Henry Schein to roll software business into joint venture with Internet Brands

Henry Schein Inc., Long Island’s largest public company based on revenue, Tuesday announced it is rolling its software unit into a Utah-based joint venture with Internet Brands, whose websites include WebMD, Fodor’s Travel and CarsDirect.

Financial terms were not disclosed.

The joint venture, named Henry Schein One, will be majority-owned by Melville-based Henry Schein and based in American Fork, Utah, about 14 miles from Provo.

In a news release, the companies said the joint venture initially would have about 1,500 employees drawn from the American Fork-based Henry Schein Practice Solutions unit, which provides practice-management software for dentists, and the dental businesses of Internet Brands, based in El Segundo, California.

A Henry Schein spokeswoman said that most of the 1,500 employees of the joint venture already are located in American Fork and there are no plans to close existing facilities of Henry Schein Practice Solutions or Internet Brands. Only two Long Island employees would be transferred to the joint venture, she said.

Henry Schein, which has two corporate office buildings with 185,000 and 105,000 square feet in Melville, has about 22,000 employees worldwide, with operations or affiliates in 34 countries.

The deal is expected to close in the second quarter.

Shares of Henry Schein, whose primary business is providing health care products to the offices of dentists, veterinarians and doctors, rose 1.5 percent to close Tuesday at $66.84. The stock has fallen about 22 percent over the last 12 months as Henry Schein grapples with a Federal Trade Commission antitrust case and class action lawsuits alleging price fixing with other distributors of health care products.

Henry Schein One, “which will serve markets globally,” would have had sales of about $400 million in 2017 if the joint venture had been in place, the companies said.

Henry Schein reported that 2017 sales of technology and value-added services were $438.1 million, a 2.9 percent increase over 2016. That compares to the company’s 7.7 percent in overall sales growth to $12.5 billion in 2017.

The joint venture expects to realize between $20 million and $30 million in annual cost savings after three years, the companies said.

Henry Schein chairman and chief executive Stanley M. Bergman called the joint venture “a powerful new engine to accelerate our customers’ growth.”

The joint venture’s chief executive will be James A. Harding, currently the senior vice president and CEO of Henry Schein’s Global Practice Solutions Group. Harding has also served as the chief technology officer of Henry Schein, which he joined in 2000.

“By combining Henry Schein’s strength in practice management software with our leading digital marketing applications in this new joint venture, we intend to leverage the considerable resources of both companies to provide our customers and their patients with a better experience,” Bob Brisco, CEO of Internet Brands, said in a statement.

Internet Brands is owned by KKR & Co. L.P., a publicly traded Manhattan private equity firm.