Not all dental companies are smiling

Jeremy Booth, Dental Tribune International

Sun. 1. September 2024

share

save

LEIPZIG, Germany: The dental industry has traditionally been seen as a safe bet for investors, offering consistency and stability even in times of economic recession. The SARS-CoV-2 pandemic challenged this perception, and Russian President Vladimir Putin’s invasion of Ukraine in February 2022 hammered home the hard truth that modern dentistry is not exempt from crises, particularly given its reliance on elective treatments. This year’s second-quarter results show that some of the world’s leading dental manufacturers were still struggling with latent economic pressures and sluggish consumer spending—and that others were thriving.

Straumann Group still growing in Asia-Pacific

Straumann Group has once again stood out among dentistry majors. The company posted CHF 654.9 million (€681.9 million*) in revenue for the quarter, up by 12.4% year on year and 14.8% on an organic basis, for which currency fluctuations and other factors are excluded. The company’s regional year-on-year growth was 11.6% in the Europe, Middle East and Africa (EMEA) region, 4.7% in North America, 8.4% in Latin America and 26.4% in Asia-Pacific.  

The period rounded off a prodigious 12 months of growth for Straumann in the Asia-Pacific region, where year-on-year sales increases for the company in the prior three quarters reached 12.6%, 26.7% and 63.7%, respectively. Accordingly, the proportion of Straumann’s business that is located in Asia has also increased. Asia-Pacific sales in the first half of this year accounted for 22.4% of total group sales, compared with 17.7% in the first half of 2023. Meanwhile, the EMEA and North America regions—the company’s largest earners—currently account for some two fewer percentage points of total group sales than they did in the first half of last year. 

Dental implant products accounted for the lion’s share of Straumann’s first-quarter Asia-Pacific sales, boosted by increased revenue from premium implants and the challenger brand, Anthogyr. Sales of Neodent and Anthogyr also increased significantly in Asia-Pacific markets Australia, India, Thailand and Vietnam.  

In North America, where dental companies have struggled with lacklustre results over the previous 12 months, Straumann recorded CHF 181.4 million in sales and 5.3% organic growth. Noting that implant sales were its main driver of sales growth in the region, the company said: “The demand for digital solutions also showed positive momentum, thanks to good sales of intra-oral scanners.” 

Straumann announced in its earnings report that it had agreed to sell DrSmile to the Barcelona-headquartered Impress group, aiming to “focus even more on go-to-market activities in the orthodontics business-to-business area”.

Aligner sales remain an important source of sales growth for major dental manufacturers. (Image: edwardolive/Shutterstock)

Envista Holdings reports net loss of US$1.2 billion

Revenue at Envista Holdings for the second quarter reached US$633.1 million (€591.7 million*), a year-on-year decline of 4.4%, and core sales (for which the impacts of foreign currencies and acquisitions are excluded) were down by 3.2%. The owner of more than 30 dental brands, Envista recorded a net loss of US$1.2 billion for the period, owing to a substantial non-cash charge for the impairment of goodwill and intangible assets. Net income for the comparable quarter in 2023 was US$51.9 million. 

Stephen Keller, then interim chief financial officer (CFO) at Envista, explained to analysts: “The general market softening, driven in part by higher interest rates and moderate consumer confidence, has contributed to reduced revenue, operating margins and expectations for future cash flows. These effects, coupled with a decline in our stock price, have resulted in the estimated fair value of certain parts of our businesses [falling] below their carrying value. Therefore, we recorded a US$1.2 billion non-cash charge for goodwill intangible impairments in the quarter.” 

Envista’s selling, general and administrative expenses increased by 10.8% year on year during the period, and research and development expenses decreased by 11.9%, costing the company US$302.5 million and US$23.6 million, respectively.  

