(2528,~~645~~614)

(2415,~~720~~722)

(4877,~~701~~315)

(5470,~~861~~583)

Total

3745,~~636~~441

5670,~~903~~012

67112,~~005~~446

95165,~~125~~137

The following table provides a breakdown of total assets by reportable segment:

	October 26, 2024		April 27, 2024
	January 25, 2025		April 27, 2024
Total assets
Dental	$	~~921~~902,~~931~~117	$	913,478
Animal Health	1,~~551~~564,~~841~~171		1,568,413
Corporate	~~371~~366,~~830~~298		414,841
Total	$	2,~~845~~832,~~602~~586	$	2,896,732

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Note 10. Accumulated Other Comprehensive Loss ("AOCL")

The following table summarizes the changes in AOCL during the ~~six~~nine months ended ~~October~~January 2625, ~~2024~~2025:

	Cash FlowHedges		CurrencyTranslationAdjustment		Total
AOCL at April 27, 2024	$	(1,370)	$	(88,545)	$	(89,915)
Other comprehensive loss before reclassifications	—		4(7,~~025~~735)		4(7,~~025~~735)
Amounts reclassified from AOCL	~~521~~782		—		~~521~~782
AOCL at October 26, 2024	$	(849)	$	(84,520)	$	(85,369)
AOCL at January 25, 2025	$	(588)	$	(96,280)	$	(96,868)

The amounts reclassified from AOCL during the ~~six~~nine months ended ~~October~~January 2625, ~~2024~~2025 include gains and losses on cash flow hedges, net of taxes of $~~161~~241. The impact to the Condensed Consolidated Statements of Operations and Other Comprehensive Income was an increase to interest expense of $~~682~~1,023 for the ~~six~~nine months ended ~~October~~January 2625, ~~2024~~2025.

Note 11. Legal Proceedings

From time to time, we become involved in lawsuits, administrative proceedings, government subpoenas, and government investigations (which may, in some cases, involve our entering into settlement agreements or consent decrees), relating to antitrust, commercial, environmental, product liability, intellectual property, regulatory, employment discrimination, putative class actions under the California Labor Code Private Attorneys General Act, and other matters, including matters arising out of the ordinary course of business, including securities litigation. The results of any such proceedings cannot be predicted with certainty because such matters are inherently uncertain. Significant damages or penalties may be sought in some matters, and some matters may require years to resolve. We also may be subject to fines or penalties, and equitable remedies (including but not limited to the suspension, revocation or non-renewal of licenses).

We accrue for these matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Adverse outcomes may result in significant monetary damages or injunctive relief against us that could adversely affect our ability to conduct our business. There also exists the possibility of a material adverse effect on our financial statements for the period in which the effect of an unfavorable outcome becomes probable and reasonably estimable.

On May 23, 2024, Plaintiff Monica Mehring and Mehring Family Dentistry (together, “Plaintiffs”) filed a class action complaint against Patterson Companies Inc. “doing business as Patterson Dental,” UnitedHealth Group and its subsidiaries Change Healthcare and Optum Inc. (collectively, the “Defendants”) in a case captioned Dr. Monica Mehring et al. v. Patterson Companies, Inc. et al., Case No. 4:24-cv-3147 (N.D. Cal. May 23, 2024) (the “Class Action Complaint”). The Class Action Complaint alleges that as a result of Defendants’ failure to implement robust cybersecurity controls, “a group of cybercriminals were able to infiltrate Defendants’ computer networks and steal for ransom confidential health data and source code among other things (‘Data Breach’).” Notwithstanding the Class Action Complaint’s generic reference to “Defendants,” Plaintiffs describe the Data Breach as UnitedHealth Group’s February 21, 2024 discovery that a suspected nation-state associated cyber security threat actor had gained access to some of the Change Healthcare information technology systems. Plaintiffs allege that as a direct result of the Data Breach, they were unable to submit claims through Patterson-supplied Eaglesoft software and, to date, have been unable to receive payments for claims submitted on February 20, 2024. While Plaintiffs assert that they use Eaglesoft to access Change Healthcare and Optum software to “integrate processing, prescriptions, billing and insurance,” the Class Action Complaint does not allege that Eaglesoft or any of Patterson’s IT systems or computer networks were accessed by any threat actor or were otherwise the subject of the alleged Data Breach. Notwithstanding the foregoing, Plaintiffs assert the following causes of action against all Defendants: negligence; “negligent interference with prospective economic advantage;” negligence per se; breach of implied contract; “breach of covenant of good faith and fair dealing;” and unjust enrichment. Plaintiffs purport to bring each claim on behalf of a nationwide class defined as: (i) “[a]ll healthcare providers in the United States whose use of Change Healthcare’s and Optum’s services were disrupted by the [D]ata [B]reach occurring in February 2024”; and (ii) “[a]ll healthcare providers in the United States whose use of Patterson Dental’s Eaglesoft’s services were disrupted by the [D]ata [B]reach occurring in February 2024.” Plaintiffs separately seek to certify a Delaware statewide class defined as: (i) “[a]ll healthcare providers in the state of Delaware whose use of Change Healthcare’s and Optum’s services were disrupted by the [D]ata [B]reach occurring in February 2024”; and (ii) “[a]ll healthcare providers in the state of Delaware whose use of Patterson Dental’s Eaglesoft’s services were disrupted by the [D]ata [B]reach

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occurring in February 2024.” Although the Class Action Complaint is the only known complaint related to the Data Breach that names Patterson as a defendant, similar complaints were filed in other jurisdictions against defendants UnitedHealth Group, Change Healthcare and Optum. Pursuant to an order dated June 7, 2024, the Judicial Panel on Multidistrict Litigation (“MDL”) transferred all such actions, including the Class Action Complaint, to the District of Minnesota for coordinated and consolidated pretrial proceedings. ~~The~~On ~~deadline~~January ~~for~~15, 2025, Lead Plaintiffs’ counsel tofiled ~~file~~ a consolidated MDL complaint ~~is January 15, 2025. We are vigorously defending ourselves~~ in ~~this~~which ~~litigation. We~~Patterson dowas not ~~anticipate~~named ~~that~~as ~~this matter will have~~ a ~~material~~defendant ~~adverse~~and ~~effect~~Plaintiffs onwere ~~our~~not ~~financial~~named ~~statements~~plaintiffs.

See also Note 12.

Note 12. Subsequent Event

~~During~~The ~~the~~Company ~~third~~has ~~quarter~~received several demand letters from purported shareholders of ~~fiscal~~the ~~2025,~~Company wealleging ~~announced~~failures ~~that~~to wedisclose ~~are~~material ~~evaluating~~information ~~potential~~in ~~strategic~~the ~~alternatives~~preliminary toproxy ~~maximize~~statement ~~shareholder~~filed ~~value.~~by ~~Such~~the ~~alternatives~~Company ~~may~~with ~~include~~the SEC in connection with the proposed Merger described in Note 1 above, ~~but~~which ~~are~~allegedly ~~not~~rendered ~~limited~~the toproxy statement false and misleading. Specifically, athe ~~sale~~demands allege, ~~merger~~among other things, ~~strategic~~that ~~business~~the ~~combination~~proxy orstatement ~~other~~failed ~~transaction.~~to ~~There~~disclose ~~can~~material beinformation noregarding ~~assurances~~the ~~that~~sales ~~such~~process ~~evaluation~~conducted ~~will~~by ~~result~~the inCompany, athe ~~transaction~~Company’s orfinancial ~~that~~projections ~~any~~and ~~transaction~~the financial analysis by the financial advisor to the Company’s Board of Directors, ifGuggenheim ~~pursued~~Securities, ~~will~~LLC. beThe ~~successfully~~Company ~~completed.~~believes Wethe dodemands ~~not~~are ~~intend~~without tomerit. ~~disclose~~The ~~further~~Company ~~developments~~cannot ~~unless~~predict ~~and~~the ~~until~~outcome itof isor ~~determined~~estimate ~~that~~the ~~further~~loss ~~disclosure~~or isrange ~~appropriate~~of loss from these matters.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

DESCRIPTION OF BUSINESS

OVERVIEW OF TRANSACTION WITH PATIENT SQUARE

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SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

The U.S. Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information, so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those disclosed in the statement.

