Envista Holdings Corporation (NVST) Earnings Call Transcript & Summary

Hi, everyone. Thanks for joining us today for the Envista fireside chat. I'm Elizabeth Anderson. I'm the healthcare tech and distribution analyst here at Evercore. And I am thrilled to be joined by the management team of Envista. So we have CEO, Amir Aghdaei; John Bedford, who is the VP of Investor Relations; and then Howard Yu, who is the CFO. Just as we get started, for a moment, there is a way to ask questions during the fireside chat. You can put it in to your platform and they appear on my screen. So feel free to use that as we go along. Thanks, guys, for joining today. It's a pleasure to have you.

Good morning.

Good morning, happy to be here.

Nice. So Amir, this has been quite the first year as a public company. I don't know if we've had another one quite like that. As you think about year 2 that we've just started, this is probably a good start maybe for like a state of the union or sort of an update on where we are and where you see Envista going?

Yes. Thank you. Thank you for having us. As you recall, Elizabeth, before IPO and during IPO, we communicated what in this is substantial. We talked about really expanding and bringing dental care to masses. And in order to do that, we needed to really accelerate our growth, improve our margin and build a better portfolio. As [ Harsh ] has said, past 8, 9 months has been, that really has given us an opportunity to take a giant step forward. We normally look at short-term, mid-term, long-term. What took place in the past, probably 8 or 9 months, we were able to significantly change the portfolio, and we moved away from about 5% of product categories that they were not growing, they were not really contributing much to our margin. We're able to close the gap versus the nearest competitor in our margin structure. We invested significantly into our growth opportunities. And we can talk about them a little bit more, and you have seen that in Q3. And we really build a better, stronger Envista. The thing that we could control, we have done a really nice job. I feel really good about what we have been able to do in spite of challenges that we have had. What we see in the next 6 to 9 months is not necessarily as clear, but we are prepared for whatever is ahead of us. And we are really bullish about the long run, about the industry as a whole and about Envista's opportunities. Let me park in there, and let you do a deep dive in any categories that you would like?

Yes. No, thanks. That's a good overview. And if you start to know what's going to happen over the next 6 to 9 months, please call me. I would be very glad. So I think one of the things that's probably really helped to manage through this was -- is the EBS or Envista Business System for those people who [indiscernible]. How does that help during the pandemic? Like I think about it, obviously, from like a cost perspective. So maybe talk about that. But then also, like what are the less obvious ways that helped?

The infection prevention you mentioned?

No, no. Envista Business System, EBS.

Envista Business. I'm sorry, Elizabeth. So we brought the heritage of EBS, EBS from down. And then a simply way think about that is that is continuous improvement mindset. So whatever we do, there is better opportunities to do that. So let me give you 3 to 4 examples of how we deployed EBS to build a better company. At the beginning of the year, we decided, Howard and I decided that we really need to take about $100 million of permanent cost out because we knew that we had some challenges about our margin structure. So we put a whole set of processes in place, we built standard work, applying EBS on a weekly basis, reviews with those that they own it and executed it step by step. We say we are about 80% to 85% along the way. And it wasn't a one shot, one time. It was a very strategic, sequential process that EBS came to work from a project management and execution and accountability perspective. One example on the cost side. Now let's talk about growth initiative. If we look at our infection prevention business, it's about $150 million to $200 million business. We knew we had started a series of processes around in-sourcing and ramping up the capacity. We deployed EBS to double the capacity in short period of time in manufacturing front, and we were able to improve capacity by 50% from the beginning of pandemic to end of Q3. And that resulted in over 30% core growth in that business. So think about it, it's about 100 basis point of growth coming purely from that business. And that continues moving forward with over $30 million backlog as we stand today. So we applied EBS in capacity building, improvement of production, throughput distribution. Last but not least, this is about Spark. When we walked into 2020, we have just started. We have a group of people that we were expanding piece by piece. We doubled the capacity by end of Q3, and we are able to double the capacity again by the time that we saw 2021 going through it. So how did it show itself in manufacturing, deployment, supply chain, but also in signing customers, making sure that we do the training, we get more and more into the look and building data. EBS shows itself on lean and manufacturing on cost and production. It shows itself on innovation, getting product to market, making sure that they hit the mark. And it shows in itself in how we recruit, develop talent moving forward. We've got a much stronger team today than we had only 12 months ago. Because of what we have gone through, because of the experience that we have gained, because of the processes that we have put in place that for the last -- as we come out of this pandemic, it makes us more robust, more predictable as we go forward.

