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Henry Schein says it expects to take $38.5M charge to settle lawsuit

The Melville company said it will settle a

The Melville company said it will settle a federal class-action antitrust lawsuit involving about 140,000 dentists nationwide. Credit: Barry Sloan

Henry Schein Inc. expects to take a charge of $38.5 million to settle a federal class-action antitrust lawsuit involving about 140,000 dentists nationwide, the company announced Thursday.

The Melville-based distributor of products to the offices of dentists and doctors said it expects to take a charge of 19 cents per share when the company reports its third-quarter financial results.

"We anticipate that documentation will be completed within the next couple of weeks," the company said in a government filing Thursday. "After that the settlement will be subject to court approval."

The first of the lawsuits that were consolidated into the class action was filed in January 2016.

Two other dental supply companies, Patterson Companies Inc., based in St. Paul, Minnesota, and Benco Dental Supply Company, based in Pittston, Pennsylvania, are co-defendants in the case in U.S. District Court for the Eastern District of New York.

Those two companies "also anticipate settling this matter," according to Henry Schein.

Shares of Henry Schein  fell 5.1 percent  to close Thursday at $77.00. The stock was trading at $84.81 12 months ago.

The lawsuit, filed by dental practices, charges that the three companies conspired to fix prices, allocate customers and block competitors by boycotting manufacturers and state dental associations.

Henry Schein's statement said that the settlement would resolve all outstanding class-action litigation related to dental supplies. 

“We categorically and emphatically deny any wrongdoing, and we have made a business decision in the best interests of the company to engage in settlement discussions to avoid long, distracting litigation and the additional use of resources,” Stanley M. Bergman, chairman and chief executive of Henry Schein, said in a statement.

Ross J. Muken, an analyst with Manhattan-based brokerage Evercore ISI, said in a research note that experts he consulted concluded Henry Schein had "no chance" of winning the case. 

In June 2017, Henry Schein agreed to settle a 2015 antitrust lawsuit filed in U.S. District Court in Central Islip by SourceOne Dental Inc., based in Chandler, Arizona. In that case, Henry Schein took a 4-cents-per-share charge to its second-quarter 2017 results.

In February, the Federal Trade Commission filed a complaint against Henry Schein, Benco and Patterson charging that they conspired to refuse to provide discounts to buying groups representing dentists. Henry Schein denied that charge. A hearing before an administrative law judge is scheduled for Oct. 16.  

Henry Schein is Long Island's largest local public company based on revenue of about $12.5 billion in 2017. The company has 1,430 employees on Long Island and about 22,000 worldwide.

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