瑞信-美股-医疗行业-牙医调查显示：COVID-19背景下牙医需求量的下降并不令人意外-2020.4.17-61页.pdf

Dental Update Survey Says:Dental Demand Unsurprisingly Deteriorates on COVID-19 Dynamics Life Science Tools and Diagnostics|Channel Check 1Q Dental Practice Volume,Revenue Growth Sinks on COVID-19:According to our proprietary survey of 75 US dental practitioners,72%of practices experienced greater than 5%declines in revenue in 1Q,with revenue likely falling more than our 4.5%weighted average estimate,a meaningful deterioration from our 4Q survey(+1.1%)on COVID-19.Routine visits(-3.1%)was the most meaningful driver of practice revenue declines,followed by cosmetic procedures(-3.0%),preventative(-3.0%),and orthodontics(-2.8%),particularly unsurprising following ADA/AAO/CDC recommendations to defer elective dental procedures in light of the pandemic.Respondents remain cautious going forward,with 96%of respondents expecting a decline in practice revenue in 2Q and 89%expecting a decline in revenue over the NTM,where the duration and longer term implications of COVID-19 remain largely unknown.While we were previously encouraged by a seemingly stabilizing dental demand over the past several quarters,the pandemic has clearly driven a meaningful deterioration across the dental market,consistent with QTD commentary from industry constituents.Greater Context on COVID-19 Dynamics(43%of practices closed):In order to better understand the impact of coronavirus,we asked our respondents to what extent they are still treating patients,if at all.Unsurprisingly almost half(43%)have fully closed their practices,while 57%are still treating patients,albeit on a more limited basis,with most only providing emergency services,seemingly in line with aforementioned recommendations from health organizations.In this environment,practitioners are willing to treat patients who are in severe pain or who may be at risk of sustaining significant long term adverse ailments,a substantially more limited scope of offerings than practitioners would offer in a normal environment.Importantly,most respondents who are currently practicing expect to continue to provide emergency treatment going forward.Model Updates:In conjunction with our Dental survey we are reducing our estimates for manufacturers and distributors largely on COVID-19 disruption.For NVST,we are lowering our 2020 EPS estimate to$0.96(from$1.70),reflecting internal topline growth of-8.9%(from+1.4%)and a 23.8%drop in 2Q(from+1.1%).Our NVST price target moves to$23(from$30)on the reduced view.For XRAY,we are lowering our 2020 EPS to$2.06(from$2.76),reflecting internal growth of-6.5%(from+3.3%)in 2020 and a 19.5%deterioration in 2Q(from+5.3%).We are lowering our XRAY price target to$50(from$65)on the reduced view and uncertainties in capital equipment purchasing.We are also lowering 2020 EPS estimate for HSIC to$2.95(from$3.69),including-4.4%internal topline growth(from+2.8%)for the year and an 18.3%decline in 2Q revenue(from+2.7%).Meanwhile,our PDCO 2020 EPS moves to$1.39(from$1.53),predicated on a 1.2%drop in organic revenue(from+1.8%).Our target prices for HSIC and PDCO move to$59(from$70)and$22(from$29),respectively,on the lowered view and reduced conviction in nearer term growth prospects given COVID variables.17 April 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- 17 April 2020 Dental Update 2 Equipment-COVID Potentially Driving Extended Purchasing Deferrals:The NTM outlook on equipment purchasing deteriorated meaningful relative to 4Q in light of COVID-19 dynamics,with many practitioners noting they deferred or cancelled orders in 1Q.Moreover,responders await a resumption in patient traffic,a stabilization in their financial situation,and incremental clarity around the LT implications of COVID-19 before resuming equipment purchases,potentially signaling reductions in capital outlays(vs.historical levels)may extend beyond the resolution of the current pandemic,setting an incrementally cautious tone for dental manufacturers and distributors,in our view.While we remain encouraged by Dentsply Sironas(XRAY,OP)longer term prospects amidst a turnaround story,with stepped-up innovation efforts,including Primescan(utilized by 7%of respondents in 1Q vs.none in 4Q),a pullback in spend near term,particularly across high-tech equipment categories,will pressure earnings and obscure progress with other internal initiatives.Separately,we note Align Technologys(ALGN,OP)iTero remains the leading intraoral scanner(29%of total respondents;61%of digital impression users).Clear Aligners ALGN Dominates;DTC Concerns Less of a Focus:The clear aligner NTM outlook has unsurprisingly moderated,with respondents who currently utilize clear aligners now expecting a 1.4%weighted average decline(vs+2.2%in 4Q;+2.4%in 1Q19)on COVID-19,slightly better than aforementioned overall NTM practice revenue growth expectations.Practitioners are seemingly less concerned with direct-to-consumer(DTC)concepts,like SmileDirectClub(SDC,OP),which are likely disproportionately exposed to fluctuations in the broader macro environment.Meanwhile,across the doctor-directed market,ALGNs Invisalign remains the clear market leader,with 64%of our cohort currently offering Invisalign(86%of clear aligner users),with 65%and 56%of ortho and GP cases treated with its more comprehensive Invisalign Full offering,respectively.We continue to await greater traction for Invisalign Go for GPs and Mandibular Advancement.We also note continued enthusiasm for XRAYs SureSmile,utilized by 7%of respondents(9%of clear aligner users,up from 5%in 4Q)and potential early traction(one user;two potential adds NT)for Envista Holdings(NVST,N)Spark system following its recent broader roll out.Separately,we were surprised that 11%of respondents indicated their potential willingness to work with SDC,with several more undecided due to a lack of information around the model and pricing,differing from our prior hypothesis that essentially no practitioners would be willing to work with the company.Digging into Implants NVST on Top:Surprisingly,Envistas(NVST,N)branded implants were utilized the most on average,with practitioners using its premium Nobel Biocare brand and discount Implant Direct brand on 27%and 4%of relevant