I think that's helpful. So I think maybe turning to, hopefully, what we -- coming out of COVID, knock on something. Can you give us a sense for what you're seeing through November from a patient volume perspective? I know there are some conflicts. Are we still increasing? Are we flat lining?

Yes. I'm happy to. Obviously, as everybody knows, March started, we have seen the bottom started [indiscernible] really quickly, very fast. By April, we were down almost 80%. And starting in April, we have seen a gradual improvement. Every month has been better than the previous months. And in Q3, you saw our result minus 1%, minus 2%, somewhere in that category. And that process -- first, let me tell you about our performance, and I tell you about what's going on. That process has really continued. We haven't seen anything radically in October and November that is indication that the environment has changed. Yes, the number of cases is going up, but let me tell you this, going to dentist is probably one of the safest places that you can go. The average number of patients going down based on what we know, based on all the information that we have is somewhere between minus 10%, minus 20% year-over-year, and that really hasn't radically changed yet, even though we are hearing a lot of new information. But what the other side of that is when patients show up they really want to get everything done at once. So average spending per patient is higher than it was before, lower number of patients, but higher spending. So from what we see, from what we hear, customers that we talk to, there is an opportunity to -- and a couple of other things maybe I add that, with the dentist because of the income that we have lost in the first 6 months or so, they have become a lot more creative and a lot more flexible. After hours, weekends, tele dentistry in order to compensate for it. And a lot of people are staying home. So being able to take an hour during the day, out of the Zoom call and go and see a dentist is not that difficult versus in the past. So there's a whole set of dynamic that’s taking place. It's uncertain. We're not exactly sure what future is going to hold. But what we have seen so far, continuity of what we saw through Q3 into the Q4. That's an extent that we are able to really see and then manage and control what is within our control moving forward.

Okay. No, that's helpful. And when you say people are getting more procedures done, and that seems like maybe a slight shift in [ showing ] versus before. It was more like pent-up demand and like how my tooth hurts versus you're just saying, you're kind of seeing like a lump -- of like more lumping of visits.

Yes. Very good, very good. We have had a lot of questions back and forth time to figure out how much of this is actually exactly what you said, pent-up demand. And we have to really go segment by segment in order to be able to answer that. We still think that the hygiene procedures are not back and -- but for us, that's less than 3% of our business. We really like it to be back because it opens other opportunities over time. Ortho has been very resilient. So if you were in the middle of a crisis, you were able to continue going forward, but they start, the number of start -- case starts, bracket and wire and aligner has really ramped up. And a lot of that has to do with the ability for people to spend money, redirect investment in other places, in aesthetics versus what they were doing on travel and other places. Implant has been a pretty good ramp. We haven't seen anything despite of the number of cases that said that has changed going forward. So by procedures, we see some of the traditional procedures are gaining momentum, while others, like hygiene, as I mentioned, hasn't yet come back. Again, you put them all back together and set the number of acceptance. So you go to an office, they do the planning for you. They tell you what the acceptance rate is higher than it was before. So you accept the proposal that is given to you and you want everything to be done because you don't want to come back as often as in the past. A combination of all of that, from a procedure perspective, even though volume is down a little bit, the average spending has been higher than in the past. So that's why we are seeing a little bit of a shift in here, and I'm really hoping that would maintain itself as we come out of this going forward. People are more comfortable. They want to spend more. And that pent-up demand that we sort of discussing I think it is going to have ramp in the long run because a lot of tooth related issues, hygiene related issues, when the environment becomes more stable, when the vaccine is in place, a lot of that is going to come back. So when we start looking at the long run, if we're really bullish about the industry as a whole that has [indiscernible] translated and is transforming itself and has plenty of potential for the next decade or so.

Yes. No, that's helpful. Maybe just one last question on demand. How are you sort of looking at -- one of the things that's obviously so helpful in sort of the growth profile is your high-growth market exposure. So maybe talk about China separately and then maybe some what you're seeing in other markets there?

Yes, happy to do it. About 25% of our business give or take is in outside developed market. And China went down faster, ramped up faster than everybody else. It is back to the high single-digit growth year-over-year in Q3, and that momentum has continued in Q4. So China is about 10%, 11% of our overall business. That remaining 14%, 15% is lagging significantly behind developed markets. And we have not yet seen any type of recovery there. But it varies greatly. For example, Russia is a little bit ahead of what we have seen in India, in Middle East. Brazil continues to have some challenges. So about 14%, 15% of our business continues to lag behind, but the stabilization that we have seen in China as well as better performance in developed markets that has given us that confidence that we would be able to just hang in there and bring them along as they start ramping back up in those areas giving us an opportunity. Honestly, in the past probably 8 or 9 months, to change the way we train, we educate, we deploy capabilities. Just to give you one feel, Elizabeth, we have trained over 250,000 dentists in the past 6 months on a variety of procedures and a lot of that, a good portion of that has been also in emerging markets, signing people up, being live, doing webcast, doing Zoom, having question-and-answer going in various spaces. That has been received very well in those geographies.

Yes. No, that makes sense. So -- and then maybe switching over to talk about some of the margins. I mean you're in that sort of -- consumables demand is likely to outpace equipment demand going forward, that should drive a beneficial margin mix. So how do we think about sort of that impact or any other notable margin impacts from maybe the fourth quarter and generally going forward?

Yes. So from the beginning, we had said our assertion was that we're going to build a better with a higher margin. We feel really good about what we have done. And just to give you a little bit of a feel, these things are not necessarily seasonal, the changes that we have done. Say about 5% of business, low margin wasn't going. So we took that out. So that by itself, really a shift in there. We are replacing that with another 5% extra under infection prevention business, that $150 million, $200 million, has an opportunity to have another $50 million to $100 million potential over the next couple of years. 100 to 200 basis point of growth that has higher margin, it's more of a consumable, and we have in-source some of that. So you can take a look at -- this is a structural change. It's not a 1 quarter, 1 piece. Our specialty businesses, our ortho and implant, have better growth profile, and they're growing faster. They have -- we have said that before in the past, a 10% higher margin, they're direct. We are seeing that going forward. On the other hand, I want to highlight a couple of things. Q4, we have 3 less selling days year-over-year. Am I correct?

Yes.

It's about 3% to 4% difference. A lot of things that we did in Q2 and Q3, about furloughs, about cost, -- cutting cost, expenses, we have written a lot of that back in that we don't have any more in furloughs. A large part of what we did in restructuring is done and is behind us. Investment in some of the areas we are rolling them back in. So we get into a more of a normal situation in Q4. Still travel is not where it needs to be, but investment is ramping up. Although we have said, we wanted to get to more of a high teens, 20% EBITDA, that's where we want to be in the long run. And we feel really confident that we will be able to do that as the growth profile and the portfolio changes moving forward. That's our commitment. Obviously, we have shown in the last couple of quarters that we're making significant progress, and we want to stay in that momentum, not short changing investment, but making sure that, that long-haul is in front of us, and we are achieving it, while accelerating growth.