This Quarterly Report on Form 10-Q contains ~~certain~~statements “that are forward-looking statements” within the meaning of the ~~safe~~federal ~~harbor~~securities ~~provisions~~laws. ofForward-looking ~~the~~statements ~~U.S.~~include ~~Private~~information ~~Securities~~concerning ~~Litigation~~the ~~Reform~~proposed ~~Act~~Merger ofand ~~1995,~~the ~~including~~ability ~~statements~~to ~~regarding~~consummate ~~future~~the ~~financial~~proposed ~~performance~~Merger, our liquidity and ~~the~~our ~~objectives~~possible ~~and~~or ~~expectations~~assumed future results of ~~management~~operations, including descriptions of our business strategies. ~~Forward-looking~~ These statements often include words such as “~~believes~~believe,” “~~expects~~expect,” “~~anticipates~~project,” “~~estimates~~potential,” “~~intends~~anticipate,” “~~plans~~intend,” “~~seeks~~plan,” “estimate,” “seek,” “will,” “may,” “would,” “should,” “could,” “forecasts” or similar words. These statements are based on certain assumptions that we have made in light of ~~similar~~our ~~meaning~~experience in the industry as well as our perceptions of historical trends, orcurrent conditions, expected future ordevelopments ~~conditional~~and ~~verbs,~~other ~~such~~factors aswe ~~“will~~believe are appropriate in these circumstances. We believe these assumptions are reasonable,” “but you should understand that these statements are not guarantees of performance or results,” “and our actual results could” ordiffer ~~“may.” Forward~~materially from those expressed in the forward-looking statements ~~are~~due ~~neither~~to ~~historical~~a ~~facts~~variety ~~nor~~of ~~assurances~~important offactors, ~~future~~both ~~performance~~positive and negative, that may be revised or supplemented in subsequent releases or reports. ~~Instead~~ These statements involve risks, ~~they~~estimates, assumptions, and uncertainties that could cause actual results to differ materially from those expressed in these statements and elsewhere in this report. These uncertainties include, but are ~~based~~not ~~only~~limited onto, the inability to consummate the Merger within the anticipated time period, or at all, due to any reason, including the failure to obtain required shareholder approval, satisfy the other conditions to the consummation of the Merger or complete necessary financing arrangements; the risk that the Merger disrupts our current ~~beliefs~~plans and operations or diverts management’s attention from its ongoing business; the effects of the Merger on our business, ~~expectations~~operating results, and ~~assumptions~~ability ~~regarding~~to retain and hire key personnel and maintain relationships with customers, suppliers and others with whom we do business; the ~~future~~risk that our stock price may decline significantly if the Merger is not consummated; the nature, cost and outcome of any legal proceedings related to the Merger; our dependence on suppliers to manufacture and supply substantially all of the products we sell; potential disruption of distribution capabilities, including service issues with third-party shippers; our dependence on relationships with sales representatives and service technicians to retain customers and develop business; risks of selling private label products, including the risk of adversely affecting our relationships with suppliers; adverse changes in supplier rebates or other purchasing incentives; the risk of technological and market obsolescence for the products we sell; the risk of failing to innovate and develop new and enhanced software and e-services products; our dependence on positive perceptions of Patterson’s reputation; risks associated with illicit human use of pharmaceutical products we distribute; risks inherent in acquiring and disposing of assets or other businesses and risks inherent in integrating acquired businesses; turnover or loss of key personnel or highly skilled employees; risks associated with information systems, software products and cyber-security attacks; risks inherent in our growing use of artificial intelligence systems to automate processes and analyze data; adverse impacts of wide-spread public health concerns as we experienced with the COVID-19 pandemic and may experience in the future; ~~plans~~risks related to climate change; our ability to comply with restrictive covenants and ~~strategies~~other limits in our credit agreement; the risk that our governing documents and Minnesota law may discourage takeovers and business combinations; the effects of the highly competitive dental and animal health supply markets in which we compete; the effects of consolidation within the dental and animal health supply markets; risks from the formation or expansion of GPOs, ~~projections~~provider networks and buying groups that may place us at a competitive disadvantage; exposure to the risks of the animal production business, ~~anticipated~~including ~~events~~changing consumer demand, the cyclical livestock market, weather conditions, the availability of natural resources and ~~trends~~other factors outside our control, and the ~~economy~~risks of the companion animal business, including the possibility of disease adversely affecting the pet population; exposure to the risks of the health care industry, including changes in demand due to political, economic and regulatory influences and other factors outside our control; increases in over-the-counter sales and e-commerce options; risks of litigation and government inquiries and investigations, including the diversion of management’s attention, the cost of defending against such actions, the possibility of damage awards or settlements, fines or penalties, or equitable remedies (including but not limited to the revocation of or non-renewal of licenses) and inherent uncertainty; failure to comply with health care fraud or other laws and regulations; change and uncertainty in the health care industry; failure to comply with existing or future U.S. or foreign laws and regulations including those governing the distribution of pharmaceuticals and controlled substances; failure to comply with evolving data privacy laws and regulations; tax legislation; risks inherent in international operations, including currency fluctuations; and uncertain macro-economic conditions, including inflationary pressures.

Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements.21

Any number of factors could affect our actual results and cause such results to differ materially from those contemplated by any forward-looking statements, including, but not limited to, the following: our dependence on suppliers to manufacture and supply substantially all of the products we sell; potential disruption of distribution capabilities, including service issues with third-party shippers; our dependence on relationships with sales representatives and service technicians to retain customers and develop business; risks of selling private label products, including the risk of adversely affecting our relationships with suppliers; adverse changes in supplier rebates or other purchasing incentives; the risk of technological and market obsolescence for the products we sell; the risk of failing to innovate and develop new and enhanced software and e-services products; our dependence on positive perceptions of Patterson’s reputation; risks associated with illicit human use of pharmaceutical products we distribute; risks inherent in acquiring and disposing of assets or other businesses and risks inherent in integrating acquired businesses; turnover or loss of key personnel or highly skilled employees; risks associated with information systems, software products and cyber-security attacks; risks inherent in our growing use of AI systems to automate processes and analyze data; adverse impacts of wide-spread public health concerns as we experienced with the COVID-19 pandemic and may experience in the future; risks related to climate change; our ability to comply with restrictive covenants and other limits in our credit agreement; the risk that our governing documents and Minnesota law may discourage takeovers and business combinations; the effects of the highly competitive dental and animal health supply markets in which we compete; the effects of consolidation within the dental and animal health supply markets; risks from the formation or expansion of GPOs, provider networks and buying groups that may place us at a competitive disadvantage; exposure to the risks of the animal production business, including changing consumer demand, the cyclical livestock market, weather conditions, the availability of natural resources and other factors outside our control, and the risks of the companion animal business, including

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~~the~~The ~~possibility~~foregoing review of ~~disease~~important ~~adversely~~factors ~~affecting~~that ~~the~~could ~~pet~~cause ~~population;~~actual ~~exposure~~results to ~~the~~differ ~~risks~~from ofexpectations ~~the~~should ~~health~~not ~~care~~be ~~industry,~~construed ~~including~~as ~~changes~~exhaustive inand ~~demand~~should ~~due~~be toread ~~political,~~in ~~economic~~conjunction ~~and~~with ~~regulatory~~the ~~influences~~information ~~and~~contained ~~other~~in ~~factors~~this ~~outside~~Quarterly ~~our~~Report ~~control;~~on ~~increases~~Form ~~in over~~10-~~the-counter~~Q ~~sales~~ and ~~e-commerce~~information ~~options;~~contained ~~risks~~or ofincorporated ~~litigation~~by ~~and~~reference ~~government~~in ~~inquiries~~our ~~and~~Annual ~~investigations,~~Report ~~including~~on ~~the~~Form ~~diversion~~10-K offor ~~management’s attention,~~ the ~~cost~~year ofended ~~defending~~April ~~against such actions~~27, ~~the~~2024 ~~possibility~~filed ofwith ~~damage~~the ~~awards~~SEC oron ~~settlements,~~June ~~fines or penalties~~18, or2024 ~~equitable remedies~~ (including ~~but~~Part ~~not~~I, ~~limited~~Item to1A ~~the~~(“Risk ~~revocation of or non-renewal of licenses~~Factors”)), ~~and~~our ~~inherent~~definitive ~~uncertainty;~~proxy ~~failure~~statement tofor ~~comply~~our ~~with~~2024 ~~health~~annual ~~care~~meeting ~~fraud~~of orshareholders ~~other~~filed ~~laws~~with ~~and regulations; change and uncertainty in~~ the ~~health~~SEC ~~care~~on ~~industry;~~August ~~failure~~2, to2024, ~~comply~~and ~~with~~our ~~existing~~recent orQuarterly ~~future~~Reports ~~U.S.~~on orForm ~~foreign~~10-Q ~~laws~~ and ~~regulations~~Current ~~including~~Reports ~~those~~on ~~governing~~Form ~~the~~8-K. ~~distribution~~The ofinformation ~~pharmaceuticals~~contained ~~and~~in ~~controlled~~this ~~substances;~~Quarterly ~~failure~~Report toon ~~comply~~Form ~~with~~10-Q ~~evolving~~is ~~data~~made ~~privacy~~only ~~laws~~as ~~and~~of ~~regulations;~~the ~~tax~~date ~~legislation; risks inherent in international operations~~hereof, ~~including~~even ~~currency~~if ~~fluctuations;~~subsequently ~~and~~made ~~uncertain~~available ~~macro-economic~~on ~~conditions,~~our ~~including~~website ~~inflationary~~or ~~pressures~~otherwise.

The order in which these factors appear should not be construed to indicate their relative importance or priority. We caution that these factors may not be exhaustive, accordingly, any forward-looking statements contained herein should not be relied upon as a prediction of actual results.

You should carefully consider these and other relevant factors, including those risk factors in Part I, Item 1A (“Risk Factors”) in our most recent Form 10-K, and information which may be contained in our other filings with the U.S. Securities and Exchange Commission, or SEC, when reviewing any forward-looking statement.

Investors should understand it is impossible to predict or identify all such factors or risks. As such, you should not consider the foregoing list, or the risks identified in our SEC filings, to be a complete discussion of all potential risks or uncertainties.

Any forward-looking statement made in this Quarterly Report on Form 10-Q is based only on information currently available to us and speaks only as of the date on which it is made. We do not undertake any obligation to release publicly any revisions to any forward-looking statements whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

OVERVIEW

Our financial information for the first ~~six~~nine months of fiscal 2025 is summarized in this Management’s Discussion and Analysis and the Condensed Consolidated Financial Statements and related Notes. The following background is provided to readers to assist in the review of our financial information.

