COVID-19 and the dental market: Pandemic continues to bite

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The latest earnings reports from major dental companies show that dental offices around the world are open and doing business, but that the market has not yet returned to 2019 levels. (Image: Mirror-Images/Shutterstock)
Jeremy Booth, Dental Tribune International

Jeremy Booth, Dental Tribune International

Fri. 13. August 2021


LEIPZIG, Germany: Sales at major dental companies climbed in the second quarter of this year compared with the same period in 2020, during which the pandemic brought dentistry to a grinding halt. In the latest series of earnings reports, some dental company chiefs praised the recovery of the market, whereas others outlined falling discretionary spending, concerns about SARS-CoV-2 variants and sluggish vaccine rollouts in some geographic areas.

David Katzman, CEO of tele-orthodontics company SmileDirectClub (SDC), was candid when he spoke with analysts in August. SDC missed its earnings expectations for the quarter. Katzman pointed to SDC’s newest international markets, Spain and Germany, where he said “lingering effects” of the COVID-19 pandemic had hampered earnings. He said that, at home in the US, the company’s target demographic had been hit hard in the pocket by the health crisis.

He explained: “[Our] core demographic, which has a median household income of $68,000 (€58,000), likely experienced outsized pressures in their capacity to spend on discretionary items given the significant inflationary headwinds facing the non-discretionary categories like transportation, utilities and food.”

SDC’s target consumers, Katzman said, appeared to be favouring products over services owing to pent-up demand for apparel, automobiles and home-related goods. Joblessness was also having an impact. He explained: “Further contributing to the unfavourable condition of constrained capacity on spend on discretionary items and a general consumer preference for products over services, joblessness remains pervasive in four of our larger states, California, New York, Texas and Florida. Through 10 July 2021, these four states represent 40% of the nation’s continuing jobless claims.”

Total sales revenue at SDC for the quarter was $174.2 million, an increase of 62.7% year over year, and the company completed just over 90,000 unique aligner shipments, compared with 57,136 in the second quarter of last year.

Align Technology posts $1 billion in sales

Staying with orthodontics, leading clear aligner maker Align Technology fared better than SDC during the quarter, as it continued to break its own earnings records. The company sold $841 million worth of clear aligner trays during the period—a year-over-year increase of 181.9%—and its imaging systems and CAD/CAM services revenue was $169.8 million, a 214.7% year-over-year increase. Total sales therefore topped $1 billion for the first time. Compared with the first quarter of this year, the company’s clear aligner and imaging services revenue streams were up 11.6% and 20.0%, respectively. Clear aligner volume for the second quarter increased by 200.0% year over year to reach 665,600 cases, and clear aligner volume for teenagers increased by 156.3% to reach 181,000 cases.

Invisalign shipments reached new heights in 2020, leading some to believe that clear aligner treatment could be pandemic-proof. (Image: AUWE PHOTO/Shutterstock)

A look at the company’s regional figures shows that dentists in most regions provided Invisalign treatment to more patients in the second quarter of this year than they did in the quarterly periods before the pandemic. In the Americas region, case volume was up 260.7% year over year. International shipments were up 149.2%, and those in the Europe, Middle East and Africa region (EMEA) were up 265%, led by Iberia, the UK and Italy. In the Asia Pacific region, clear aligner volume increased by 50%, led by Japan, China, Australia and New Zealand.

Straumann remarks on improved patient volumes in 2021

The results of another international player, Straumann Group, will give readers an impression of the state of global dental markets. In the EMEA region, total sales of CHF 230 million (€212.7 million) represented a 102% year-over-year increase, which Straumann credited to sales of premium and challenger implant brands, its orthodontics business, and strong sales in Germany, Iberia, France, the UK and Turkey. Straumann’s organic sales growth in North America decreased by 42% during the second quarter of 2020; this year, it increased by 135% to reach CHF 152 million. Sales in the Asia Pacific region rebounded by 63% in the period to reach CHF 103 million. In Latin America, where Brazil is the largest contributor to regional revenue, CHF 31 million in sales represented a year-over-year increase of 174.4%.

