瑞信-美股-医疗保健行业-美国牙医调查：牙医需求似乎稳定-2020.1.27-48页.pdf

Dental Update Survey Says:Dental Demand Seemingly Stable Life Science Tools and Diagnostics|Channel Check 4Q Dental Practice Volume,Revenue Growth Modestly Improves:According to our proprietary survey of 75 US dental practitioners,54%of practices experienced positive revenue growth in 4Q,rising 1.1%(weighted avg.),a slight sequential acceleration from our 3Q survey(+1.0%).New patient traffic(+1.6%)was the most meaningful driver of practice revenues,followed by bridges and implants(+1.3%),preventative(+1.0%),and acute visits(+1.0%).Respondents remain optimistic on NTM trends with 68%expecting improved practice volume,a nice improvement from the 3Q experience(64%),with practice volume expected to grow+2.0%,ahead of the 3Q experience(+1.9%).While the trends indicate no meaningful turnaround in dental demand,we are encouraged by the stability,providing a barometer of performance for our dental coverage universe,consistent with our QTD conversations with industry constituents(see GNY Dental Summit note).EquipmentDigital Dentistry Drivers in Innovation:The NTM outlook on equipment purchasing was essentially in-line with 3Q,pointing to sustained healthier trends relative to FY18/1H19,albeit with practitioners still likely wary of larger cash outlays on broader macro concerns,reimbursement pressures,and DSO competition.We maintain our positive thesis on Dentsply Sirona(XRAY,OP)amidst a turnaround story as 2019 product launches offer upside to 2020 estimates on potentially accelerating traction.While XRAYs Primescan offering clearly remains in early days of adoption,with pricing potentially acting as a deterrent to broader market penetration,we are optimistic on its recently launched upgrade program,which should spur further demand,while also promoting consumables sales.Its One DS upgrade program enrollment has exceeded internal forecasts(1.5x dentists vs.plan),and broader practitioner recognition of the program was respectable(24%),based on our survey,and we view greater awareness should support growth over time.For Align Technology(ALGN,OP),its iTero remained the leading intraoral scanner(16%of total respondents;48%of digital impression users).Note,ALGN continues to price its iTero lower than competitive offerings.Clear AlignersFew Surprises:ALGN Dominates;DTC Remains Concern for Practitioners:The majority(61%)of clear aligner users expect demand to rise over the NTM,largely driven by marketing efforts from major companies,with volume also supported by a rising base of trained practitioners.That said,a majority of practitioners remain concerned by disruptive direct-to-consumer(DTC)concepts,like SmileDirectClub(SDC,OP),as patients seek more cost-effective solutions with DTC average list price in the$1,895 range(60%discount).Note,this could represent a barrier to adoption of SDCs recent practitioner strategy.Meanwhile,across the doctor-directed market,ALGNs Invisalign remains the clear market leader,with 52%of our cohort currently offering Invisalign(93%of clear aligner users),with 70%of cases treated with its more comprehensive Invisalign Full offering.We continue to await greater traction for Invisalign Go for GPs and Mandibular Advancement.We also note continued enthusiasm for XRAYs SureSmile,utilized by 5%of respondents(10%of clear aligner users)in our survey,with respondents highlighting its quality.27 January 2020 Equity Research Americas|United States DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES,ANALYST CERTIFICATIONS,LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS.US Disclosure:Credit Suisse does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.Research Analysts Erin Wilson Wright 212 538 4080 erin.wrightcredit- Katie Tryhane 212 325 2713 katie.tryhanecredit- Haley Christofides 212 325 3720 haley.christofidescredit- Matthew Urbik 212 325 2152 matthew.urbikcredit- 27 January 2020 Dental Update 2 Introducing Implants STMN on Top:Last quarter,we added several questions related to dental implants to our survey,and we acknowledge greater historical context in future surveys will drive more meaningful takeaways.Unsurprisingly,Straumann(STMN)branded implants were utilized the most on average,representing 36%share(vs.25%in 3Q),ahead of its reported market share positioning(25%).That said,we remained encouraged by Envista Holdings(NVST,N)positioning,with practitioners using its premium Nobel Biocare brand and discount Implant Direct brand on 14%and 7%of relevant cases,respectively.Moreover,we are incrementally optimistic as it relates to the prospects of NVSTs new N-1 implant system(awaiting US regulatory approval),as many dentists await implant innovation that improves ease of use and enhances biocompatibility,particularly given the new system aims to simplify the implant process while also supporting faster osseointegration.Supply chain,Direct Dist.,Amazon Update:Henry