“Our performance in [the second quarter] does not reflect the full capabilities of Envista.”—Paul Keel, CEO, Envista Holdings 

Paul Keel, who was appointed Envista CEO in the second quarter, commented in a press release: “Our performance in [the second quarter] does not reflect the full capabilities of Envista. As such, we took important steps to begin repositioning Envista for improved performance in the future. We hired a permanent CFO as well as presidents for our two largest businesses. We mitigated risks in critical parts of our company. And we made much-needed growth investments in our highest-margin businesses. While these actions negatively impact near-term results, they are essential for longer-term value creation.” 

Keel explained that the investments included new executive appointments and investments in Nobel Biocare, Envista’s largest and most profitable business. In July, the company named Stefan Nilsson as the new president of Nobel Biocare (effective 15 July), Eric Hammes as Envista’s new CFO (effective 8 August) and Veronica Acurio as president of orthodontics (effective 2 August).

Adult and teen case starts climb at Align Technology

The financial year is yielding much needed gains for Align Technology, which had a run of disappointing results in 2023. In the second quarter, revenue from aligners was flat; however, sales of imaging systems and CAD/CAM services were up by 16.1%. Align banked US$1.03 billion in revenue for the period, a 2.6% year-on-year increase. 

Aligner shipments totalled 642,700 cases, up by 3.2% year on year and 6.2% sequentially. CEO Joseph Hogan explained in the company’s earnings statement that “[second quarter] adult patient case starts were up 5% sequentially and 1% year over year—reflecting our highest number of adult shipments in eight quarters—driven by strength in the [general practitioner] channel, led by North American and [Asia-Pacific] dentists. In the teen and growing kids’ segment, over 216,000 teens and younger patients started treatment with Invisalign clear aligners during the second quarter, an increase of 8.8% sequentially and up 8.0% year over year, reflecting growth across regions, especially from Invisalign First in the EMEA and [Asia-Pacific] regions”. 

Aligner shipments for the period included some 25,000 Doctor Subscription Program (DSP) touch-up cases, representing a 37% year-on-year increase. Hogan told analysts in the company’s earnings webcast: “DSP continues to drive growth and is currently available in North America and certain EMEA countries. During the quarter, we extended DSP into more countries in Europe, and we anticipate expanding into additional markets going forward.”  

Late last year, Align began commercialising its 3D-printed palatal expander for young patients, and the system was launched in Australia and New Zealand during the second quarter.

Dentsply Sirona reports drop in equipment sales

Net sales at Dentsply Sirona in the second quarter reached US$984 million, down by 4.2% year on year. Organic sales decreased by 2.3% in the period, and the company posted a net loss of US$4 million, compared with a net income of US$86 million for the comparable period last year.  

A notable decline was seen in sales of Dentsply Sirona’s connected technology solutions, which decreased by 18.2% year on year. Sales of essential dental solutions, which comprise endodontic, restorative and preventive dental products, were down 0.4%, and sales of orthodontic and implant solutions were up 2.6%. The company’s Wellspect Healthcare business performed better, showing year-on-year growth of 9.7%. 

“[We] anticipate the equipment market will remain challenging through the second half of the year.”—Glenn Coleman, CFO, Dentsply Sirona 

CFO Glenn Coleman told investors: “[The] demand environment for equipment remains soft due to macro headwinds and higher interest rates in most markets”, adding that increased competition in the market had also played a role. “While we anticipate the equipment market will remain challenging through the second half of the year, we expect our current and planned actions, including an upcoming digital equipment launch to improve our performance in the second half,” he said. 

Patient traffic at dental clinics in Europe was steady during the period, but was offset by lower patient volumes in the US. Sales of the business-to-business SureSmile aligner brand increased by 6% during the period, attributable to strong growth in Europe and increased adoption in Japan. 

In its report, the company outlined the second phase of its transformational strategy, which includes a planned reduction in operating expenses of between US$80 million and US$100 million over the next 12–18 months. 

Recent and forthcoming management changes at Dentsply Sirona include the appointment on 1 June of Xavier Carro Fernandez as group vice president of commercial operations in the EMEA region, succeeding Gerard Campbell prior to his retirement in June next year, and the departures of Executive Vice President and Chief Business Officer Andreas Frank and Coleman in October and November, respectively.

Tags: