DENTSPLY SIRONA Inc. (XRAY) Earnings Call Transcript & Summary

Good morning, everybody. Welcome to Day 3 of the Healthcare Conference. I'm Tycho Peterson. We're going to kick it off today with Dentsply Sirona. [Operator Instructions] So with that, I'll turn it over to Don.

Thanks very much, Tycho, and thank you for joining us this morning. And Tycho, on behalf of Dentsply Sirona, thank you for JPMorgan and actually making a virtual conference work. We're going to talk a lot today about our plans that we implemented in 2018 and progress we've made against that, some fundamentals of the industry. But before we do that, obviously, there's some safe harbor language that's included in our presentation that you can refer to. So as I mentioned today, our intention is to discuss industry fundamentals, the progress against the restructuring plan that we implemented in November 2018 and talk about the recent transaction we did last week. If we go to the next slide, and just -- I'll reference the slides as we go along. If you go to Slide 6, we believe the dental market is a great place to be with strong underlying fundamentals. There's a lot of data and more data comes out every day about the role oral health plays in overall health, like you can't be healthy in general without having great oral health. We've seen during the pandemic, and we've seen strong trends prior to that, that there's a strong need for preventive, i.e., giving you the oral health as well as aesthetics. And we think of aesthetics as kind of clear aligners implant the overall look and feel of your smile. Globalization over the long term has benefited the dental category. And as we see rising economies, you see much more spending by individuals on oral health. So as we've seen places like Latin America, Middle East, Asia growing, we've seen dental grow along with that. In the last couple of years, there's been a strong trend about new channels that are expanding the dental market. That's things like direct-to-consumer advertising that we've seen in the clear aligner space. And we've seen digital technologies being adopted at a very rapid pace. What digital technologies are, think about X-rays, that's creating a digital image as well as scanning, which is an intraoral scanner that will produce a digital image of the teeth and mouth and gums. That is becoming kind of the standard within the category versus what was historically a very manual process with impression material and other things. And then one of the trends we are benefiting from at Dentsply Sirona is the idea of single visit dentistry, which means you can come in, you can be diagnosed, if it's a case where you're going to need a significant restoration, you can actually get that done in a single visit versus what sometimes would take 2, 3 or even 4 visits. So that single visit dentistry, particularly around major restorations, is something that's becoming a standard in many places around the world. If you would look at Slide 7, we tend to be optimistic about the future. It's been interesting. During the pandemic, you saw in many countries around the world, including North America, you saw dentistry shutdown in the second quarter. And while everything is it back, we have seen a significant recovery after the first wave. As we've gone through what we're kind of terming the second wave, we have not seen things that we saw in the first wave, which is like governments actually looking to shut down dentistry. And in fact, we've seen a relatively consistent kind of recovery as we've moved away from the April, May time period. We see our tracking studies say there's increasing patient confidence. Once somebody has been back to the dentist post-COVID, they see the infection protocols are in place, they feel very confident that the dentist is not going to be a place where they're going to be infected. While those infection protocols took a little bit of time to get into place, and we saw kind of a headwind in terms of absolute number of patients that a dentist could see in a day, we do see that dentists are -- and their offices are getting used to those protocols. And while absolute capacity isn't all the way back, we're seeing consistent levels of improvement over time. And the interesting thing is the dental community has done a wonderful job in our opinion, of really managing through short-term setbacks. And that means reaching out to their patients, making sure that when their patients are invited back, there's a lot of communication about going into the office and how is that all going to work. Long term, as I mentioned, we continue to believe that dental is a great place to be. There's strong marketing fundamentals. Aging is something that drives aesthetics. Population rising around the world, again, pushes demand onto oral care. And new technologies and the economy -- and rising economies all over the world are something that benefits dental. There's a lot of categories that have seen very, very strong growth. We tend to lump them into what we call Digital Dentistry. So think about scanners, mills, and things that come off that, like clear aligners are done at treatment plan. But you also see increasing use of treatment planning in places like implants, which again are being driven by digital treatment planning. And that -- those spaces are growing at very healthy rates. The rest of the category, we've seen a solid market performance, whether that's in the consumables as we've seen post pandemic, that business beginning to return to areas that we had seen historically. And the industry, by and large, delivers strong cash flow and a strong return on investment. We're going to move to Slide 9. We -- I've referenced twice now the fact that we put a restructuring plan in place in November 2018. And we developed a strategy as well as some priorities. Our strategy is developing superior integrated workflows built on digital excellence, whether that's scanning or X-rays. Easy-to-use treatment planning, and this is an area that we've seen rapid expansion. And then essential products. So if a treatment plan says you need a complete crown, you now have a treatment plan and the essential products to actually deliver that. So we think about workflows, diagnostic excellence, treatment planning, improving outcomes for both patients and professionals. Our priority is to deliver that vision coming out of our restructuring were threefold. First was grow revenues, the second was improve margin, the third was to simplify the organization. Under each of those, we had said that we would believe that 3% to 4% is a long-term organic growth rate that we would achieve a margin rate of 22% on an operating income basis by the end of '22 and that we would generate cost savings of $225 million. If we did that, we believe that would allow us to target double-digit EPS growth on a consistent basis. Looking at our version, Slide 10, our company fundamentals at Dentsply Sirona, we think we're the premier provider of dental products, software and services. We're global, and that's really important because you get scale in so many different ways. But we're a global leader in a fragmented, attractive and relatively underpenetrated category. We have a strong financial profile and good capital structure. Something that we focus on day in and day out is innovation, and we believe we've built a very strong innovation machine that's going to help us deliver end-to-end solutions in dentistry, which is really how we think dentistry is going to grow into the future. We have significant and sustainable competitive advantages, and we are well positioned to drive and capitalize on trends affecting Digital Dentistry and dentistry as a whole. Looking at our Slide 11. For those of you who don't know Dentsply Sirona, we're about 43 -- and looking, these numbers are based off 2019 because 2020 is much more affected by the pandemic. But our T&E, our Technology & Equipment segment is about 57%. Our Consumables business is 40%. We're very well balanced from a geographic standpoint with North America representing about 34%; Europe, 40%; and the Rest of the World in the 20-plus range. Businesses that we have in our Consumables space, our endodontics, think of those as root canals, many strong brands there; preventive, that's things like Cavitron and other things associated with kind of hygiene; restorative, which is the most prevalent dentist category -- the procedure dentists do the most. Think of that as if you had a filling or you had a cavity that needs to be filled, whether it's a small one or a large restoration; as well as prosthetics, which is our teeth and put into dentures, whether that's a digital denture or a traditional denture. We have an Equipment & Instrument business, which has a series of leading brands in the x-ray space, that's imaging; treatment centers, which are an integrated way of treating dentists. That's very popular in Europe as well as parts of Asia where it's a chair that's integrated with a lot of software that allows the dentist to be very efficient in treatment of patients and instrument business. We have in Digital Dentistry, many leading brands. CEREC is a large brand, which is basically end-to-end scanning all the way through milling around restoration or implants or surgical guides. We have SureSmile, which is our clear aligner play in the direct-to-dentist category. And then we now have added BYTE to our overall clear aligner portfolio. That now gives us critical mass in clear aligner because we have a dentist play, which is SureSmile, and we have BYTE, which is a direct-to-consumer play right now. So we have a strong implant franchise, whether that's our ATLANTIS, ANKYLOS, XiVE or Astra Tech business. And we also have a health care business that participates in the urology category. Looking at Slide 12, as we said, our priorities were growing revenue, improving margins and simplifying the organization. We have several plans in place to help us grow revenue. So whether that's innovation, and we're very happy with the pipeline that we've been able to bring to the market over the last several months. If you look back over the last basically 12, 15 months, we've been able to introduce Primescan, Primemill, Surefil one, which is an important restorative product, and recently, Axeos, which is a wide field of view X-ray product. Commercial effectiveness, we have done a lot of work working through the 5,000 to 6,000 people that we put in our commercial enterprise, around whether that's marketing or sales force effectiveness. And we've begun a process that's starting in North America but rolled it around the world to deliver what we think is a much more effective and consistent commercial organization. We're one of the leaders in clinical education. We have both a global footprint. We've been able to digitize that. And we actually have a very strong physical plant around Dentsply Sirona Academies, which are places people can come in and physically learn how to use our product and integrate them into their workflow. And when we talk about growth, it can be organic or inorganic. BYTE -- the BYTE acquisition and transaction is an example of inorganic. Looking at our Slide 13, this is kind of the pipeline, and we're very happy with what we've been able to do. And since announcing the restructuring, you can see that we've been able to accelerate not only the quantity of new products, but we believe the quality of the new products. And you can see even during the pandemic, we had a very active new product year in 2020, and we look forward to 2021 and beyond, continuing to deliver a product that we believe is really going to help us transform dentistry. Some changes that we've made over time. We really now manage all of Dentsply Sirona as a portfolio. We're focusing much more on procedures as opposed to the individual product. As an example, with Surefil one, it's how do we think about that being the culmination of a complete diagnosis and then identifying the need for restorative and then using something like a Palodent and a Surefil one, not only gives better patient outcomes, but it actually helps the dentists do that in a more timely fashion. Looking at our Slide 14, I've mentioned Axeos. We're really excited about this launch, which came in late fourth quarter of 2020. We think it's a real practice builder for GPs because it has both 2D and 3D. It's got a wide field of view with -- and it's very Interesting that we were able to build technology that gives us intelligent low dose for 3D applications. So as dentists expressed concerned about how much radiation patients get when they're looking at something like a 2D or 3D, we feel that we're really meeting a market need with this intelligent low dose. And it comes with our software Sidexis 4, which we think is very, very advanced. It's -- we believe that it's very helpful with something like SureSmile because it's a root-to-crown treatment plan that you can develop through Axeos. But we did other things, and Looking at our Slide 15, we talked about SureSmile. In our call last quarter, we talked about the fact that we think SureSmile will be trending toward a $100 million run rate as we come out of 2021. We believe it's very competitive in the marketplace because it's the only root-to-crown planning solution. It's seamlessly integrated into our Primescan products, and we believe that we have a large installed base of Primescan that gives us a built-in advantage when we bring SureSmile to Primescan doctors. We've spent a lot of time in the third and fourth quarter revamping our manufacturing infrastructure so that we are going to be able to manage a strong expansion in SureSmile and now with BYTE. And we believe our treatment planning solution is very, very competitive. And when dentists begin to think about what product do they want to offer, treatment planning, not only do you want to get a great treatment plan, but we want one that's easy to use, is very, very important to them. Moving to our Slide 16, we identified the second area as how do we expand our margin. We've made a lot of progress in this area, whether it's by creating a single supply chain. That's work that we've been doing over the last 2 years. And as we went through the pandemic, the benefits of now having a single planning, a single logistics and a single manufacturing entity in a global integrated supply chain demonstrated the efficiency that, that's created because we're able to take the business down and then bring the business back up relatively efficiently. We have put a lot of discipline and it's been really great to have Jorge here for the last 14, 15 months that we've really been able to put a comprehensive and very disciplined cost management program. And we've done a lot of portfolio shaping, whether the most recent announcements getting out of analog lab and getting out of our traditional orthodontic business or other things like 1-800 DENTIST or FONA, you've been able to see. And we kind of looked at the third quarter of 2018, 2019 and 2020, and you can see consistent progress on the margins. And we also said we needed to simplify the business. The legacy of Dentsply Sirona was a lot of individual business units that hadn't really been integrated. We failed to operate as a unit effectively and take advantage of our global breadth and scale. We needed to simplify the organization. And we put in basically 18 months ago, a new operating structure. I mentioned the fact that we have an integrated supply chain, but we also created a single commercial unit. We consolidated the R&D in a number of different ways, all designed to take advantage of scale. We implemented a comprehensive headcount reduction effort, which we said we were going to achieve a 6% to 8% headcount reduction, which we have accomplished at this point. And we said that we were going to reduce costs initially by 2025 -- $225 million by 2022, and we've recently increased that. And you can see we've seen consistent results. Again, if you go to the third quarter to kind of give a snapshot in time between 2018, '19 and '20, you see a consistent reduction in SG&A. And we've been able to do that, in fact, while maintaining a very aggressive commercial footing as well as spending money around things like R&D. So as we go to the next slide, what has that delivered? Again, we're taking a snapshot of where we were in Q3 '18, '19 and '20. And you can see consistent improvement, led by driving our top line as well as delivering margin expansion. It's leading to the double-digit bottom line growth that we were talking about. So as we move forward, I want to introduce Jorge Gomez, our CFO, to talk about the BYTE transaction, which we announced last week. Jorge?

Thanks, Don, and good morning, everybody. This is a very exciting transaction for us. On Page 20, you see a quick summary of what we did. So essentially, we acquired 100% of BYTE for $1.04 billion, and funded the acquisition with -- entirely with cash on hand. Strategically and financially, very, very exciting transaction. Obviously, clear aligners is a fast-growing segment within the broader dental market. The addition of BYTE for us is expected to expand our product offerings, our customer base and to access new markets. We will be able to utilize the extensive R&D capabilities, the deep commercial expertise that we have. And with that, we will certainly expand BYTE's growth, both domestically and internationally. BYTE is expected to be accretive to our stated long-term organic revenue growth target of about 3% to 4%. With the acquisition of BYTE, we now expect this growth rate target to trend higher into the future. But we also expect the transaction to be accretive to our non-GAAP EPS earnings per share or earnings per share this year and years thereafter. We're also very pleased with the fact that the existing management team, led by Neeraj Gunsagar, will continue to operate the business. They've done a remarkable job over the last several years building a great business that is growing really fast and is profitable. And so we are excited to keep them on board and look forward to working with them. If we go to the next slide, Slide 21, let me go a little bit deeper into some of the reasons why we believe this transaction is very compelling for our shareholders. As I said before, the clear aligner market has become one of the most important categories in dental. It is fast-growing, it is profitable and it's driving, frankly, the acceleration of the dental digital industry. With this transaction, we are enhancing our scale in this critical category. We will now have 2 leading assets. We have our existing SureSmile business which is the in-office clear aligner system and now BYTE. This combination of in-office and at-home solutions will allow us to expand our total addressable market and extend access to additional patients. We also believe the transaction has the potential to increase access to quality dental care for additional patients. BYTE, as far as to expand access to oral health care as they serve many patients that do not regularly attend a dentist office today, that is a great contribution to the industry. By combining BYTE's direct-to-consumer marketing expertise with Dentsply Sirona's focus on dental clinicians, Don talked about our clinical capabilities, we will broaden our reach to improve the outcome for many patients. And finally, as I said before, this transaction will actually increase the connection with dental professionals and with consumers around the globe. We will be driving more opportunities to introduce dentist-driven solutions to the addressable market. And by doing that, we're going to create significant value. As I said before, transaction is going to be accretive to our long-term financial targets. And in the short term, it's going to be accretive to our non-GAAP EPS in '21. On Slide 22, this is really a synergistic transaction for both Dentsply Sirona and BYTE. First, let's take a look at what Dentsply Sirona brings to the table as part of this transaction. Dentsply Sirona's global platform has a strong network of dental professionals. Going forward, we can expand BYTE into this area as well as into international markets. We have strong R&D capabilities and we'll bring our resources and passion for innovation up to BYTE. Our company has an extensive global supply chain and logistics platform. Utilizing that platform is going to allow to generate a lot of efficiency improvements, lowering the cost of our -- of the production cost for BYTE and further improving margins. Also, Dentsply Sirona has SureSmile, which is our advanced root-to-crown clear aligner system that will remain the focus of our professional channel. But now we have -- and we've been very pleased with the performance of that business. Its development is growing and it's going to complement what we're doing with BYTE. On the BYTE side, BYTE brings a direct-to-consumer approach, which has worked to increase patient access to dental care. Great contribution from BYTE on that front. BYTE has advanced technology that provides really high-quality care for patients and gives them the gift of an improved smile. Very importantly, BYTE has a strong consumer brand and comes with a robust marketing and data analytics platform to support it. That was one of the key assets that we were intrigued by when we did our due diligence for BYTE. Altogether, BYTE then Dentsply Sirona, we're going to increase scale, we're going to unlock growth, we're going to broaden and deepen the relationships that we have with our dental partners today. On Slide 13 (sic) [ 23 ], let me go a little bit deeper on some of the characteristics of BYTE and who BYTE is. BYTE was founded in 2017, headquartered in L.A. and has been growing rapidly. Now we have operations in Utah, in Costa Rica. BYTE's mission from day 1 has always been clear. It is to increase access and -- increase access to affordable dental care for patients with an easy-to-use aligner system. The consumer experience that BYTE provides has been really, really well received in the marketplace. They -- it is fast, it is convenient and it really allows patients, customers to have access to a great product in a very convenient way. BYTE's platform has extended access to a patient population that typically has a limited access to the proper oral care due to high cost. The majority of our current customers, the customer base of BYTE, has either not visited a dentist's office recently or actually never had any dental procedures in the past. BYTE's consumer-friendly experience and convenient clear aligner system has resonated with so many new dental patients. Furthermore, since the majority of the existing customer base is without a dental professional relationship, we see a real opportunity. through this transaction to transition customers over to a local professional for long-term care of their oral care needs which is going to be truly incremental to -- truly incremental new customers to dental offices across the U.S. and abroad, dental offices that we serve today. BYTE has established highly effective marketing capabilities that help drive customer acquisition. Their fast growth rate proves that. Through advanced customer engagement tools, BYTE has found strong interest from customers and potential customers to meet with dental professionals. And as we said before, BYTE has also assembled a great leadership team, a great employee base, and we are very pleased with that, that they have joined Dentsply Sirona and that they will continue to drive BYTE forward. So with that, let me turn it back to Don.