We present three reportable segments: Dental, Animal Health and Corporate. Dental and Animal Health are strategic business units that offer similar products and services to different customer bases. Dental provides a virtually complete range of consumable dental products, equipment, turnkey digital solutions and value-added services to dentists and dental laboratories throughout North America. Animal Health is a leading, full-line distributor in North America and the U.K. of animal health products, services and technologies to both the production-animal and companion-pet markets. Our Corporate segment is comprised of general and administrative expenses, including home office support costs in areas such as information technology, finance, legal, human resources and facilities. In addition, customer financing and other miscellaneous sales are reported within Corporate results.

Operating margins of the animal health business are lower than the dental business. While operating expenses run at a lower rate in the animal health business when compared to the dental business, gross margins in the animal health business are lower due generally to the low margins experienced on the sale of pharmaceutical products.

We believe there are several important aspects of our business that are useful in analyzing it, including: (1) growth in the various markets in which we operate; (2) internal growth; (3) growth through acquisition; and (4) continued focus on controlling costs and enhancing efficiency. To measure internal performance, we exclude the impact of foreign currency, contributions from recent acquisitions, and differences in the number of weeks in fiscal periods from net sales. Foreign currency impact represents the difference in results that is attributable to fluctuations in currency exchange rates the company uses to convert results for all foreign entities where the functional currency is not the U.S. dollar. The company calculates the impact as the difference between the current period results translated using the current period currency exchange rates and using the comparable prior period’s currency exchange rates. The company believes the disclosure of net sales changes in constant currency provides useful supplementary information to investors in light of fluctuations in currency rates.

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exchange rates. The company believes the disclosure of net sales changes in constant currency provides useful supplementary information to investors in light of fluctuations in currency rates.

FACTORS AFFECTING OUR RESULTS

Restructuring. During the second quarter 2025, we took actions to better align our organization to current market opportunities. These restructuring activities resulted in pre-tax asset impairment charges of $6.9 million to write down assets related to certain software offerings and pre-tax severance charges of $3.3 million. The asset impairment were recorded within cost of sales and the severance was recorded within operating expenses in the Condensed Consolidated Statements of Operations and Other Comprehensive Income. Annual pre-tax savings from the severance actions are estimated to be approximately $16 million, of which approximately $10 million is estimated to be realized in fiscal 2025.

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impairment were recorded within cost of sales and the severance was recorded within operating expenses in the Condensed Consolidated Statements of Operations and Other Comprehensive Income. Annual pre-tax savings from the severance actions are estimated to be approximately $16 million, of which approximately $10 million is estimated to be realized in fiscal 2025.

Sale of Investment. During the second quarter 2025, we sold our investment in Vetsource, a commercial partner and leading home delivery provider for veterinarians, for $86.4 million. Our investment in VetSource had a carrying value of $56.8 million and a put option with a carrying value of $25.8 million. We recorded a pre-tax gain of $3.8 million in other income, net in our Condensed Consolidated Statements of Operations and Other Comprehensive Income as a result of this sale. The cash received of $86.4 million was reported within investing activities in our Condensed Consolidated Statements of Cash Flows.

Change Healthcare cyber attack. Change Healthcare, a subsidiary of UnitedHealth Group and the largest clearinghouse for medical claims in the U.S., was the subject of a cyberattack in February 2024, which resulted in many dental practices being unable to process insurance claims. Many of our practice management software solutions incorporated a fee-based integration with Change Healthcare for claims management. During the outage, Patterson suspended payment for that service, which impacted the net sales and gross profit of our Dental segment. This outage negatively impacted our business in the fourth quarter of fiscal 2024, continues to affect our business, and has generated litigation. We onboarded a new provider that has a variety of capabilities including, without limitation, insurance claim reimbursement assistance. We have filed a claim with our business interruption insurance provider for losses incurred related to this attack and are actively pursuing reimbursement under our policy coverage.

Macro-economic conditions. We are impacted by various conditions that create uncertainty in our macro-economic environment. Cost inflation and fluctuating interest rates may affect our customer's willingness to invest in capital equipment and could impact our customers' volume of purchases.

Receivables Securitization Program. We are a party to certain receivables purchase agreements with MUFG Bank, Ltd. ("MUFG"), under which MUFG acts as an agent to facilitate the sale of certain Patterson receivables (the “Receivables”) to certain unaffiliated financial institutions (the “Purchasers”). The proceeds from the sale of these Receivables comprise a combination of cash and a deferred purchase price (“DPP”) receivable. The DPP receivable is ultimately realized by Patterson following the collection of the underlying Receivables sold to the Purchasers. The collection of the DPP receivable is recognized as an increase to net cash provided by investing activities within the Condensed Consolidated Statements of Cash Flows, with a corresponding reduction to net cash used in operating activities within the Condensed Consolidated Statements of Cash Flows.

RESULTS OF OPERATIONS

QUARTER ENDED ~~OCTOBER~~JANUARY 2625, ~~2024~~2025 COMPARED TO QUARTER ENDED ~~OCTOBER~~JANUARY 2827, ~~2023~~2024

The following table summarizes our results as a percent of net sales:


	Three Months Ended
	January 25, 2025		January 27, 2024
Net sales	100.0	%	100.0	%
Cost of sales	79.6		78.3
Gross profit	20.4		21.7
Operating expenses	17.5		17.4
Operating income	2.9		4.3
Other income (expense)	(0.2)		(0.5)
Income before taxes	2.7		3.8
Income tax expense	0.7		0.9
Net income	2.0		2.9
Net loss attributable to noncontrolling interests	—		—
Net income attributable to Patterson Companies, Inc.	2.0	%	2.9	%

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	Three Months Ended
	October 26, 2024		October 28, 2023
Net sales	100.0	%	100.0	%
Cost of sales	80.4		79.5
Gross profit	19.6		20.5
Operating expenses	17.4		17.1
Operating income	2.2		3.4
Other income (expense)	(0.1)		(0.2)
Income before taxes	2.1		3.2
Income tax expense	0.5		0.8
Net income	1.6		2.4
Net loss attributable to noncontrolling interests	—		—
Net income attributable to Patterson Companies, Inc.	1.6	%	2.4	%

Net Sales. Consolidated net sales for the three months ended October 26, 2024 were $1,674.4 million, an increase of 1.3% from $1,652.8 million for the three months ended October 28, 2023. Foreign exchange rate changes had a favorable impact of 0.5% on current quarter net sales.

Dental segment net sales for the three months ended October 26, 2024 were $611.7 million, a decrease of 2.3% from $626.4 million for the three months ended October 28, 2023. Foreign exchange rate changes had no significant impact on current quarter net sales. Current quarter net sales of consumables increased 0.7%, net sales of equipment decreased 7.5%, and net sales of value-added services and other decreased 2.7%. The decrease in net sales of equipment was primarily within digital and CEREC categories. The decrease in net sales of value-added services was primarily due to a decline in sales of software offerings that were negatively impacted by the cybersecurity attack on Change Healthcare.

Animal Health segment net sales for the three months ended October 26, 2024 were $1,054.6 million, an increase of 2.9% from $1,024.6 million for the three months ended October 28, 2023. Foreign exchange rate changes had a favorable impact of 0.9% on current quarter net sales. Current quarter net sales of consumables increased 2.6%, net sales of equipment increased 1.4%, and net sales of value-added services and other increased 19.1%. Acquisitions contributed an increase in Animal Health net sales of approximately 0.1%.

Gross Profit. The consolidated gross profit margin rate for the three months ended October 26, 2024 decreased 90 basis points to 19.6%. Approximately 40 basis points of the decline was attributable to an asset impairment charge of $6.9 million in our Dental software business. The remainder of the decline was primarily attributable to margin pressure and mix in the Dental segment. The Corporate segment gross profit included the favorable impacts of interest rate changes on our customer financing portfolio in the current quarter. This interest rate impact was partially offset by a loss on associated interest rate swap agreements, which is reflected in other income, net in our Condensed Consolidated Statements of Operations and Other Comprehensive Income.

Operating Expenses. Consolidated operating expenses for the three months ended October 26, 2024 were $290.5 million, a 3.0% increase from the prior year quarter of $282.1 million. The consolidated operating expense ratio of 17.4% increased 30 basis points from the prior year quarter. The increase in operating expenses was primarily attributable to severance, medical claims, and the write-off of the remaining balance of an inventory pre-payment. The inventory pre-payment was made in a period of supply chain disruptions and determined to be uncollectible in the second quarter of fiscal year 2025. These increases were partially offset by lower travel and entertainment expenses due to discretionary spend management.

Operating Income. For the three months ended October 26, 2024, operating income was $37.6 million, or 2.2% of net sales, as compared to $56.9 million, or 3.4% of net sales for the three months ended October 28, 2023. The decrease in operating income was driven primarily by the Dental segment.

Dental segment operating income was $33.7 million and $55.3 million for the three months ended October 26, 2024 and October 28, 2023, respectively. The decrease in operating income was primarily attributable to lower net sales and gross profit as compared to the prior year quarter.

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~~Animal~~Net ~~Health~~Sales. ~~segment~~Consolidated ~~operating~~net ~~income~~sales ~~was~~for the three months ended January 25, 2025 were $291,572.64 million, ~~and~~a decrease of 2.7% from $261,616.31 million for the three months ended ~~October~~January 2627, 2024,. ~~and~~Foreign ~~October~~exchange ~~28,~~rate ~~2023,~~changes ~~respectively.~~had ~~The~~an ~~increase~~unfavorable inimpact ~~operating~~of ~~income~~0.2% ~~was~~on ~~primarily~~current ~~driven~~quarter by net sales. ~~growth~~Acquisitions ~~and~~contributed an increase in ~~gross~~net ~~profit~~sales asof ~~compared~~approximately ~~to the prior year quarter~~0.2%.

