Henry Schein Inc., the nation’s largest distributor of dental products, said Tuesday it would spend about $4 million to pay one-time cash bonuses of $1,000 to some of its U.S. workers in light of a lower tax rate under the new federal tax law.
The Melville-based distributor of products and equipment to the offices of dentists, doctors and veterinarians said that the bonuses would go to “certain designated staff members in the U.S. with one full year of service” as of Jan. 1. About 4,000 workers would receive the bonus, the company said.
The firm employs more than 22,000 people worldwide, about half of those in the United States, according to a government filing for the quarter ended Sept. 30.
Henry Schein, which is the largest public company by revenue based on Long Island, also reported a fourth quarter net loss related to $140 million in taxes on repatriated foreign earnings, another facet of the new tax law.
The company posted a net loss of $8.5 million, or 6 cents per diluted share, in the quarter ended Dec. 30 compared with net income of $139.2 million, or 86 cents per diluted share in the prior year’s period.
Net sales for the fourth quarter rose 6.3 percent to $3.3 billion on growth from higher sales, acquisitions and foreign currencies.
“We closed out 2017 with a strong fourth quarter that demonstrates the advantages of our high-touch, value-added solutions business model,” CEO Stanley M. Bergman said in a statement. He said the model helps practitioners and their office staffs “operate efficient practices.”
The company said it is raising its forecast for 2018 earnings per share to $4.03 to $4.14. It expects its 2018 tax rate to be about 24 percent.
For the full year 2017, Henry Schein had net sales of $12.5 billion, a 7.7 percent increase compared with 2016.
Shares of Henry Schein fell 2.2 percent Tuesday to close at $67.97. The stock has declined about 20 percent in the past 12 months.
The company’s stock price came under pressure in December after a Morgan Stanley analyst warned that e-commerce giant Amazon.com could pose a competitive threat as it entered the health care business.
New U.S. tax rules require U.S. multinational companies like Henry Schein to pay taxes of 15.5 percent on overseas earnings held in cash and cash equivalents and 8 percent on other earnings under a “transition tax” that deems those earnings to be repatriated.
Under the previous law, they would have had to pay corporate taxes of 35 percent if repatriating the earnings to the United States.
Last week, the Federal Trade Commission disclosed an antitrust complaint against Henry Schein and two other suppliers of dental products, saying that they conspired to boycott or refuse to offer discounts to dentists’ buying groups.
The case is scheduled to be heard before an administrative judge in October.
The federal regulator seeks no monetary penalties, but would require Henry Schein, Benco Dental Supply Co. of Pittston, Pennsylvania, and Patterson Companies Inc. of St. Paul, Minnesota, to document communications with competitors, submit compliance reports and pay for an independent monitor.
In an earnings conference call Tuesday, Bergman decried the complaint as “meritless” and “outrageous.”