Yes, and let me just kind of summarize what we've tried to say today. So look, we believe that long term, the dental category is a great place to be. We've seen some good resilience coming out of the pandemic. And then in our mind, we've been marching to a restructuring plan that we introduced in November of 2018, focusing on growing revenues and whether that's through innovation, organic or inorganic, improving our demand creation capabilities through things like marketing effectiveness and sales force effectiveness, we believe that we can grow revenues. Margin improvement has been a real focus for us, and whether that's through organizational simplification that's leading to scale in areas like supply chain, procurement and other things, implementing a disciplined cost management program, and we will continue to shape our portfolios. We believe if we see continued progress around recovery from the pandemic, we'll see a 22% margin at the end of 2022. And then we believe that we can continue to simplify the organization. We've achieved our headcount goals. We have an effective operating structure. And we -- again, we will -- we believe that we will hit the $250 million savings objective we put out in 2018. We will do that by the end of 2021. So basically, we will have delivered not only on our restructuring plan, but we believe that we've set Dentsply Sirona up for sustainable long-term value creation for our shareholders. So with that, back to you, Tycho, and we can answer some questions.

All right. Thanks, guys. I'm going to jump in with a couple on BYTE here. And it's -- this is kind of a whole new category around DTC. So first question is why BYTE versus candid versus some of the others? I mean there's kind of a whole new category being created. How do you avoid some of the traps that SmileDirect has fallen into around quality and other issues [indiscernible]. The big question we've gotten a lot is DTC spending, Align spends a ton of money here, what are you going to have to spend behind BYTE in the DTC channel?