Schein(HSIC,N)and Patterson Companies(PDCO,OP)were named as primary distributors by 51%and 13%of respondents,respectively(vs.38%and 18%on a TTM-basis).The vast majority(76%)is satisfied with its primary distributor,and 88%do not work with GPOs,an unsurprising dynamic(differs meaningfully from the Animal Health market).While Amazon penetration remains a question for dental distributors,the majority of practitioner Amazon purchases today are related to office supplies(36%),with only 7%of standard medical products(e.g.,gloves,cotton balls)purchased through the e-commerce giant.Moreover,4%(vs.6%in 3Q)of dental-specific consumables are purchased through Amazon today,which is only expected to grow to 7%in 3-5 years based on our cohort.In terms of direct distribution,respondents currently purchase 7%of consumables(11%of equipment)direct from manufacturers,with 24%and 19%of respondents expecting to purchase more consumables and equipment,respectively,directly from manufacturers over the next twelve months,a trend that may continue as manufacturers further invest in their internal sales efforts,including both XRAY and NVST.27 January 2020 Dental Update 3 Dental Survey Takeaways We commissioned a survey of 75 practicing dentists dispersed across 23 states in the U.S.,with the highest number of responses in California(15),New York(10),and Florida(9).Our respondents range across a number of specialties including general dentist(43),periodontists(16),orthodontists(6),pediatrics/pedodontist(6),and oral and maxillofacial surgeons(4),with an average tenure of 17 years.About one-third of respondents work as sole practitioners(35%),while most other participants work with multiple other dentists at a single practice owned by dentists(35%).Of note,seven respondents work for a DSO or dental management organization affiliated group practices and two worked at a hybrid DSO.On average,our respondents see 91 patients/week.Of note,the practitioner segmentation of the most recent survey is differs from our historical work,with a vastly higher concentration of Periodontists(21%vs.6%historical average)and a lower concentration of Orthodontists(8%vs.23%historical average),potentially skewing some of the results,particularly as it relates to clear aligner and equipment utilization.3Q Snapshot:Our Quick Takes by Company Dentsply Sirona(XRAY,Outperform):We remain encouraged by XRAYs execution on restructuring initiatives,particularly as it relates to its newer focused innovation strategy,where results have already seemingly started to materialize with the launch of Primescan and the introduction of new SureSmile software.However,Primescan adoption clearly still remains in early days,with no respondents utilizing the offering today(vs.3%in 3Q),implying meaningful market penetration opportunity ahead.That said,pricing remains a key deterrent,with only 8%of respondents willing to spend up to or above the$40,000-$50,000 range(vs.$44,995 for Primescan AC with Connect Software),a dynamic that may be mitigated with XRAYs recently launched upgrade program.Meanwhile,in terms,XRAYs legacy CEREC remains the market leader in CAD/CAM(75%of full chairside users utilize the system),with respondents highlighting its ease of use and accuracy.Its SureSmile clear aligner system,which is currently utilized by 5%of respondents(10%of clear aligner users)appears relatively well received,with respondents praising its quality.Moreover,one respondent plans to add the product near term,in addition to ClearCorrect(vs.current Invisalign offering),seemingly in line with the view that practitioners are willing to try new offerings to gauge the attractiveness of each system.All in,adoption is still in early days,and we await further market feedback/commentary going forward.While most of our respondents view XRAYs pricing as broadly unchanged,net/net our cohort views pricing is slightly less expensive relative to competitors,particularly across its CAD/CAM offerings,in line with recent company-specific dynamics,where we highlight XRAY recently launched its Primescan upgrade program in October at its annual Dentsply Sirona World event.Importantly,XRAY structured the program in such a way so as to drive consumables sales(e.g.,blocks),offering greater Primescan discounts with greater consumables purchases.While enrollment in the program exceeded XRAYs initial internal forecasts(1.5x practitioners vs.plan),broader practitioner recognition of the program remains fairly low with only 24%of respondents aware of the program(5%interested in enrolling).All in,we are forecasting 4Q19 revenues to rise 0.7%,driven by+1.5%organic consumables growth and+7.2%organic growth in Equipment,reflecting a y/y benefit from$31 million of destocking in 4Q18,as well as the shift of DS World timing to 4Q.We remain optimistic on XRAYs salesforce execution push,and potential associated direct distribution initiatives,where 32%of