Henry Schein cutting jobs to manage costs as COVID hurts dental sales
Henry Schein Inc. is cutting jobs, reducing hours and suspending its 401k match to manage costs, the company said. Credit: Barry Sloan
Henry Schein Inc., Long Island's largest public company by revenue, is cutting jobs, trimming work hours and suspending its 401(k) match to manage costs during the COVID-19 outbreak.
"The COVID-19 pandemic has had a significant impact on our worldwide results for the month of March, and continues to impact our dental business, in particular, as many dental practices are closed except for emergency procedures," chairman and chief executive Stanley M. Bergman said in a statement Tuesday.
In releasing its first quarter financial results, the Melville company did not immediately disclose the scope of its job cuts and furloughs. The company has about 19,000 employees worldwide.
"Practically everyone in the company has had their compensation impacted in one way or another," Bergman said in a conference call.
That includes Bergman himself. He agreed to waive his base salary, minus contributions to benefit plans, from April 6 through June 30, according to a government filing published Tuesday.
The company also has put acquisitions on hold as part of the cost-cutting efforts.
In a research note, Jeff D. Johnson, an analyst at Robert W. Baird & Co. Inc., said that Henry Schein's cost-cutting was "more aggressive" than some other medical supply companies.
In results for the period ended March 28, a surge in the company's sales of personal protective equipment used to guard against the coronavirus offset lower demand in its primary dental business.
Bergman said that since the global coronavirus response began in March, dental sales have been down about 70%, though the China market has shown signs of recovery.
Overall, net sales for the quarter increased 2.9% to $2.4 billion. Net income was $130.5 million, or 91 cents per diluted share, versus $118.4 million, or 78 cents per diluted share, in the prior year.
While dental sales declined by 4.6% to $1.5 billion, medical sales climbed 17.1% to $800.7 million and technology services rose 14.2% to $132 million.
The earnings release comes after Henry Schein reached a tentative $35 million settlement last week in a shareholder class action lawsuit for the period from March 2013 through February 2018.
The lawsuit filed in U.S. District Court in Brooklyn charged that the company misled investors about its North American dental business, inflating the price of Henry Schein stock.
In an email, a Henry Schein spokeswoman said that the settlement "does not represent an admission of wrongdoing."
"We settled to avoid the uncertainties, burden and expense of protracted litigation," she said.
If approved by the court, the settlement would be paid through insurance and would have no impact on Henry Schein's earnings, the spokeswoman said.
Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.