Yes, and let me start off, and Jorge, you can chime in. Look, we were looking at BYTE for a number of reasons. We felt that we wanted to really create critical mass in the clear aligner space. That's the first thing. And between what we're going to be able to do with SureSmile and what we're going to be able to do with BYTE, we believe that we are now a very solid player in that category. We believe that having the -- we'll have one manufacturing footprint. We now have R&D that can go off to 2 different areas, whether it's the DTC space or whether it's the SureSmile space. So we felt that, that really fit very, very well. When we were looking at BYTE, the thing that attracted us to it, well, first, it was a great management team that we felt was second to none in the category. The second is they built this from the ground up to be a digital asset. If you look at Candid and SmileDirect, I'll let them comment, but they started out kind of as a retail and then direct-to-consumer play. This was built from the ground up to be a DTC play. And we believe that the customer experience that had been really carefully curated at BYTE was really a sustainable advantage for us. So that's kind of how we settled on BYTE. And again, we've been running the business for a week. But everything we saw in diligence and now that we see even in this early stage excites us even more. In terms of how do you avoid the traps for rapid growth, I mean, one of the things that I believe the reasons that the founders at BYTE and the BYTE management team is looking at it, they wanted to avoid some of those mistakes. They wanted to be able to take advantage of the scale and the expertise that we have in globalizing businesses, things around supply chain, QA, RA and other areas. We bring immediate credibility and can give them a solid foundation to build out expansion. And then, Tycho, in terms of the DTC spending and whether we're going to be on the NFL or someplace like that, we really kind of have a different model. I mean, first, it's a very disciplined model that was built by the founders from day 1 to be profitable and this remained that way. And we think we will be able to continue to operate it that way. We're very, very focused on things like CAC and the cost of acquisition. We believe that it's going to be a little bit more of a digital orientation where you'll think about social media and search engine optimization as opposed to trying to create a large funnel that's based principally on broadcast media. Now that being said, is that going to have a role in the future? Absolutely. But one of the things that we have been committed to is really driving margin improvement. And we -- as Jorge said, this is going to be accretive to us in terms of about -- we said $0.05 in 2021. So it's -- as we look at the expansion opportunities, we think that's going to be less about how do we go spend a lot of money in the broadcast media space, but how do we take advantage of the model they have today, part 1. Part 2 is then we'll bring it out to our dentist network around the world.

And then how does adding the DTC offering on clear aligners impact your current relationships with GPs on the consumables side?

Tycho, we believe it's -- and again, it's very early stages, but we believe it's going to enhance our credibility with the GPs, because, look, BYTE is basically aimed at Class I occlusions. Basically minor kind of aesthetics in the anterior of the mouth. That means there's a lot of people that come into the BYTE network that would benefit from Class II or Class III treatment that need to go see somebody for more advanced treatment. We believe that driving those patients into the dentist office is a clear opportunity for us to really expand the relationship as well as the credibility that we are going to help drive patient traffic for that. And it's been interesting. The reaction from the large DSOs as we've kind of taken them through our plans here has been really exciting.

Margins have obviously been a big focus. You reiterated the 22% target. One question we've gotten is, would you have hit that without adding BYTE? Would you have gotten away that you'd 22% if you didn't have BYTE added into the portfolio?

Yes, Tycho. And look, we get asked about the 22% all the time, and that's assuming that we don't have another massive shutdown, but we would have gotten to the 22% without BYTE.

Okay. Question over e-mail, is the base business in 2021, is it going to look better than it did in 2019 in terms of revenues when you adjust for the divestitures and acquisitions?

We're not going to really -- we'll give guidance -- I guess, our call is at the first week of March. We'll give guidance out as to how we think about that. I would tell you, look, we're cautiously optimistic about how the categories responded. We don't think it's all the way back. I mean, if you look at some categories like PPE, it's grown really well. The aesthetic space is like clear aligners and implants have grown where dentists have been focusing on more kind of sophisticated procedures to make up for a little bit of lost traffic. But again, assuming we don't see a massive second wave, we think the numbers would start approach -- the base category numbers would start approaching 2021. So we're cautiously optimistic. But Tycho, this thing, as you well know, and you've got to see 100 companies over the last couple of days, this thing keeps finding a whole bunch of different ways, so we'll see.

One last one on just kind of the clear aligner. Well, I guess a two-parter, you exited bracket and wires. Any kind of backlash from that in the channel? Obviously, for some complex cases, you still want to use brackets and wires. So that's the first question. And then, Jorge, you talked about BYTE bringing new customers into the dental practice. Maybe that we're going to the dentist to begin with, I'm just wondering what that demographic is of tech savvy people that don't go to the dentist. I'm just -- who are these people that don't go to the dentist that would be getting clear aligners?

