Henry Schein shake-up sought by investment fund that calls for cost cuts, higher profits, new board
Henry Schein, a medical and dental supplier, had nearly 1,450 employees at its Melville headquarters last year. Credit: Tom Lambui
An investment fund wants Henry Schein Inc., Long Island’s largest public company by revenue, to shake up its board of directors, reduce expenses and increase profits, according to a source familiar with the fund’s proposals.
Ananym Capital Management LP presented its ideas to executives of the distributor of health care products in September, shortly after the fund opened with $250 million to invest in public companies. Since then, Ananym and Henry Schein have held a second meeting and exchanged documents, the source told Newsday.
Ananym hopes to avoid a proxy fight at next year’s annual meeting of shareholders by reaching an agreement with Henry Schein, the source said on Tuesday.
Ananym declined to comment.
Henry Schein spokeswoman Angela Ruggiero said the company "regularly engages in dialogue with its shareholders with the goal of enhancing shareholder value. We analyze any shareholder input in that context."
News of Ananym’s proposals, which were first reported by Reuters, sent Henry Schein shares climbing on the Nasdaq Stock Market on Monday and Tuesday. The stock closed down $1.11, or about 1.5%, to $73.73 on Wednesday.
Henry Schein, which sells products to physicians and dentists, reported a profit of $593 million last year, down from 2022’s $741 million. Revenue totaled $12.3 billion for the year, down from $12.6 billion in 2022.
Those financial results led Ananym to suggest Henry Schein can do a better job of integrating the $4 billion in acquisitions that it's made in the past five years, appoint board directors with deep knowledge of distribution and consider selling the medical distribution unit, according to the source.
Ananym also wants the company to develop a succession plan for when longtime CEO Stanley M. Bergman decides to retire, the source said.
Earlier this year, Henry Schein announced plans to reduce expenses by $100 million, and according to a stock analyst, has formulated a plan for the post-Bergman era. Bergman is 74 and has been CEO and board chairman since 1989.
"I think [Ananym] is correct that Schein has had a rough go of it in the last several years," said Jeffrey D. Johnson, an analyst with the financial services firm Robert W. Baird & Co. Inc. in Milwaukee. "But a lot of that has been more economic driven. … I don't see any mismanagement going on there."
He also said Henry Schein's medical and dental units are so closely intertwined that selling the former would be counterproductive because it would increase operating expenses.
The company had nearly 1,450 employees at its Melville headquarters last year. They earned on average $131,421 per year, according to the Suffolk County Industrial Development Agency, which awarded tax breaks in 2021 to retain the office.
Ananym was founded by investors Charlie Penner and Alexander Silver.
In 2021, Penner led a small hedge fund, Engine No. 1, that successfully forced petroleum giant ExxonMobil to change three members of its board. That campaign was supported by the New York State Common Retirement Fund led by state Comptroller Thomas P. DiNapoli.
Ananym "focuses on constructive, value-enhancing engagements with undervalued public companies," it states on its website.
Separately, on Wednesday, Henry Schein announced plans to buy Acentus, a medical supply company that sells glucose monitors, for an undisclosed amount.
Tampa, Florida-based Acentus has yearly sales of $35 million. The sale is expected to close by March 31, according to the Henry Schein announcement.
An investment fund wants Henry Schein Inc., Long Island’s largest public company by revenue, to shake up its board of directors, reduce expenses and increase profits, according to a source familiar with the fund’s proposals.
Ananym Capital Management LP presented its ideas to executives of the distributor of health care products in September, shortly after the fund opened with $250 million to invest in public companies. Since then, Ananym and Henry Schein have held a second meeting and exchanged documents, the source told Newsday.
Ananym hopes to avoid a proxy fight at next year’s annual meeting of shareholders by reaching an agreement with Henry Schein, the source said on Tuesday.
Ananym declined to comment.
Henry Schein spokeswoman Angela Ruggiero said the company "regularly engages in dialogue with its shareholders with the goal of enhancing shareholder value. We analyze any shareholder input in that context."
News of Ananym’s proposals, which were first reported by Reuters, sent Henry Schein shares climbing on the Nasdaq Stock Market on Monday and Tuesday. The stock closed down $1.11, or about 1.5%, to $73.73 on Wednesday.
Henry Schein, which sells products to physicians and dentists, reported a profit of $593 million last year, down from 2022’s $741 million. Revenue totaled $12.3 billion for the year, down from $12.6 billion in 2022.
Those financial results led Ananym to suggest Henry Schein can do a better job of integrating the $4 billion in acquisitions that it's made in the past five years, appoint board directors with deep knowledge of distribution and consider selling the medical distribution unit, according to the source.
Ananym also wants the company to develop a succession plan for when longtime CEO Stanley M. Bergman decides to retire, the source said.
Earlier this year, Henry Schein announced plans to reduce expenses by $100 million, and according to a stock analyst, has formulated a plan for the post-Bergman era. Bergman is 74 and has been CEO and board chairman since 1989.
"I think [Ananym] is correct that Schein has had a rough go of it in the last several years," said Jeffrey D. Johnson, an analyst with the financial services firm Robert W. Baird & Co. Inc. in Milwaukee. "But a lot of that has been more economic driven. … I don't see any mismanagement going on there."
He also said Henry Schein's medical and dental units are so closely intertwined that selling the former would be counterproductive because it would increase operating expenses.
The company had nearly 1,450 employees at its Melville headquarters last year. They earned on average $131,421 per year, according to the Suffolk County Industrial Development Agency, which awarded tax breaks in 2021 to retain the office.
Ananym was founded by investors Charlie Penner and Alexander Silver.
In 2021, Penner led a small hedge fund, Engine No. 1, that successfully forced petroleum giant ExxonMobil to change three members of its board. That campaign was supported by the New York State Common Retirement Fund led by state Comptroller Thomas P. DiNapoli.
Ananym "focuses on constructive, value-enhancing engagements with undervalued public companies," it states on its website.
Separately, on Wednesday, Henry Schein announced plans to buy Acentus, a medical supply company that sells glucose monitors, for an undisclosed amount.
Tampa, Florida-based Acentus has yearly sales of $35 million. The sale is expected to close by March 31, according to the Henry Schein announcement.
James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.
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