~~Corporate~~Dental segment ~~operating~~net ~~loss~~sales ~~was~~for $the three months ended January 25, 2025 were $596.63 million, ~~and~~a decrease of 6.4% from $24637.71 million for the three months ended ~~October~~January 2627, 2024. ~~and~~Foreign ~~October~~exchange ~~28,~~rate ~~2023,~~changes ~~respectively.~~had ~~The~~an ~~change~~unfavorable ~~was~~impact ~~primarily~~of ~~attributable~~0.4% toon ~~increases~~current inquarter ~~operating~~net ~~expenses~~sales. ~~related~~Current toquarter ~~severance~~net ~~and~~sales ~~medical~~of ~~claims,~~consumables ~~partially~~decreased ~~offset~~6.6%, bynet ~~favorable~~sales ~~impacts~~ of ~~interest~~equipment ~~rate~~decreased ~~changes~~7.3%, onand ~~our~~net ~~customer~~sales ~~financing~~of ~~portfolio~~value-added inservices ~~the~~and ~~current~~other ~~year~~decreased ~~quarter~~2.7%. ~~This~~The ~~interest~~decrease ~~rate~~in ~~impact~~net ~~was~~sales ~~partially~~of ~~offset~~equipment bywas ~~changes~~primarily inwithin the ~~associated~~digital ~~interest~~and ~~rate~~CAD/CAM ~~swap agreements~~categories, ~~which~~partially ~~were~~offset ~~reflected~~by inincreases ~~other income, net~~ in ~~our~~core ~~Condensed~~equipment ~~Consolidated Statements of Operations and Other Comprehensive Income~~sales.

~~Other~~Animal ~~Income~~Health ~~(Expense).~~segment ~~Net~~net ~~other~~sales ~~expense~~for ~~was~~the three months ended January 25, 2025 were $2972.14 million, ~~and~~an $3increase of 0.5% from $967.3 million for the three months ended ~~October~~January 2627, 2024. ~~and~~Foreign ~~October~~exchange ~~28,~~rate ~~2023,~~changes ~~respectively.~~had Wean ~~recorded~~unfavorable aimpact ~~gain on sale~~ of ~~our~~0.1% ~~investment~~on incurrent ~~VetSource~~quarter ofnet $3sales.8 ~~million,~~Current ~~and~~quarter ~~investment~~net ~~income~~sales ~~and~~of ~~other~~consumables increased $20.3%, ~~million~~net assales ~~compared~~of toequipment ~~the~~decreased ~~prior year quarter~~1.1%, ~~These~~and ~~favorable~~net ~~impacts~~sales ~~were~~of ~~partially~~value-added ~~offset~~services byand another ~~increase~~increased ~~in interest expense of $~~11.1%.2 ~~million~~Acquisitions ~~and~~contributed ~~unfavorable~~an ~~impacts~~increase ofin ~~interest~~Animal ~~rate~~Health ~~swaps~~net sales of ~~$3.5~~approximately ~~million as compared to the prior year quarter~~0.4%.

~~Income~~Gross ~~Tax Expense~~Profit. The ~~effective~~consolidated ~~income~~gross ~~tax~~profit margin rate for the three months ended ~~October~~January 2625, ~~2024~~2025 ~~was~~decreased ~~24.9%,~~130 ~~compared~~basis points to 2520.34%. ~~for~~The ~~the~~decline ~~three~~was ~~months~~primarily ~~ended~~attributable ~~October~~to ~~28,~~margin ~~2023~~pressure and mix in the Dental segment. The ~~change~~Corporate segment gross profit included the unfavorable impacts of interest rate changes on our customer financing portfolio in the current quarter. This interest rate impact was ~~primarily~~partially ~~due~~offset toby a gain on associated interest rate swap agreements, which is reflected in other income, net in our Condensed Consolidated Statements of Operations and Other Comprehensive Income. Gross profit was impacted in the ~~benefit~~current fiscal third quarter by a year-over-year increase in LIFO expense of ~~purchased~~$7.4 ~~transferable~~million, ~~federal~~of ~~tax~~which ~~credits~~$3.8 million of the increase was in the Dental segment and $3.6 million of the increase was in the Animal Health segment.

~~The~~Operating ~~Organization~~Expenses. ~~for~~Consolidated ~~Economic~~operating ~~Cooperation~~expenses ~~and~~for ~~Development~~the ~~(“OECD”)~~three ~~has~~months ~~published~~ended aJanuary ~~framework~~25, to2025 ~~implement~~were $275.4 million, a ~~global~~2.0% ~~minimum~~decrease ~~income~~from ~~tax~~the ~~rate~~prior year quarter of ~~15%~~$281.0 ~~through~~million. ~~its~~The ~~Base~~consolidated ~~Erosion~~operating ~~and~~expense ~~Profit~~ratio ~~Shifting~~of ~~Pillar~~17.5% ~~Two~~increased ~~project~~10 ~~(“BEPS~~basis ~~Pillar~~points ~~Two”).~~from ~~This~~the ~~new~~prior ~~legislation~~year ~~became~~quarter. ~~effective~~The decrease in ~~certain~~operating ~~countries~~expenses ~~where~~was ~~the~~primarily ~~Company~~attributable ~~operates~~to ~~starting~~discretionary inspend ~~fiscal~~management ~~2025.~~and Welower ~~continue~~payroll costs due in part to ~~evaluate~~restructuring. ~~the~~These ~~impact~~actions ofwere ~~this~~partially ~~new~~offset ~~legislation.~~by Atan ~~this~~increase ~~time,~~in weemployee dobenefit ~~not~~expense ~~expect~~due ~~the~~to ~~impact~~medical ofclaims ~~this~~and ~~legislation~~legal tofees beincurred ~~material~~in relation to ~~our~~the ~~effective~~pending ~~tax rate~~Merger.

~~Net~~Operating Income. ~~Attributable~~For tothe ~~Patterson~~three ~~Companies,~~months ~~Inc.~~ended ~~and~~January ~~Earnings~~25, ~~Per~~2025, ~~Share.~~operating ~~Net~~ income ~~attributable~~was to$45.4 ~~Patterson Companies~~million, ~~Inc~~or 2.9% ~~for~~of ~~the~~net ~~three months ended October 26~~sales, ~~2024~~as ~~was~~compared to $2670.80 million, ~~compared~~or ~~to $40~~4.03% ~~million~~of net sales for the three months ended ~~October~~January 2827, ~~2023~~2024. ~~Earnings~~The ~~per~~decrease ~~diluted~~in ~~share~~operating ~~were~~income ~~$0.30~~was driven primarily by lower margin in the ~~current~~Dental ~~quarter~~and ~~compared~~Corporate tosegments, ~~$0.42~~partially inoffset ~~the~~by ~~prior~~discretionary ~~year~~spend ~~quarter~~management in operating expenses. ~~Weighted~~Operating ~~average~~income ~~diluted~~was ~~shares~~also ~~outstanding~~impacted inby ~~the~~a ~~current~~year-over-year ~~quarter~~increase ~~were~~in ~~88.~~LIFO expense of $7.4 million, ~~compared~~a ~~to 95.~~$2.4 million year-over-year increase in ~~the~~legal ~~prior~~expenses ~~year~~and ~~quarter~~a $4.0 ~~The~~million ~~current~~increase ~~quarter~~in ~~and~~employee ~~prior~~benefit ~~year~~expense ~~quarter~~due ~~cash~~to ~~dividend~~medical ~~declared~~claims ~~was~~compared ~~$0.26~~to ~~per~~the ~~common~~prior ~~share~~year period.

~~SIX~~Dental ~~MONTHS~~segment ~~ENDED~~operating ~~OCTOBER~~income 26was $42.1 million and $53.6 million for the three months ended January 25, 2025 and January 27, 2024, ~~COMPARED~~respectively. TOThe ~~SIX~~decrease ~~MONTHS~~in ~~ENDED~~operating ~~OCTOBER~~income 28was primarily attributable to lower net sales and gross profit as compared to the prior year quarter, ~~2023~~partially offset by discretionary spend management in operating expenses.

	Six Months Ended
	October 26, 2024		October 28, 2023
Net sales	100.0	%	100.0	%
Cost of sales	80.1		79.6
Gross profit	19.9		20.4
Operating expenses	17.8		17.5
Operating income	2.1		2.9
Other income (expense)	(0.4)		—
Income before taxes	1.7		2.9
Income tax expense	0.4		0.7
Net income	1.3		2.2
Net loss attributable to noncontrolling interests	—		—
Net income attributable to Patterson Companies, Inc.	1.3	%	2.2	%

Animal Health segment operating income was $32.0 million and $32.1 million for the three months ended January 25, 2025, and January 27, 2024, respectively.

~~Net~~Corporate ~~Sales~~segment operating loss was $28.6 ~~Consolidated~~million ~~net~~and ~~sales~~$15.7 million for the ~~six~~three months ended ~~October~~January 2625, ~~2024~~2025 ~~were~~and $3January 27,~~216.1~~ ~~million~~2024, ~~a 0~~respectively.4% ~~decrease~~The ~~from~~change ~~$3,229.5~~was ~~million~~primarily ~~for~~attributable ~~the~~to ~~six~~unfavorable ~~months~~impacts ~~ended~~of ~~October~~interest ~~28,~~rate ~~2023~~changes on our customer financing portfolio and increases in operating expenses related to medical claims and legal fees in the current year quarter. ~~Foreign~~This ~~exchange~~interest rate impact was partially offset by changes ~~had~~in athe ~~favorable~~associated ~~impact~~interest ofrate ~~0.2%~~swap onagreements, ~~current~~which ~~period~~were reflected in other income, net ~~sales.~~in our Condensed Consolidated Statements of Operations and Other Comprehensive Income.