Yes, that makes sense. And I think, obviously, as you pointed out, the structural shift in infection control is important from a growth and a margin outlook perspective. How do you think about adding additional capacity to that business, given the volatility of the COVID outlook? And maybe over the longer term, like what do you see as the growth prospects from that as we hopefully exit COVID?

Yes. Across the board or specifically on the category…

infection prevention.

Infection prevention, yes, yes. Thank you. As I said, it's about $150 million to $200 million business. So what is it? It’s [indiscernible] -- variety of things that we use before a patient comes in after a patient. 50% of that business is in dental, and we have over 40% market share. 50% of it is in medical, and we have less than 10% market share. So that's just kind of a pull back up of, I'd say, what is taking place in here? In the dental, a large part of that business was in United States. So we have built capacity now in Europe. And some of the fastest-growing part of that business is actually outside United States, probably a small base. In Europe, we have built capacity. We have started doing that in China. So expansion outside U.S., even on the dental side, it gives us an opportunity and confidence to be able to keep that momentum going. The other part, I don't think that the COVID -- after COVID is going to change some of the procedural around this infection. The cause of death in United States from infection is the number for -- and you look at it going to hospital, getting values, species. So this infection -- disinfectant processes is here to stay in the dental procedures. And then in the medical side, we have been able to really open a new front. The next generation of product that we just got approval gives us an opportunity to participate in a segment of the market that really varies what we offer. Plenty of opportunity on the medical side, and we are building the capabilities to be a niche player in that space. So we feel good when we say we're going to be able to add about $100 million growth, really feel good because it's not a one thing, and it's not purely COVID. It is a procedural change, geography change and the medical space, add all of that together, we feel really confident that this is going to be an important part of our business with a consumable related margin.

Yes. And I think there's prior precedent for that. When dentists started wearing gloves, when -- et cetera. So it's not like this is a -- although it's obviously a shift, it's not -- there have been similar shifts at the various points historically.

Exactly. You're absolutely correct.

No, that makes a lot of sense. When you say medical, just to make sure that I understand that correctly. Are you talking about like doctors' offices or hospitals? Where are you seeing sort of connection there?

Hospitals, mostly emergency rooms, operating environment. Hospitals, purely in hospitals in a larger setting. And that's another thing I should have added that these aren't a onetime purchase, this is like a 3, 5-year contract. Have you signed with a specific health care providers, the GPOs, that they can put that and service that. And that's why we feel really confident about how when I approve a set of investment in Q2 in the middle of crisis, because we had an opportunity to sign a specific contractual agreement with some 3, 5 years horizon with those hospitals. So that gave us opportunity to kind of continue to diversify the business, but also make sure that the margin changes over time and it's predictable.

And those are like with volume commitments. That's not just one with a GPO with a hunting license kind of thing?

Exactly. I mean the specified –- they’re provided to a specific group of hospitals, and we are specified as that shows to them. The commitment on a yearly basis.

Okay. That makes a ton of sense. So as we think about how much your portfolio has changed over the past few years to be more focused on workflows, on consumables that we just talked to. I mean there's been quite a flip from maybe 5 or 10 years ago. How do you see that evolving as we go forward? Do you think we're sort of at the correct, steady state? Are we not? Would you be against additional equipment at this point? Can you sort of talk us through your thinking there?

Yes. So let's talk about what we got today, and then we can answer that question. We consider 85% of our portfolio to be more of a consumable day-to-day type of use. And why do we make that a statement is because even on the imaging and equipment side, a large part of that is about a $5,000 limit that you can really buy and use. What is the example of it, handheld x-ray, sensors, instruments that we use on a day-to-day basis in dental offices, 85% of our business doesn't require installation, doesn't require maintenance. We can do it remotely. We do the training. It's transactional to some degree, very different margin profile. We really feel very good about that. And the other 15%, we think is good linkage between that and the rest of our portfolio. Our directions are integrated workflow to make sure that we can do from end-to-end, what a dentist, what a DSO, what a hospital university needs, open environment, open architecture. Obviously, our preference is to use brands that have been around for 100 or so years with a quality that everybody knows. But we want to create an open environment with EBS that we can use diagnostic tools, 2D, 3D, iOS, all of that, connect to it, do planning and do execution. Integrate all of that. So when we take a look at our portfolio, are we there yet? To a large degree, but we're going to continue to look for inorganic activities, partnership, joint development in order to expand this portfolio over time. In the past 3 years, and we are back again -- in the past few years, we generated $1 billion worth of cash. Now our debt is less than $1 billion now.

