Henry Schein gets $250 million investment from private equity firm KKR
Private equity firm KKR is investing $250 million in Melville-based Henry Schein, a medical and dental supplier, seen here in 2023. Credit: Tom Lambui
Private equity firm KKR increased its stake in Henry Schein Inc., investing $250 million in the company to help boost financial performance, according to the Melville-based company.
The investment will make KKR, headquartered in Manhattan, the largest non-index fund shareholder, giving the firm a 12% stake in Henry Schein, Long Island’s largest publicly traded company by revenue. Henry Schein distributes branded and private-label products for dentists' offices and has a market capitalization of nearly $10 billion.
Non-index funds are deemed riskier because investments are not diversified, but deliver strong returns.
Vanguard Group Inc., an index and mutual fund giant that manages investments for 50 million people, was the largest investor in Henry Schein, with an 11.9% stake, as of Sept. 30, according to S&P Capital IQ.
Henry Schein and KKR said in its joint statement Wednesday the investment will give the company "expertise across finance, operations, and in dental and other areas of health care." The company said the collaboration will help it focus on capital allocation and operational improvements.
The company released preliminary revenue figures Wednesday showing $12.7 billion in sales for full year 2024.
Officials with Henry Schein declined to comment on the investment beyond what the company wrote in its statement. KKR directed inquiries to the companies' joint statement.
Stanley M. Bergman, CEO and chairman of the board. said in a statement that KKR had "experience in supporting value creation across its investments."
News of the investment follows an attempted shake-up of Henry Schein’s board of directors in September by activist investor Ananym Capital Management LP. The firm, which sought to make $250 million in investments in public companies, had pushed Henry Schein to make changes to its board, cut costs, improve profits, and consider selling its medical distribution business.
As part of KKR’s investment agreement, two of the firm's leaders will join Henry Schein’s board of directors, according to the announcement: Max Lin, a partner at KKR who leads its health care industry team, and William K. Daniel, an executive adviser to the private equity firm.
Jeffrey D. Johnson, an analyst at investment firm Robert W. Baird in Milwaukee, said the KKR investment likely represents an opportunity to appease activist investors with Ananym, who planned to nominate as many as six directors to the board to force changes at the company, according to reports from Reuters.
“Schein has been looking for ways to meet these activists part way,” Johnson said. Leading up to Wednesday's announcement, KKR, which has "a long history" in the dental industry, had acquired a 10% stake in Henry Schein, he said.
“It appears they built this 10% stake over the last few months likely using a proxy," Johnson said. Some investors were concerned about the company's performance and lack of CEO succession planning.
Bergman is 75 and has been chairman and CEO since 1989.
Anoop Rai, a professor of finance at Hofstra University said that despite its strong fundamentals, Henry Schein has seen rising costs, largely due to acquisitions.
“Revenues are good, but the main issue is costs have been going up significantly," Rai said. "KKR has a decent reputation. Not all turnarounds work, but that’s the best option they have right now."
Shares of Henry Schein closed Wednesday at $79.87, up nearly 5%.
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