respondents currently purchase products directly from the company,with 24%and 19%expecting to purchase more consumables and equipment,respectively directly from manufacturers over the next twelve months.Focus on its earnings call will be on end-market fundamentals,equipment trends,supply and upgrade dynamics with Primescan,salesforce dynamics,and efficiency initiatives.27 January 2020 Dental Update 4 Envista Holdings(NVST,Neutral)Earnings Date 1/30:While we acknowledge greater historical context in future surveys will drive more meaningful takeaways across the implant market,we were encouraged by NVSTs positioning across the specialty category,with practitioners using its premium Nobel Biocare brand and discount Implant Direct brand in 14%and 7%of relevant cases,respectively,essentially in line with its market share.Moreover,we are incrementally optimistic as it relates to the prospects of NVSTs new N-1 implant system following a 7-8 year innovation lag on the implant front.The new system aims to simplify the implant process while also supporting faster osseointegration,seemingly addressing key areas of focus for practitioners,who await implant innovation that improves ease of use and biocompatibility.As a caveat,NVST anticipates launching N-1 in Europe likely in 2020,followed by the U.S.in 2021.In terms of clear aligners,we also await feedback on its Spark Clear Aligner products,which NVST began piloting in the US market in late 2019,with no users in our survey,albeit with a broader rollout in progress this year.Meanwhile,as it relates to innovation across its imaging portfolio,given NVST only began to take orders for its new KaVo X500 in December and KaVo X Pro in 1Q20,it is likely too early to begin to track traction across each offering,with no respondents currently utilizing the digital impression systems.As a reminder,while historically NVST has had a fairly fragmented research&development function,with seven R&D centers in imaging alone,since 2016,it has consolidated its R&D efforts,with the aim of driving more efficient and effective resource allocation in order to generate more meaningful innovation,a key component to its return to growth story.In 4Q,we forecast NVST revenues will fall 4.2%(-1.8%core),driven by+2.0%Specialty Products&Technologies core revenue growth and-5.0%in Equipment&Consumables.On a pro forma basis,we expect its EBITDA margin will deteriorate 111 bps,including a 32 bps contraction in gross margin,an 18 bps increase in SG&A,and a 50 bps increase in R&D expenses.All in,assuming a tax rate of 23.4%,EPS should fall 11.8%to$0.50(vs.consensus$0.49).Focus on the call will be on demand trends,visibility on stocking dynamics,product pipeline update,and progress on cost savings initiatives.See our initiation note here:NVST:Bracing for Growth;Initiate Neutral Distributors Patterson Companies(PDCO,Outperform),Henry Schein(HSIC,Neutral):On balance,while expectations for distributors remain relatively low,we are cautiously optimistic on prospects for the respective dental businesses of Patterson Companies and Henry Schein based on the incrementally positive NTM outlook on dental demand trends amongst our cohort as well as broader stabilization(albeit still lackluster)4Q trends.We also highlight positive commentary as it relates to Patterson,with respondents ranking its on-time delivery and salesforce knowledge as most satisfactory,coming in well above the broader average,potentially signaling building traction with turnaround initiatives underway.As a reminder,HSIC has benefited over the past year from previous mis-execution at PDCO,a dynamic that may abate going forward as PDCO stabilizes core operational performance,evidenced by its recent DSO win(see PDCO Victory Over HSIC).That said,dental service organizations(DSOs)could cause margin pressure,where 11%of respondents have disclosed some manner of affiliation with corporate players,and with 83%of respondents noting their expanding presence in the dental market.These larger corporate players can leverage their scale to achieve better pricing from distributor partners and purchase directly from the manufacturer.While we continue to monitor these dynamics,we acknowledge the presence of DSOs currently remains relatively low and that direct from manufacturer purchasing is also relatively low,accounting for only 7%and 11%of consumables and equipment,respectively.Moreover,Amazons presence remains limited,only currently accounting for 4%of both dental-specific consumables products and equipment.Align Technology(ALGN,Outperform)Earnings Date 1/29:While scrutiny remains as it relates to the competitive landscape evolution,with now several doctor-directed 27 January 2020 Dental Update 5 competitors along with newer DTC concepts available in the market,we deemphasize the competitive threat,with a view that the highly underpenetrated clear aligner market is large enough for s