cases,respectively,well ahead of its previously disclosed market share(19%).Moreover,we remain optimistic as it relates to the prospects of NVSTs new N-1 implant system(awaiting US regulatory approval),where many dentists stressed the importance of ease of use when selecting an implant offering,particularly relevant given the new system aims to simplify the process while also supporting faster osseointegration.Meanwhile Straumann(STMN)branded implants represented 23%share(vs.36%in 4Q),essentially in-line with its reported market share positioning(25%).Supply chain,Direct Dist.,Amazon Update:Henry Schein(HSIC,N)and Patterson Companies(PDCO,OP)were named as primary distributors by 41%and 17%of respondents,respectively(vs.43%and 17%on a TTM-basis),with practitioners purchasing 71%and 77%of consumables and equipment,respectively,through their primary distributors.While Amazon penetration remains a question for dental distributors,the majority of practitioner Amazon purchases today are related to office supplies(30%),with only 8%of standard medical products(e.g.gloves,cotton balls)purchased through the e-commerce giant.Moreover,5%(vs.4%in 4Q)of dental-specific consumables are purchased through Amazon today,which is only expected to grow to 11%in 3-5 years based on our cohort.In terms of direct distribution,respondents currently purchase 11%of consumables(15%of equipment)direct from manufacturers,with 23%and 11%of respondents expecting to purchase more consumables and equipment,respectively,17 April 2020 Dental Update 3 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.17 April 2020 Dental Update 4 Dental Survey Takeaways We commissioned a survey of 75 practicing dentists dispersed across 21 states in the U.S.,with the highest number of responses in New York(17),California(7),and New Jersey(6).Our respondents range across a number of specialties including general dentist(51),orthodontists(17),pediatrics/pedodontist(4),periodontist(2),and oral and maxillofacial surgeons(1),with an average tenure of 25 years.About half of respondents work as sole practitioners(51%),while most other participants work with multiple other dentists at a single practice owned by dentists(32%).Of note,three respondents work for a DSO or dental management organization affiliated group practices and one works at a hybrid DSO.On average,our respondents see 150 patients/week.Of note,our survey is skewed towards geographies that are more highly impacted by COVID-19 relative to the rest of the country,including New York,New Jersey,and California,where we note these states have implemented the most meaningful social distancing measures,including“shelter in place”orders,which may drive a more cautious overall tone.1Q Snapshot:Our Quick Takes by Company Dentsply Sirona(XRAY,Outperform):While we remain encouraged by XRAYs execution on restructuring initiatives to-date,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,we note a deterioration in dental demand trends and equipment purchasing will likely meaningfully impact near term results.Given XRAYs turnaround story is predicated on an acceleration in revenue growth due to innovation efforts and the adoption of high-tech equipment(e.g.Primescan,Primemill),we view progress will inevitably be obscured and likely delayed on aforementioned headwinds related to COVID-19.In 1Q,Primescan adoption clearly still remains in early days,with 7%of respondents utilizing the offering today(3%digital impression only;4%full CAD/CAM vs.none in 4Q),implying meaningful market penetration opportunity ahead.That said,pricing remains a key deterrent,with only 1%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(56%of full chairside users utilize the system),with respondents highlighting its ease of use and accuracy.More specifically,XRAY recently launched its Primescan upgrade program in October at its annual Dentsply Sirona World event,followed by the launch of a second iteration of the upgrade program at Chicago Midwinter in February.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.Its SureSmile clear aligner system,which is currently utilized by 7%of respondents(9%of clear aligner users)appears relatively well received,with respondents praising its cost effectiveness,customer service,and scanner compatibility.All in,adoption is still in early days,and we await further market feedback/commentary going forward,albeit with near term performance likely impacted by broader pressure on the clear aligner market due to COVID-19.All in,we are forecasting 1Q19 revenues to fall 4.7%,driven by-7.8%organic consumables growth and+1.8%organic growth in Equipment.Focus for the call,however,will be on color for 2Q and beyond,given COVID dynamics.Envista Holdings(NVST,Neutral):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 27%and 4%of relevant cases,respectively,ahead of its previously reported market share.Moreover,we 17 April 2020 Dental Update 5 remain 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.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 only one user 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,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 1Q,we forecast NVST revenues will fall 12%(-10.6%core),driven by-4%Specialty Products&Technologies core revenue growth and-18%in Equipment&Consumables.On a pro forma basis,we expect its EBITDA margin will deteriorate 475 bps,including a 250 bps contraction in gross margin,a 199 bps increase in SG&A,and a 25 bps increase in R&D expenses.All in,assuming a tax rate of 23.5%,EPS should fall 65.6%to$0.10(vs.consensus$0.11).Greater focus,however,will be on 2Q dynamics and beyond.Distributors Patterson Companies(PDCO,Outperform),Henry Schein(HSIC,Neutral):On balance,we remain cautious on near term prospects for the respective dental businesses of Patterson Companies and Henry Schein based on the incrementally weaker 2Q and NTM outlook on dental demand trends amongst our cohort in light of recent COVID-19 dynamics,including unprecedented social distancing protocols.On a relative basis,we favor Patterson,where we note our surveys over the past year have included positive commentary on the companys services,potentially signaling building traction with turnaround initiat