The 29-year-old picked up the injury during kicking practice on Friday and his absence will be a blow to the hosts' chances of winning the tournament.
"It is devastating for Daniel. He has played 86 test matches he has been a world class player for a long time," Henry said.
"He is probably one of the greatest players ever produced by this country and this was his pinnacle.
"He has had a lot of focus on this tournament for the past couple of years and it is devastating he can't be a part of that."
New Zealand qualified for the quarter-finals after winning all of their group matches.