Dental medtech market remains steady amid ‘robust’ US employment: Henry Schein

Dive Brief:

Demand for dental services is holding steady as “robust” U.S. employment and overall stability in Europe support the sector, according to executives at Henry Schein.
Speaking at a Goldman Sachs event, executives from the leading distributor of dental products set out the state of their industry as the new year gets underway, revealing that practices are operating at near-normal levels.
Goldman Sachs analysts said they left the event “encouraged by the update on end-market trends in dental/medical” but flagged potential concerns about pricing and the pace of dental specialty growth.

Dive Insight:

Henry Schein CEO Stanley Bergman and CFO Ron South spoke to Goldman Sachs analysts at an event run by the investment bank late last week. The analysts summarized the exchange in a note to investors.

“Dental end-market trends were described as stable sequentially, helped by robust U.S. employment and overall stability in Europe. Equipment demand has also remained robust, though [average selling price] declines in digital tech have been a topline headwind (lower-priced products gaining share),” the analysts wrote.

Henry Schein has seen “strong sales of traditional equipment as it works through a backlog of orders,” the analysts wrote, but its digital division has experienced a rougher ride. The analysts reported demand is “solid” but price declines are pressuring the business.

Bergman and South cited prices for intraoral scanners as an example of the pressures. New entrants are pricing their devices at about $12,000 and gaining market share from the incumbents, which charge $20,000 to $25,000 for their rival products. The lower-priced products “have significantly narrowed the tech/capabilities gap vs. more premium products,” according to the analysts.

Henry Schein also is being undercut in the consumables market, according to the analysts.

“Dentists have had increased sensitivity to price recently and have traded down to lower-priced manufacturers and to [Henry Schein’s] private brands,” the analysts wrote. The Henry Schein executives expect price realization of 2% to 3% this year, compared to 3% to 5% last year.