~~Dental~~Other ~~segment~~Income ~~net~~(Expense). ~~sales~~Net other expense was $2.6 million and $8.1 million for the ~~six~~three months ended ~~October~~January 2625, ~~2024~~2025 ~~were~~and $1January 27,~~162.0~~ ~~million~~2024, ~~a 2~~respectively.7% The decrease ~~from~~in ~~$1,193.7~~net ~~million~~other ~~for~~expense ~~the~~was ~~six~~primarily ~~months~~attributable ~~ended~~to ~~October~~favorable ~~28,~~impacts ~~2023.~~of ~~Foreign~~interest ~~exchange~~ rate ~~changes~~swaps ~~had~~as ancompared ~~unfavorable~~to the prior year quarter.

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~~impact~~Income ofTax 0Expense.1% onThe ~~current~~effective ~~period~~income ~~net~~tax ~~sales.~~rate ~~Current~~for ~~period~~the ~~net~~three ~~sales~~months ofended ~~consumables~~January ~~decreased 0.8%~~25, ~~net~~2025 ~~sales~~was ~~of equipment decreased 5~~27.52%, ~~and~~compared ~~net~~to ~~sales of value-added services and other decreased 4~~23.72%. ~~The~~for ~~decrease~~the inthree ~~net~~months ~~sales~~ended ofJanuary ~~equipment~~27, ~~was primarily within digital and CEREC categories~~2024. The ~~decrease~~increase in ~~net~~the ~~sales~~rate ofis ~~value-added services was~~ primarily due to athe ~~decline~~impact inof ~~sales~~provision ofto ~~software~~return ~~offerings~~adjustments ~~that~~in ~~were~~the ~~negatively~~prior ~~impacted~~year byquarter ~~the~~as ~~cybersecurity~~compared ~~attack~~to onthe ~~Change~~current ~~Healthcare~~quarter.

~~Animal~~The ~~Health~~Organization ~~segment~~for ~~net~~Economic ~~sales~~Cooperation ~~for~~and ~~the~~Development ~~six~~(“OECD”) ~~months~~has ~~ended~~published ~~October~~a ~~26,~~framework ~~2024~~to ~~were~~implement ~~$2,037.0~~a ~~million,~~global aminimum ~~0.1~~income tax rate of 15% ~~increase~~through ~~from~~its ~~$2,035.6~~Base ~~million~~Erosion ~~for~~and ~~the~~Profit ~~six~~Shifting ~~months~~Pillar ~~ended~~Two ~~October~~project ~~28,~~(“BEPS ~~2023~~Pillar Two”). ~~Foreign~~This ~~exchange~~new ~~rate~~legislation ~~changes~~became ~~had~~effective ain ~~favorable~~certain ~~impact~~countries ofwhere ~~0.5%~~the onCompany ~~current~~operates ~~period~~starting ~~net~~in ~~sales~~fiscal 2025. ~~Current~~We ~~period~~continue ~~net~~to ~~sales~~evaluate the impact of ~~consumables~~this ~~decreased~~new 0legislation.~~2%,~~ ~~net~~At ~~sales~~this oftime, ~~equipment~~we ~~decreased~~do ~~1.0%,~~not ~~and~~expect ~~net~~the ~~sales~~impact of ~~value-added~~this ~~services~~legislation ~~and~~to ~~other~~be ~~increased~~material 13to our effective tax rate.~~9%.~~

~~Gross~~Net ~~Profit~~Income Attributable to Patterson Companies, Inc. ~~The~~and ~~consolidated~~Earnings ~~gross~~Per ~~profit~~Share. ~~margin~~Net ~~rate~~income attributable to Patterson Companies, Inc. for the ~~six~~three months ended ~~October~~January 2625, ~~2024~~2025 ~~decreased~~was 50$31.3 ~~basis~~million, ~~points~~compared ~~from~~to $47.7 million for the ~~prior~~three ~~year~~months ~~period~~ended toJanuary 1927, 2024.~~9%.~~ ~~Approximately~~Net 20income ~~basis~~attributable ~~points~~to ofPatterson ~~the~~Companies, ~~decline~~Inc. was ~~attributable~~impacted toin anthe ~~asset~~fiscal ~~impairment~~third ~~charge~~quarter by a pre-tax year-over-year increase in LIFO expense of $67.94 million, a $2.4 million year-over-year pre-tax increase in ~~our~~legal ~~Dental~~expenses ~~software~~and ~~business~~a $4.0 ~~The~~million ~~remainder~~pre-tax ofincrease in employee benefit expense due to medical claims compared to the ~~decline~~prior ~~was~~year ~~primarily~~period. In addition, the year-over-year decrease in net income attributable to ~~margin~~Patterson ~~pressure~~Companies, ~~and~~Inc. ~~mix~~ in the ~~Dental~~third ~~segment.~~quarter ~~The~~of ~~Corporate~~fiscal ~~segment~~2025 ~~gross~~was ~~profit~~also ~~included~~related to lower sales of dental consumables and equipment and the ~~favorable~~continued ~~impacts~~negative impact of ~~interest~~the ~~rate~~widely ~~changes~~reported cybersecurity attack on ~~our~~vendor ~~customer~~Change ~~financing~~Healthcare, ~~portfolio~~within the value-added services category of the dental segment. Earnings per diluted share were $0.35 in the current quarter compared to $0.52 ~~This~~in ~~interest~~the ~~rate~~prior ~~impact~~year ~~was~~quarter. ~~partially~~Weighted ~~offset~~average bydiluted ashares ~~loss~~outstanding onin ~~associated~~the ~~interest~~current ~~rate~~quarter ~~swap~~were ~~agreements~~89.1 million, ~~which~~compared isto ~~reflected~~92.5 million in ~~other~~the ~~income~~prior year quarter. Our payment of dividends is restricted under the terms of the Merger Agreement. As a result, ~~net~~we did not declare a dividend in ~~our~~the ~~Condensed~~current ~~Consolidated~~quarter ~~Statements~~and do not anticipate further payment of ~~Operations~~dividends ~~and~~during ~~Other~~the ~~Comprehensive~~pendency ~~Income~~of the Merger. The prior year quarter cash dividend declared was $0.26 per common share.

~~Operating~~NINE ~~Expenses.~~MONTHS ~~Consolidated~~ENDED ~~operating~~JANUARY ~~expenses for the six months ended October 26~~25, 2024 were $573.7 million, a 1.9% increase from the prior year period of $563.0 million. The increase in operating expenses was primarily attributable to severance, medical claims, and the write-off of the remaining balance of an inventory pre-payment. The inventory pre-payment was made in a period of supply chain disruptions and determined to be uncollectible in the second quarter of fiscal year 2025. ~~These~~COMPARED ~~increases~~TO ~~were~~NINE ~~partially~~MONTHS ~~offset~~ENDED byJANUARY ~~lower travel and entertainment expenses due to discretionary spend management. The consolidated operating expense ratio of 17.8% increased 30 basis points from the prior year period~~27, ~~which was also driven by these same factors.~~2024

The following table summarizes our results as a percent of net sales:

Operating Income. For the six months ended October 26, 2024, operating income was $67.0 million, or 2.1% of net sales, as compared to $95.1 million, or 2.9% of net sales for the six months ended October 28, 2023. The decrease in operating income was driven primarily by the Dental segment.


	Nine Months Ended
	January 25, 2025		January 27, 2024
Net sales	100.0	%	100.0	%
Cost of sales	79.9		79.2
Gross profit	20.1		20.8
Operating expenses	17.8		17.4
Operating income	2.3		3.4
Other income (expense)	(0.3)		(0.2)
Income before taxes	2.0		3.2
Income tax expense	0.5		0.8
Net income	1.5		2.4
Net loss attributable to noncontrolling interests	—		—
Net income attributable to Patterson Companies, Inc.	1.5	%	2.4	%

~~Dental~~Net ~~segment~~Sales. ~~operating~~Consolidated ~~income~~net ~~was~~sales ~~$60.7 million~~ for the ~~six~~nine months ended ~~October~~January 2625, ~~2024~~2025 were $4,788.5 million, a 1.2% decrease offrom $334,845.26 million ~~from~~for the ~~prior~~nine ~~year~~months ~~period~~ended January 27, 2024. ~~The~~Foreign ~~decrease~~exchange ~~was~~rate ~~primarily~~changes ~~driven~~had bya ~~decreases~~favorable impact of 0.1% on current period net sales. Acquisitions contributed an increase in net sales ~~and~~of ~~gross~~approximately ~~profit~~0. 1%.

~~Animal~~Dental ~~Health~~ segment ~~operating~~net ~~income~~sales ~~was~~for the nine months ended January 25, 2025 were $551,758.4 million, a 4.0% decrease from $1,830.8 million for the ~~six~~nine months ended ~~October~~January 2627, 2024,. aForeign ~~decrease~~exchange rate changes had an unfavorable impact of $10.12% ~~million~~on ~~from~~current ~~the~~period ~~prior~~net ~~year~~sales. Current period. ~~The~~net ~~decrease~~sales ~~was~~of ~~primarily~~consumables ~~driven~~decreased by2.7%, anet ~~decrease~~sales inof equipment decreased 6.2%, and net sales ~~and~~of ~~gross~~value-added ~~profit,~~services ~~partially~~and ~~offset~~other bydecreased ~~lower~~4.1%. ~~operating~~The ~~expenses~~decrease ~~due~~in tonet ~~discretionary~~sales ~~spend~~of ~~management~~equipment ~~during~~was ~~the~~primarily ~~six~~within ~~months~~the ~~ended~~digital ~~October~~and ~~26,~~CAD/CAM ~~2024~~categories.

