By the numbers
Q4 sales: $3 billion
12% decrease year over year
Q4 net income: $18 million
Compared to $47 million in Q4 2022
A cybersecurity incident that caused Henry Schein to take some of its systems offline last year could continue to affect the medical device distributor’s financial performance this year.
CEO Stanley Bergman told investors on a Tuesday earnings call that the company’s North American and international distribution businesses are experiencing merchandise sales below pre-incident levels and that some customers have not returned yet.
Henry Schein said it expects a “residual impact” of about 15 cents per diluted share, primarily in the first quarter, due to the cybersecurity incident. Henry Schein also outlined the costs of the incident last year.
In the fourth quarter, net sales declined to $3 billion, which included an estimated impact of $350 million to $400 million from the cybersecurity event. The company also estimated a $120 million to $130 million impact on operating income due to the incident.
William Blair analysts wrote in a research note the sales impact was better than the $500 million they had expected, but Henry Schein’s earnings still came in below expectations for the quarter due to acquisition-related costs.
The cybersecurity incident began in late September, which led to Henry Schein’s main website going down in October and the company still working in November to bring its e-commerce platform back online. The firm reported a data breach that affected more than 29,000 people’s personal information to Maine’s attorney general in December.
CFO Ronald South told investors that Henry Schein plans to file an insurance claim, and the company expects it to be covered under its policy, which has a $60 million limit. The claim would not be recognized until later in the year.
The company forecast diluted earnings per share of $5 to $5.16 in 2024, an improvement from $4.50 in 2023, according to earnings results shared Tuesday. The company expects sales growth of 8% to 12% over 2023, reflecting recent acquisitions and a planned recovery from the incident.