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Weighing up the new reality: Dental companies count cost of COVID-19

Earnings are down, but dental companies are pivoting toward innovative online educational tools, and new business strategies. (Image: gosphotodesign/Shutterstock)
By Jeremy Booth, DTI
May 18, 2020

NEW YORK, U.S.: Dentistry faces an earnest struggle to adapt to what some have called the new reality. A series of investor updates from major dental companies shows us that digital tools are now more important than ever for education and in customer service environments. Some dental companies have taken extraordinary measures to sure up manufacturing and supply, and significant adverse financial impacts have been shouldered.

It has been more than ten years since major dental companies reported significant dips in income. Most dental offices around the world closed their doors throughout March, which is typically the most important month in the first quarter for leading dental laser manufacturer BIOLASE. Net revenue for BIOLASE for the three-month period was $4.7 million, a drop of 54%, and laser revenues in the company’s U.S. and international markets dropped by 62% and 68%, respectively.

President and CEO Todd Norbe said that the company had been forced to adjust its operations. It had moved toward online educational forums to showcase its products, and Norbe said that these had been extremely well attended. BIOLASE also announced a new partnership with a manufacturer of intensive care unit (ICU) equipment that will result in it supplying ICU-grade portable ventilators from its manufacturing facility. Orders for the ventilators had topped $14 million, Norbe said.

Straumann webinars attract 200,000

Straumann said that it had utilized the lockdown to gain new customers and train existing ones through its online educational platform, the Straumann Campus. The group hosted 12 webinars in April through the platform, and at least another seven webinars were due to take place between the time of writing and mid-June. So far, these online educational initiatives have generated more than 200,000 visits and, together with its offering of online symposia, have helped the company to gain more than 20,000 customer leads.

The group announced that it will shrink its global workforce by 9% this year in order to align its costs with reduced revenues and the onset of an economic recession. The group reported a drop of just 1% in organic revenue for the first quarter, but the pandemic effectively disrupted what had been a strong growth trend for the company—organic revenue had climbed by around 16% in the second half of 2019.

First quarter sales at Straumann were up slightly in the Europe, Middle East and Africa region, which is home to more than 45.0% of the group’s business, and they increased by 4.9% in North America, but fell by 25.5% in the Asia Pacific region and by 12.0% in Latin America.

Dentsply Sirona withdraws guidance

Dentsply Sirona reported that its net sales for the first quarter were down 7.6%, or 4.3% in organic terms. Sales of dental consumables took the greatest hit in Dentsply’s portfolio and first quarter sales of consumables were down 16.8%. Lower patient volumes and elective procedures resulted in consumables in the preventive and endodontic categories declining the most.

The company withdrew its previous guidance for 2020, and its preliminary report for the first quarter did not offer revised guidance.

Envista embraces virtual communication and aims to divest equipment interest

Envista’s May investor update was its first ever for the first quarter, the company having been spun off from Danaher Corp. in September. CEO Amir Aghdaei said, in a webcast conference call, that the company had adopted cost-cutting measures of around $100 million, which included its intention to exit from equipment maker Pelton & Crane in order to reduce the company’s exposure to a segment of dentistry that is likely to underperform for at least the remainder of 2020. Pelton & Crane belongs to the KaVo Kerr company. KaVo Kerr, Nobel Biocare and Ormco make up the three pillars of Envista’s global dental business.

Aghdaei explained that the SARS-CoV-2 pandemic had caused Envista to change its focus and adjust to new realities. “Our approach to the current health crisis is focused on what’s important, the safety of our employees, supporting our customers, partners and communities and preserving our financial strength.”

The company has been utilizing CEO town hall-style forums, whereby all 12,000 Envista employees can share immediate strategies and actions, and discuss these with the company’s leadership. He added that a new, virtual approach to customer support, training and dental education had been well received: “The response from customers far exceeded our expectations. Last month, we held the Nobel Biocare Global Symposium virtually for the first time and had a record 12,000-plus clinicians registered to learn from their peers about innovative implant and workflow solutions and best practices to grow their patient base. In the first quarter, we substantially increased online training and education content and frequency and had more than 200,000 participants across our operating companies,” he explained.

Envista’s performance in January and February had been solid, but Howard Yu, the company’s chief financial officer, explained in the call that core sales for the quarter had decreased by 14.6% compared with the same period last year. He said that developed dental markets had decreased by percentages in the low-teens, led by Western Europe. Emerging markets were down by around 20%, led by China, which had declined by at least 35%.

The company also withdrew its guidance for 2020 owing to the many uncertainties presented by the global health pandemic.

One of the most trying moments in modern history”

Business leaders in the dental industry have not minced their words. “Due to the speed and severity of the COVID-19 health care and related economic crisis, this is one of the most trying moments in modern history for everyone,” said Henry Schein CEO Stanley M. Bergman. Dental sales in the first quarter at the major dental distributor were down 4.6% compared with the same period last year, but the company’s medical business experienced a 17% increase in sales for the period.

Straumann Group CEO Guillaume Daniellot commented: “Coronavirus has left its mark on the past months and we must be prepared to address the impact of the pandemic on disposable incomes and consumer confidence in the coming quarters.”

Dentsply Sirona CEO Donald Casey said that the pandemic had changed the market for dental practitioners and their patients, but he added that the company was seeing early signs of a spike in demand.

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