Henry Schein reported solid growth in its Q3 financial results and commented on its recent cybersecurity incident.
“Regarding our recently reported cybersecurity incident, our distribution businesses are now operational and we are initiating the reactivation of our ecommerce platform early this week,” said Stanley M. Bergman, chairman of the board and chief executive officer of Henry Schein. “We have also made significant progress resuming the high levels of service our customers have come to expect from us.”
As disclosed in the company’s Current Report on Form 8-K, Henry Schein discovered a cybersecurity incident on Oct 14, 2023, that primarily affected its dental and medical distribution businesses. The company has contained the incident, restored most of the business-critical systems it proactively took offline in response to the situation, and is making significant progress towards resuming normal-course operations.
Henry Schein expects to file an insurance claim in 2024 related to this incident. The company expects the claim to be covered under its cyber insurance policy, although final resolution is subject to insurer approval. This policy has a $60 million after-tax claim limit after a $5 million retention, and any recovery from the claim will likely not be recognized until late 2024.
“We are reporting solid financial results for the third quarter,” said Bergman. “The company achieved good total sales growth and non-GAAP diluted EPS growth despite continued lower sales of PPE products and COVID-19 test kits. Profitability benefitted from our technology, value-added services, and dental specialty products as we continue towards our goal of achieving 40% of operating income from sales of high-growth, high-margin products”
Total net sales for the quarter were $3.2 billion, an increase of 3.1% compared with the Q3 2022. Growth from acquisitions was 3.2% and there was a 1.1% increase in net sales related to foreign currency exchange.
Global dental sales were $1.9 billion for the quarter, an increase of 5.4% compared with the prior-year period, with strong sales growth in consumable merchandise driven by acquisitions. Internally generated sales decreased 0.2% in local currencies and reflect a 0.9% decrease in North America and 0.9% growth internationally, and increased 0.3% in local currencies when excluding sales of PPE products.