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Amazon announcement sends shares of Henry Schein, competitor down

Henry Schein Inc. said it will not be

Henry Schein Inc. said it will not be moving from its Melville headquarters. Credit: Barry Sloan

Shares of Henry Schein Inc. moved lower Thursday, a dip that Wall Street analysts attributed to Amazon.com's newly announced acquisition of an online pharmacy, the retail giant's latest foray into health care.

Seattle-based online retailer Amazon said Thursday that it would pay about $1 billion for PillPack, a Boston-based online pharmacy that packages medications by dose.

Stock in Melville-based Henry Schein, Long Island's largest publicly traded company based on revenue, shed 1.5 percent to close Thursday at $72.66 after hitting an intraday low of $70.68.

"Investors have become highly sensitive to interpreting any move by Amazon in health care as affirmation of risk to dental distributors such as Henry Schein and Patterson Companies," Jeff D. Johnson, an analyst at Milwaukee-based investment company Robert W. Baird & Co. Inc., said in an email. St. Paul, Minnesota-based Patterson is Henry Schein's largest competitor in the dental distribution business. Its stock fell 2.9 percent Thursday to close at $23.06.

Johnson said investor jitters continue "even though our continued survey work and industry checks suggest Amazon is seeing almost no traction with their dental offerings over the last 12-24 months."

Henry Schein officials did not respond to a request for comment.

Henry Schein distributes supplies to clinics and the offices of dentists and doctors. In April, Henry Schein announced plans to spin off its veterinary unit, which accounted for 28 percent of the company's $12.5 billion in 2017 revenue.

Analyst Ross J. Muken of Manhattan-based investment firm Evercore ISI, agreed that the weakness in Henry Schein shares Thursday could be traced to Amazon's "deeper push into health care." The company's chief financial officer, Steven Paladino, estimated at a Deutsche Bank conference in May that Amazon's market share of the dental and medical products distribution market is about 1 percent.

A survey of dentists by Evercore ISI found that about 44 percent of respondents used Amazon.com at least once to buy supplies. Those who used the online retailer said they purchase about 2.5 percent of their total supplies through the website but expect that to increase to 6.8 percent in 2019.

Shares of Amazon.com rose 2.5 percent to close Thursday at $1,701.45.

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