Straumann’s total revenue for the second quarter was CHF 516 million. This represented a year-over-year increase of around 92%—in the comparable period last year, Straumann’s total revenue of CHF 248 million was down nearly 40%.

The company published a half-yearly report at the close of the second quarter, and in the report, the company said that dental practices had been operating with “healthy patient flows throughout the first half of 2021”.

“With the exception of Latin America, which is still in the eye of the storm, all of our regions report that more than 85% of dental practices are open” – Guillaume Daniellot, CEO Straumann Group

Guillaume Daniellot, Straumann CEO, reminded analysts in a conference call: “When we held our last media conference three months ago, our industry was in lockdown. COVID-19 had cut our monthly revenue by 70%, and we were initiating measures to reduce our headcount and cost base in preparation for the economic recession that the pandemic is expected to trigger.” He added that the situation on the day of the latest media conference (12 August 2021) was more positive. “With the exception of Latin America, which is still in the eye of the storm, all of our regions report that more than 85% of dental practices are open. Correspondingly, between 85% and 100% of our facilities are open and our sales team are operating at similar levels. In short, both we and our customers are back to business.”

Earnings reports from the first quarter of this year showed that dentistry had bounced back, but remained shaky. (Image: Katjen/Shutterstock)

Envista optimistic about continued recovery

Sales at Envista Holdings in the second quarter were $740.1 million, an increase of 104.4% year over year. The close of the period marked four consecutive quarters of growth for Envista’s premium implant business—which achieved 90% core sales growth in the three-month period ended 30 June.

Envista CEO Amir Aghdaei said during the company’s earnings call that Envista had seen solid demand for its infection prevention business, owing to the fact that enhanced disinfection protocols are now the new normal. Aghdaei said: “We’re excited about the opportunities for a new CaviWipes 2.0 product. It features a two-minute universal contact time, shows efficacy against a broad range of pathogens, including the COVID-19 virus, and increases our opportunity to penetrate the medical market further while enhancing our dental position.”

Howard Yu, senior vice president and chief financial officer at the company, said: “While patient volumes have improved to pre-pandemic levels in our major markets, we continue to see inconsistent roll-outs of vaccines and spikes in COVID-19 variant infections in several geographic areas, including Western Europe and parts of the United States. Overall, we are mindful of the pandemic-related risks but remain optimistic for a continued recovery throughout the balance of 2021.”

Aghdaei added: “While vaccination rates are increasing every day, we are mindful of the risk related to COVID-19 variance, continue to monitor reopening of economies and acknowledge that vaccination rollout worldwide [is] at different stages. However, we believe that patient demand will sustain at pre-pandemic levels, due to the industry’s enhanced sanitation measures.”

Envista owns more than 30 dental brands, including major names like KaVo Kerr, Nobel Biocare and Ormco.

Dentsply Sirona cautions over “ongoing impact”

Net sales at Dentsply Sirona for the second quarter were $1.067 billion, a 117.3% year-over-year increase. In the dental consumables segment, net sales of $445 million for the period represented a 138.0% increase. Sales of dental technology and equipment reached $622 million, a year-over-year gain of 104.6%.

US sales were $366 million, up 179.4% year over year, European sales of $431 million were up 99.5%, and sales in all other markets reached $270 million, an increase of 87.5%.

In a call with analysts, Jorge M. Gomez, executive vice president and chief financial officer at the company, commented: “Growth was strong across all regions and in all categories, most notably within the endo and [restorative] parts of our portfolio, which represent strategic priorities for our business.”

CEO Donald M. Casey said that the dental market continues to recover and to demonstrate its underlying resilience, but that dentistry is not yet out of the woods. “The pandemic remains a key consideration for us as we evaluate our performance for the quarter and plan for the remainder of the year,” he explained. “At this point, we feel the market is operating slightly below 2019 levels with a continued recovery expected for the remainder of the year. As we navigate through the newest phase of the pandemic, we are mindful that there [continues] to be some ongoing impact in certain regions and some stresses to the supply chain.”

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