~~Corporate~~Animal Health segment ~~operating~~net ~~loss~~sales ~~was $48.7 million and $54.9 million~~ for the ~~six~~nine months ended ~~October~~January 2625, ~~2024~~2025 ~~and~~were ~~October 28~~$3,009.4 ~~2023~~million, ~~respectively~~a 0.2% ~~The~~increase ~~change~~from ~~was~~$3,002.9 ~~primarily~~million ~~attributable~~for tothe ~~increases~~nine inmonths ~~our~~ended ~~equipment~~January ~~financing sales~~27, ~~including~~2024. ~~favorable~~Foreign ~~impacts~~exchange ~~of interest~~ rate changes onhad ~~our~~a ~~customer~~favorable ~~financing~~impact ~~portfolio,~~of in0.3% ~~the~~on current ~~year~~ period asnet ~~compared~~sales. toCurrent ~~the prior year~~ period. ~~This~~net ~~interest~~sales ~~rate~~of ~~impact~~consumables ~~was~~declined ~~partially~~less ~~offset~~than ~~by changes in the associated interest rate swap agreements~~0.1%, ~~which were reflected in other income,~~ net insales ~~our Condensed Consolidated Statements~~ of ~~Operations~~equipment ~~and~~decreased ~~Other Comprehensive Income~~1.1%, ~~The~~and ~~favorability in~~ net sales ~~was~~of ~~partially~~value-added ~~offset~~services byand ~~increases~~other inincreased ~~operating expenses~~13.0%.

Other Income (Expense). Net other expense was $13.6 million and $1.2 million for the six months ended October 26, 2024 and October 28, 2023, respectively. The change was driven by an increase in interest expense of $4.9 million and unfavorable impacts of interest rate swaps of $14.0 million as compared to the prior year period. These unfavorable impacts were partially offset by a gain on sale of our investment in VetSource of $3.8 million, and an increase to investment income and other of $2.7 million as compared to the prior year period.

Income Tax Expense. The effective income tax rate for the six months ended October 26, 2024 and October 28, 2023 was 24.5%. The rate was impacted by a favorable income tax reserve adjustment offset by excess tax benefits associated with stock-based compensation.

Net Income Attributable to Patterson Companies, Inc. and Earnings Per Share. Net income attributable to Patterson Companies, Inc. for the six months ended October 26, 2024 was $40.5 million, compared to $71.2 million for the six months ended October 28, 2023. Earnings per diluted share were $0.46 in the current period compared

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toGross $0Profit.74 inThe consolidated gross profit margin rate for the ~~prior~~nine ~~year~~months ~~period.~~ended ~~Weighted~~January ~~average~~25, ~~diluted~~2025 ~~shares~~decreased ~~outstanding~~70 inbasis points from the ~~current~~prior year period ~~were~~to 8820.71%. ~~million,~~The ~~compared~~decline was due primarily to 95an asset impairment charge of $6.79 million in ~~the~~our ~~prior~~Dental ~~year~~software ~~period~~business and margin pressure and mix in the Dental segment. The ~~current~~Corporate ~~period~~segment ~~and~~gross ~~prior~~profit included the favorable impacts of interest rate changes on our customer financing portfolio in the current year period. ~~cash~~This ~~dividend~~interest ~~declared~~rate impact was ~~$0.52~~partially ~~per~~offset ~~common~~by ~~share~~a loss on associated interest rate swap agreements, which is reflected in other income, net in our Condensed Consolidated Statements of Operations and Other Comprehensive Income.

Operating Expenses. Consolidated operating expenses for the nine months ended January 25, 2025 were $849.1 million, a 0.6% increase from the prior year period of $844.0 million. The increase in operating expenses was primarily attributable to severance, medical claims, legal fees, and the write-off of the remaining balance of an inventory pre-payment. The inventory pre-payment was made in a period of supply chain disruptions and determined to be uncollectible in the second quarter of fiscal 2025. These increases were partially offset by lower travel and entertainment expenses due to discretionary spend management. The consolidated operating expense ratio of 17.8% increased 40 basis points from the prior year period, which was also driven by these same factors.

Operating Income. For the nine months ended January 25, 2025, operating income was $112.4 million, or 2.3% of net sales, as compared to $165.1 million, or 3.4% of net sales for the nine months ended January 27, 2024. The decrease in operating income was driven primarily by the Dental segment.

Dental segment operating income was $102.8 million for the nine months ended January 25, 2025, a decrease of $44.8 million from the prior year period. The decrease was primarily driven by decreases in net sales and gross profit, an asset impairment charge, the write-off of an inventory pre-payment, and severance in the current year period, partially offset by discretionary spend management.

Animal Health segment operating income was $87.0 million for the nine months ended January 25, 2025, a decrease of $1.2 million from the prior year period. The decrease was primarily driven by a decrease in gross profit, partially offset by lower operating expenses due to discretionary spend management during the nine months ended January 25, 2025.

Corporate segment operating loss was $77.3 million and $70.6 million for the nine months ended January 25, 2025 and January 27, 2024, respectively. The change was primarily attributable to increases in operating expenses including severance, medical claims, and legal fees, partially offset by increases in our equipment financing sales, including favorable impacts of interest rate changes on our customer financing portfolio, in the current year period as compared to the prior year period. This interest rate impact was partially offset by changes in the associated interest rate swap agreements, which were reflected in other income, net in our Condensed Consolidated Statements of Operations and Other Comprehensive Income.

Other Income (Expense). Net other expense was $16.2 million and $9.2 million for the nine months ended January 25, 2025 and January 27, 2024, respectively. The change was driven by an increase in interest expense of $3.9 million and unfavorable impacts of interest rate swaps of $8.3 million as compared to the prior year period. These unfavorable impacts were partially offset by a gain on sale of our investment in VetSource of $3.8 million, and an increase to investment income and other of $1.4 million as compared to the prior year period.

Income Tax Expense. The effective income tax rate for the nine months ended January 25, 2025 and January 27, 2024 was 25.7% and 23.9%, respectively. The increase in the rate is primarily due to a less favorable impact of excess tax benefits associated with stock compensation in the current year as compared to the prior year.

Net Income Attributable to Patterson Companies, Inc. and Earnings Per Share. Net income attributable to Patterson Companies, Inc. for the nine months ended January 25, 2025 was $71.7 million, compared to $118.9 million for the nine months ended January 27, 2024. Earnings per diluted share were $0.81 in the current period compared to $1.26 in the prior year period. Weighted average diluted shares outstanding in the current period were 88.9 million, compared to 94.7 million in the prior year period. The current period dividend declared was $0.52 per common share, and the prior year period cash dividend declared was $0.78 per common share. Our payment of dividends is restricted under the terms of the Merger Agreement. As a result, we did not declare a dividend in the fiscal third quarter and do not anticipate further payment of dividends during the pendency of the Merger.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used in operating activities was $~~458~~735.71 million and $~~485~~719.38 million for the ~~six~~nine months ended ~~October~~January 2625, ~~2024~~2025 and ~~October~~January 2827, ~~2023~~2024, respectively. Net cash used in operating activities for the ~~six~~nine months ended ~~October~~January 26, 2024 was primarily driven by the impact of our Receivables Securitization Program and a decrease to net income as compared to the prior year period, partially offset by a lower investment in working capital.

~~Net cash provided by investing activities was $549.3 million and $454.9 million for the six months ended October~~ 26, 2024 and October 28, 2023, respectively. Collections of DPP receivables were $497.0 million and $489.5 million for the six months ended October 26, 2024 and October 28, 2023, respectively. During the six months ended October 26, 2024, we recorded cash receipts of $86.4 million from the sale of our investment in VetSource and used $7.9 million to acquire Infusion Concepts Limited and Mountain Vet Supply. Capital expenditures were $26.2 million and $33.5 million during the six months ended October 26, 2024 and October 28, 2023, respectively. We expect to use a total of approximately $60.0 million for capital expenditures in fiscal 2025.

~~Net~~Table cash used in financing activities for the six months ended October 26, 2024 was $48.9 million, driven by $50.0 million for share repurchases and $46.2 million for dividend payments, partially offset by $48.0 million attributed to draws on our revolving line of credit. Cash received from the sale of VetSource was used to reduce the draw on our revolving line of credit. Net cash used in financing activities for the six months ended October 28, 2023 was $13.2 million, driven primarily by dividend payments of $50.3 million and share repurchases of $90.5 million, partially offset by $125.0 million attributed to draws on our revolving line of credit. Contents

25, 2025 was primarily driven by the impact of our Receivables Securitization Program and changes in working capital.

Net cash provided by investing activities was $759.2 million and $718.0 million for the nine months ended January 25, 2025 and January 27, 2024, respectively. Collections of DPP receivables were $731.1 million and $770.3 million for the nine months ended January 25, 2025 and January 27, 2024, respectively. During the nine months ended January 25, 2025, we recorded cash receipts of $86.4 million from the sale of our investment in VetSource and used $12.0 million to acquire Infusion Concepts Limited and Mountain Vet Supply and pay holdbacks following our acquisition of substantially all of the assets of Relief Services for Veterinary Practitioners (RSVP) and Animal Care Technologies (ACT) and Dairy Tech, Inc. Capital expenditures were $46.4 million and $51.2 million during the nine months ended January 25, 2025 and January 27, 2024, respectively. We expect to use a total of approximately $60.0 million for capital expenditures in fiscal 2025.

