Henry Schein says cyberattack cut sales by up to $400M last quarter
Melville-based Henry Schein, above, was impacted by a 2023 cyberattack that cut into fourth-quarter sales, said CEO Stanley Bergman. Credit: Tom Lambui
Henry Schein reported a more than $120 million drop in annual net income Tuesday, which the Melville-based dental and medical supplier said was due, in part, to last year's cyberattack.
A hack shut down Henry Schein's website for about a month in the fourth quarter of 2023, forcing the sales staff to pivot from processing new orders to smoothing things over with existing customers, said CEO and board chairman Stanley Bergman. The largest publicly traded company on Long Island estimates the incident cost it $350 million to $400 million in sales that quarter.
Henry Schein disclosed the breach in mid-October and took some of its systems offline, disrupting its manufacturing and distribution businesses.
An undisclosed "third party" took data, including bank account information for a limited number of suppliers, the firm said last quarter. It relied on backup data to operate and worked with cybersecurity experts to gradually bring its digital footprint back online.
The firm ended the year with $416 million in income, compared with $538 million in 2022. Henry Schein expects its performance to improve in 2024, thanks, in part, to pent-up salesdemand that was stifled by the cyberattack.
“Historically our backlog declines significantly in the fourth quarter due to … dentists and physicians wanting to get as much equipment installed in the fourth quarter as possible for tax purposes,” Bergman told investors.
“We redeployed our sales consultants, and particularly, our sales equipment specialists in visiting customers and dealing with the cyber-incident that occurred, and so they were not focused on generating sales … there's quite a bit of business that's going to move into the [first] quarter.”
Setting aside this unseasonal bump in sales and growth from acquired companies, Henry Schein executives said they expect the core, internal business to grow by about 3 to 4 percentage points this year. Some of this is due to increased sales of software designed to help dentists and physicians manage their practices.
“Our equipment services business is doing very well,” Bergman said.
Henry Schein shares closed at $77.85 Tuesday, down 3.38%.
Sarina Trangle covers affordability and cost of living issues and other business topics. She previously worked as an editor and reporter at amNewYork.
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