Yes, I'm sure, Jorge, will -- collectively, we have 5 daughters in that demographic. So I'll let Jorge explain that. In terms of the brackets and bands, it's interesting. One of the reasons we bought OraMetrix 2 years ago was because they actually had a hybrid treatment. And we've actually stayed in that business. We got out of the traditional brackets and bands because, to be honest, it didn't fit the profile of what we were trying to do, where R&D would allow us to create a sustainable advantage. We tend to really want to build things off our installed diagnostic base, whether that's the x-ray side or the digital side, and we were not heavy into orthodontists. So we just didn't feel like a space that we're going to be able to outperform the market on a consistent basis. And we were really -- had what we thought was a comprehensive plan about how do we grow clear aligners, including doing something like BYTE. So we felt we needed to focus our efforts. And Jorge, you want to talk about the demographic?

Yes. Tycho, as I said before, one of the things that we really like about BYTE was their marketing capabilities, digital intelligence. They have a lot of interesting data. And the way we segment the market, there's a number of drivers of this new volume, and it's multiple variables. It includes, as Don indicated, it's age group, it's income level, it's lifestyle, convenience, doing stuff from home versus visiting a doctor's office. So we have multiple personas within that market segmentation. And they identified a large part of the population that don't -- without this type of product, they would not go to the dentist. Access to insurance is another type of variable there. So all of those things combined, we target very specifically at those sectors of the population.

Question on implants, just shifting gears here, any new meaningful products coming on the implant side? How do you envision competing with Danaher, and Envista's N1 and Straumann's BLX with the current portfolio?

Yes, well, first, we have a very, very good pipeline on implants in 2021. Look, we feel that our implant business is one that we've got to move at market level, and we haven't over the last couple of years. So we've changed leadership there about 15 months ago, and we've put a very comprehensive new product plan in. When you think about looking across our portfolio, we have a number of brands, whether it's MIS, whether it's Ormco or XiVE or Astra, we feel that as we get through '21, we will have an extremely competitive portfolio that will enable us to stand toe-to-toe with Nobel or what Straumann is doing. And Tycho, it's a bunch of different things, whether you think about it's the individual screw, how do you get to immediate load, whether everything is parallel wall. But between what we did toward the end of last year with Astra EV, and we've had some new products there as well as what we have in the pipeline in 2021, I feel like our portfolio, for the first time in probably like 5 years is going to be pretty much the most modern or most comprehensive that we've ever had. So we feel very, very good about the new products. Now we -- I think we've got to up our game commercially, and we've got plans in place to do that.

I guess final question in the last 2 minutes here, just on kind of ongoing trends. You alluded to the fact that despite caseloads going up, dentists have been better at managing around this with PPE and scheduling and things like that. We did see technology and equipment improve sequentially in the third quarter, still down, but moving in the right direction. Obviously, you're going to wait until the fourth quarter call to give guidance, but is your view that we're kind of through the worst of it on the COVID kind of headwinds and maybe we kind of bounced along for the next couple of quarters? But what's your view on kind of the recovery path from here, I guess?

Yes, Tycho, I can't comment on where COVID is going to go and the next strain and all that kind of stuff. But hey, look, this is what we've seen, the dentists have kind of adopted. There -- if they were seeing a 15% headwind in total patient capacity, they've kind of adjusted by what their procedure portfolio looks like, doing -- and we think that will continue. From the T&E perspective, we've got some unique things going on in -- just in terms of our comps. We -- between launching Primescan and having a DS World, as we're looking at the next quarter, we're working through a pretty -- on a comp basis, a pretty high hill. But underlying trends, what I would tell you, the dentists, really in my mind, actually took almost the time where their offices were closed, and they really said, where do we need to be over the next 5 years. And we've seen technology and equipment, to your point, sequentially improve. And we think underlying retail demand, whether we're -- is there another wave? No. But look, we're seeing some consistent improvement. And we believe long term, Digital Dentistry, Tycho is just absolutely here to stay. I mean, it's just such a -- it transformed the dentist office just in terms of aggregate efficiency, cost, communication ability and whatnot, and that's all driven by equipment that we tend to sell, whether it's like a Primescan or Orthophos or other things.

Awesome. Well, we hit the end of the session. So I want to thank you guys, for taking the time, it was a great overview. And enjoy the rest of the conference.

Great. Thanks so much, Tycho. And again, thank you, JPMorgan, for the invite.

Thank you.