Net cash used in financing activities for the nine months ended January 25, 2025 was $3.0 million, driven by $50.0 million for share repurchases and $69.2 million for dividend payments, partially offset by $116.0 million attributed to draws on our revolving line of credit. Cash received from the sale of VetSource was used to reduce the draw on our revolving line of credit. Net cash used in financing activities for the nine months ended January 27, 2024 was $34.1 million, driven primarily by dividend payments of $75.0 million and share repurchases of $214.6 million, partially offset by $286.0 million attributed to draws on our revolving line of credit. Our repurchase of shares and our payment of dividends are restricted under the terms of the Merger Agreement. As a result, we do not anticipate further repurchases of shares or payment of dividends during the pendency of the Merger.

In fiscal 2021, we entered into an amendment, restatement and consolidation of certain credit agreements with various lenders, including MUFG Bank, Ltd, as administrative agent. This amended and restated credit agreement (the “Credit Agreement”) consisted of a $700.0 million revolving credit facility and a $300.0 million term loan facility, and was set to mature no later than February 2024.

In the second quarter of fiscal 2023, we amended and restated the Credit Agreement (the “Amended Credit Agreement”). The Amended Credit Agreement consists of a $700.0 million revolving credit facility and a $300.0 million term loan facility, and will mature no later than October 2027. We used the Amended Credit Agreement facilities to refinance and consolidate the Credit Agreement, and pay the fees and expenses incurred therewith. We expect to use the Amended Credit Agreement to finance our ongoing working capital needs and for other general corporate purposes.

As of ~~October~~January 2625, ~~2024~~2025, $~~294~~292.01 million was outstanding under the Amended Credit Agreement term loan at an interest rate of 5.9653%, and $~~234~~302.0 million was outstanding under the Amended Credit Agreement revolving credit facility at an interest rate of 65.0252%. As of April 27, 2024, $295.5 million was outstanding under the Credit Agreement term loan at an interest rate of 6.54%, and $186.0 million was outstanding under the Credit Agreement revolving credit facility at an interest rate of 6.53%.

We expect the collection of deferred purchase price receivables, existing cash balances and credit availability under existing debt facilities, less our funds used in operations, will be sufficient to meet our working capital needs and to finance our business over the remainder of fiscal 2025.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

See Note 1 to the Condensed Consolidated Financial Statements.

SUBSEQUENT ~~EVENTS~~EVENT

~~During~~See ~~the~~Note ~~third~~12 ~~quarter of fiscal 2025, we announced that we are evaluating potential strategic alternatives~~ to ~~maximize~~the ~~shareholder~~Condensed ~~value.~~Consolidated ~~Such~~Financial ~~alternatives may include, but are not limited to, a sale, merger, strategic business combination or other transaction~~Statements. There can be no assurances that such evaluation will result in a transaction or that any transaction, if pursued, will be successfully completed. We do not intend to disclose further developments unless and until it is determined that further disclosure is appropriate.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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There have been no material changes in our exposure to market risk from that disclosed in Item 7A in our 2024 Annual Report on Form 10-K filed June 18, 2024.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our President and Chief Executive Officer ("CEO") and our Chief Financial Officer ("CFO"), management evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of October 26, 2024. Based upon their evaluation of these disclosure controls and procedures, the CEO and CFO concluded that the disclosure controls and procedures were effective as of October 26, 2024.

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended October 26, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of January 25, 2025. Based upon their evaluation of these disclosure controls and procedures, the CEO and CFO concluded that the disclosure controls and procedures were effective as of January 25, 2025.

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended January 25, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we become involved in lawsuits, administrative proceedings, government subpoenas, and government investigations (which may, in some cases, involve our entering into settlement agreements or consent decrees), relating to antitrust, commercial, environmental, product liability, intellectual property, regulatory, employment discrimination, securities, and other matters, including matters arising out of the ordinary course of business. The results of any such proceedings cannot be predicted with certainty because such matters are inherently uncertain. Significant damages or penalties may be sought in some matters, and some matters may require years to resolve. We also may be subject to fines or penalties, and equitable remedies (including but not limited to the suspension, revocation or non-renewal of licenses). We accrue for these matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Adverse outcomes may result in significant monetary damages or injunctive relief against us that could adversely affect our ability to conduct our business. There also exists the possibility of a material adverse effect on our financial statements for the period in which the effect of an unfavorable outcome becomes probable and reasonably estimable.

See Note 11 to the Condensed Consolidated Financial Statements appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.

ITEM 1A. RISK FACTORS

~~There~~In ~~have~~addition ~~been~~to nothe ~~material~~other ~~changes~~information toset forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors disclosed in Part I, Item 1A, “Risk Factors” in our 2024 Annual Report on Form 10-K for the fiscal year ended April 27, 2024, which could materially affect our business, financial condition or results of operations. We have also identified the following additional risk factors, which supplement those discussed in our Form 10-K:

Risk Factors related to the Proposed Merger

The proposed Merger is subject to approval of our shareholders as well as the satisfaction of other closing conditions, some or all of which may not be satisfied or completed within the expected timeframe, if at all.

Completion of the Merger is subject to a number of closing conditions, including obtaining the approval of our shareholders. We can provide no assurance that all required approvals will be obtained or that all closing conditions will otherwise be satisfied (or waived, if applicable), and, even if all required approvals can be obtained and all closing conditions are satisfied (or waived, if applicable), we can provide no assurance as to the terms, conditions and timing of such approvals or the timing of the completion of the Merger. Certain of the conditions to completion of the Merger are not within our control, and we cannot predict when or if these conditions will be satisfied (or waived, if applicable). Any adverse consequence of the pending Merger could be exacerbated by any delays in completion of the Merger or termination of the Merger Agreement.

Each party’s obligation to consummate the Merger is also subject to the accuracy of the representations and warranties of the other party (subject to customary materiality qualifications) and compliance in all material respects with the covenants and agreements contained in the Merger Agreement as of the closing of the Merger, including, with respect to us, covenants to conduct our business and operations in the ordinary course of business consistent with past practice and to not engage in certain kinds of material transactions prior to closing. In addition, the Merger Agreement may be terminated under certain specified circumstances, including, but not limited to, in connection with a change in the recommendation of our Board of Directors to enter into an agreement for a Superior Proposal (as defined in the Merger Agreement). Further, although there is no financing condition in the Merger Agreement, Parent has obtained equity and debt financing commitments, which it will use to consummate the transactions in accordance with the Merger Agreement. The obligations of the financing parties are subject to a number of customary conditions that must be satisfied prior to the completion of the Merger. As a result, we cannot assure you that the Merger will be completed, even if our shareholders approve the Merger, or that, if completed, it will be exactly on the terms set forth in the Merger Agreement or within the expected timeframe.

We may not complete the proposed Merger within the timeframe we anticipate or at all, which could have an adverse effect on our stock price as well as our business, financial results and/or operations.

The proposed Merger may not be completed within the expected timeframe, or at all, as a result of various factors and conditions, some of which may be beyond our control. If the Merger is not completed for any reason, including

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as a result of our shareholders failing to adopt the Merger Agreement, then our shareholders will not receive any payment for their shares of our common stock in connection with the Merger. Instead, we will remain a public company, our common stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act, and we will be required to continue to file periodic reports with the SEC. Moreover, our ongoing business may be materially adversely affected, and we would be subject to risks, including the following:

•we may experience negative reactions from the financial markets, including negative impacts on our stock price, and it is uncertain when, if ever, the price of the shares would return to the prices at which the shares currently trade;

•we may experience negative publicity, which could have an adverse effect on our ongoing operations including, but not limited to, retaining and attracting employees, customers, partners, suppliers and others with whom we do business;

•we will still be required to pay certain significant costs relating to the Merger, such as legal, accounting, financial advisory, printing and other professional services fees, which may relate to activities that we would not have undertaken other than in connection with the Merger;

•we may be required to pay a cash termination fee to Parent, as required under the Merger Agreement under certain circumstances;

•while the Merger Agreement is in effect, we are subject to restrictions on our business activities, including, among other things, restrictions on our ability to engage in certain kinds of material transactions, which could prevent us from pursuing strategic business opportunities, taking actions with respect to our business that we may consider advantageous and responding effectively and/or timely to competitive pressures and industry developments, and may as a result materially adversely affect our business, results of operations and financial condition;

•matters relating to the Merger require substantial commitments of time and resources by our management, which could result in the distraction of management from ongoing business operations and pursuing other opportunities that could have been beneficial to us; and

•we may commit significant time and resources to defending against litigation related to the Merger.

If the Merger is not consummated, the risks described above may materialize, and they may have a material adverse effect on our business operations, financial results and stock price, particularly to the extent that the current market price of our common stock reflects an assumption that the Merger will be completed.

We will be subject to various business uncertainties while the Merger is pending that may cause disruption.

Our efforts to complete the Merger could cause disruptions in, and create uncertainty surrounding, our business, which may materially adversely affect our results of operation and our business. Uncertainty as to whether the Merger will be completed may affect our ability to recruit prospective employees or to retain and motivate existing employees. Employee retention may be particularly challenging while the Merger is pending because employees may experience uncertainty about their roles following the Merger. A substantial amount of our management’s and key employees’ attention is being directed toward the completion of the Merger and thus is being diverted from our day-to-day operations. Uncertainty as to our future could adversely affect our business and our relationship with existing and potential customers, suppliers and other third parties. For example, customers, suppliers and other third parties may defer decisions concerning working with us, or seek to change existing business relationships with us. Changes to or termination of existing business relationships could adversely affect our revenue, earnings and financial condition, as well as the market price of our common stock. The adverse effects of the pendency of the Merger could be exacerbated by any delays in completion of the Merger or termination of the Merger Agreement.

The Merger Agreement may be terminated under various circumstances, including in connection with a Superior Proposal, and we would incur fees and expenses in connection with such termination.

Under the terms of the Merger Agreement, we may be required to pay Parent a termination fee under specified conditions, including in the event Parent terminates the Merger Agreement before receipt of our shareholders’ approval due to a change in recommendation by our Board of Directors, in the event we terminate the Merger Agreement to enter into a Superior Proposal, or in the event we enter into an alternative transaction within twelve months of termination of the Merger Agreement in certain circumstances and the alternative transaction is consummated. This payment could affect the structure, pricing and terms proposed by a third party seeking to

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acquire or merge with us and could discourage a third party from making a competing acquisition proposal, including a proposal that would be more favorable to our shareholders than the Merger.

We have incurred, and will continue to incur, direct and indirect costs as a result of the Merger.

We have incurred, and will continue to incur, significant costs and expenses, including regulatory costs, fees for professional services and other transaction costs in connection with the Merger, for which we will have received little or no benefit if the Merger is not completed. There are a number of factors beyond our control that could affect the total amount or the timing of these costs and expenses. Many of these fees and costs will be payable by us even if the Merger is not completed and may relate to activities that we would not have undertaken other than to complete the Merger.

Litigation challenging the Merger Agreement may be costly, distract management’s attention from the day-to-day operations of the business, and could prevent the Merger from being consummated within the expected timeframe or at all.

Lawsuits may be filed against us, our Board of Directors or other parties to the Merger Agreement, challenging our acquisition by Parent and/or making other claims in connection therewith. Such lawsuits may be brought by our shareholders and may seek, among other things, to enjoin consummation of the Merger. One of the conditions to the consummation of the Merger is that the consummation of the Merger is not restrained, enjoined or prohibited by any law or order of a court of competent jurisdiction or any other governmental entity. As such, if the plaintiffs in such potential lawsuits are successful in obtaining an injunction prohibiting the defendants from completing the Merger on the agreed upon terms, then such injunction may prevent the Merger from becoming effective, or from becoming effective within the expected timeframe. Regardless of the outcome of any litigation related to the Merger, such litigation may be time-consuming and expensive and may distract our management from running the day-to-day operations of our business.

We have also received several demand letters from purported shareholders of our company alleging failures to disclose material information in the preliminary proxy statement we filed with the SEC in connection with the proposed Merger, which allegedly rendered the proxy statement false and misleading. Specifically, the demands allege, among other things, that the proxy statement failed to disclose material information regarding the sales process we conducted, our financial projections and the financial analysis by the financial advisor to our Board of Directors, Guggenheim Securities, LLC.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer

On March 11, 2024, the Board of Directors authorized a $500 million share repurchase program through March 16, 2027. As of ~~October~~January 2625, ~~2024~~2025 there was $450.0 million remaining under the stock repurchase program. No shares were repurchased under the stock repurchase program during the third quarter of fiscal 2025. Our Credit Agreement permits us to declare and pay dividends, and repurchase shares, provided that no default or unmatured default exists and that we are in compliance with applicable financial covenants; however, our repurchase of shares and our payment of dividends are restricted under the terms of the Merger Agreement. As a result, we do not anticipate further repurchases of shares or payment of dividends during the pendency of the Merger.

No shares were repurchased under the stock repurchase program during the second quarter of fiscal 2025.

Our Credit Agreement permits us to declare and pay dividends, and repurchase shares, provided that no default or unmatured default exists and that we are in compliance with applicable financial covenants.

ITEM 5. OTHER INFORMATION

Insider Trading Arrangements

A significant portion of the compensation of our executive officers is delivered in the form of equity awards, including restricted stock units, performance units and non-qualified stock options. All of these awards contain vesting requirements related to service, with performance units also requiring satisfaction of certain performance criteria to obtain a payout. This compensation design is intended to align executive compensation with the performance experienced by our shareholders. Following delivery of shares of our common stock under such equity awards, once any applicable service- or performance-based vesting standards have been satisfied, our executive officers from time to time engage in the open-market sale of some of those shares for diversification or other personal reasons. Our executive officers may also engage from time to time in other transactions involving our securities.

Transactions in our securities by our directors and officers are required to be made in accordance with our Securities Trading and Information Disclosure Policy (our “Insider Trading Policy”), which, among other things, requires that the transactions be in accordance with applicable U.S. federal securities laws that prohibit trading while in possession of material nonpublic information. Rule 10b5-1 under the Exchange Act provides an affirmative defense that enables directors and officers to prearrange transactions in the company’s securities in a manner that avoids concerns about initiating transactions while in possession of material nonpublic information. Our Insider Trading Policy permits our directors and officers to enter into trading plans designed to comply with Rule 10b5-1.

In addition, our directors and officers are required to maintain an ownership of the company’s common stock with a value equal to at least a multiple of their annual base salary (5x annual salary for our Chief Executive Officer and 3x 31

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~~annual~~requires ~~salary~~that ~~for~~the ~~all~~transactions ~~direct~~be ~~reports~~in toaccordance ~~our~~with ~~Chief~~applicable ~~Executive~~U.S. ~~Officer)~~federal orsecurities ~~their~~laws ~~annual~~that ~~cash~~prohibit ~~retainer~~trading ~~(5x~~while ~~annual~~in ~~cash~~possession ~~retainer~~of ~~for~~material ~~non~~nonpublic information. Rule 10b5-~~employee~~1 under the Exchange Act provides an affirmative defense that enables directors) and officers to prearrange transactions in the company’s securities in a manner that avoids concerns about initiating transactions while in possession of material nonpublic information. Our Insider Trading Policy permits our directors and officers to enter into trading plans designed to comply with Rule 10b5-1.

~~During~~In ~~the~~addition, ~~three~~our ~~months~~directors ~~ended~~and ~~October~~officers ~~26,~~are ~~2024,~~required ~~none~~to maintain an ownership of the company’s ~~directors~~common orstock ~~officers~~with ~~(as~~a ~~defined~~value inequal ~~Rule~~to ~~16a-1(f)~~at ofleast ~~the~~a ~~Exchange~~multiple ~~Act)~~of ~~adopted,~~their ~~modified~~annual orbase ~~terminated~~salary a(5x ~~Rule~~annual ~~10b5-1~~salary ~~trading~~for ~~arrangement~~our ~~and~~Chief ~~none~~Executive ofOfficer ~~the~~and ~~company’s~~3x ~~directors~~annual orsalary ~~officers~~for ~~(as~~all ~~defined~~direct inreports ~~Rule~~to ~~16a-1(f)~~our ofChief ~~the~~Executive ~~Exchange Act~~Officer) ~~adopted, modified~~ or ~~terminated~~their aannual ~~non-Rule~~cash ~~10b5-1~~retainer ~~trading arrangement~~ (as5x ~~such~~annual ~~terms~~cash ~~are~~retainer ~~defined~~for ~~in Item 408 of Regulation S~~non-Kemployee ~~of the Securities Act of 1933, as amended~~directors).

29During the three months ended January 25, 2025, none of the company’s directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified or terminated a Rule 10b5-1 trading arrangement and none of the company’s directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified or terminated a non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933, as amended).

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ITEM 6. EXHIBITS

ExhibitNo.						Exhibit Description
10.1						Receivables Purchase Agreement, dated as of July 24, 2018, by and among Patterson Dental Supply, Inc., as servicer, PDC Funding Company III, LLC, as seller, purchasers from time to time party thereto, and MUFG Bank, Ltd., as agent, conformed through Eleventh Amendment, dated August 16, 2024.
2						Agreement and Plan of Merger by and among Paradigm Parent, Inc., Paradigm Merger Sub, Inc. and Patterson Companies, Inc., dated December 10, 2024 (incorporated by reference to our Current Report on Form 8-K, filed December 11, 2024 (File No. 000-20572)).
10.2						Receivables Purchase Agreement, dated as of January 15, 2020, by and among Patterson Veterinary Supply, Inc., as servicer, PDC Funding Company IV, LLC, as seller, purchasers from time to time party thereto, and MUFG Bank, Ltd., as agent, conformed through Ninth Amendment, dated August 16, 2024.
31.1						Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2						Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1						Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2						Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101						(Filed Electronically) The following financial information from our Quarterly Report on Form 10-Q for the period ended ~~October~~January 2625, ~~2024~~2025, formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations and Other Comprehensive Income, (iii) the Condensed Consolidated Statements of Changes in Stockholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows and (v) the Notes to the Condensed Consolidated Financial Statements.(*)
104						(Filed Electronically) The cover page from our Quarterly Report on Form 10-Q for the period ended ~~October~~January 2625, ~~2024~~2025 is formatted in Inline XBRL (Extensible Business Reporting Language).(*)

(*) The Inline XBRL related information in Exhibits 101 and 104 to this Quarterly Report on Form 10-Q shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

All other items under Part II have been omitted because they are inapplicable or the answers are negative, or were previously reported in the 2024 Annual Report on Form 10-K filed June 18, 2024.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		PATTERSON COMPANIES, INC.
		(Registrant)
Dated: December 5, 2024	By:	/s/ Kevin M. Barry
Dated: February 26, 2025	By:	/s/ Kevin M. Barry
		Kevin M. Barry
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

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