Our net debt is about $1 billion.

So it really puts us in a great position coming out of this to be able to do what we know in Danaher, in Fortive, which is start developing and adding to the portfolio through acquisition, through partnership, through early investment. That is another lever that we have yet to use to accelerate the growth to improve margin going forward. We have done a lot of inorganic activities. I think there is opportunity to bring and leverage that in 2021, 2022 and as we go forward. We have done this before. When I was in Tektronix -- when I was in Danaher, during the 2008, 2009, 2010. During that time, we did 18 acquisitions in Danaher. I was involved in about 5 to 6 acquisitions that we did that to really change the portfolio, brought it back to a different setup. That's our long-term vision in here to build a better invest that is growing faster, better earning and continue to add value to the industry as a whole.

Yes. Where -- how has that availability of potential acquisition targets changed as we're gone through COVID?

So this is about -- going back to EBS, we started this discussion with EBS. Cultivation is a process inside Envista. We continuously do that. We have a funnel, everybody owns it. We continue to look at the market. We do market work. We look at all the companies. That has never stopped. I've been in dental now over 5.5 years. That has been a big part of my priority and job. We have a whole PE team around this. Each one of the presidents do that. Continue to cultivate and look at the industry. Every management team will look at the industry, look at the list of target, continue to work with them. And what has changed is smaller companies, given the environment that we are in, specifically with MBR and other pieces that is coming, there are a lot more open to partnership, to collaboration. And we have seen an opportunity, a willingness that a lot of digitization that everybody talks about, virtualization everybody talk about, now is real. It is not just a high in sky, up high in the sky. So that has become an important qualities going forward. What does that mean? It means that there are a lot of opportunity to really use software as a differentiator in a variety of form or shape, and there are plenty of opportunities for us to collaborate, to invest, to add to that portfolio going forward. And personally, I am, and our team is very bullish about opportunities ahead, where we are a little bit under indexed, such as value [ in plan ] and region. And there are opportunities for expansion around AI, software virtualization capability. We think those 2 areas are -- offer plenty of opportunities.

Yes. No, that makes sense. And I think it's also worth noting how unconsolidated dental manufacturing as an industry is. I think that's something that people talk about it is impress upon you when you go to IDS, which unfortunately, probably, won't be going to this year, and you see just have many there are. So -- no, that makes sense. And then obviously, like as you pointed out, free cash flow generation is obviously a core strength of the business. Do you see any changes there as we sort of come out of COVID in terms of areas that you're focused on? Are you sort of happy with how things are developing on that front?

Our team -- thanks to our finance team, accounting, our FP&A, treasury and Howard’s leadership with John and many others. We have done a really outstanding job in the past, probably 9, 10 months, and managed the storm from liquidity perspective, have put ourselves in a very good position. We really did not see any major change on receivable. We have managed the payable very well. And we have reduced, as I mentioned, about $100 million of permanent expenses going for permanent costs. So our intention all on has been to use our cash, put it to work. And that really hasn't changed at all. As Howard said, about net debt of about $1 billion, even better positioned than we were when we started going public and kind of -- and what we see, at least what we see in the near future, I feel that that's not going to change, that we can continue down that momentum and leverage that in order to be able to make prudent investment with the potential for payout. We spent over $500 million in the past 3 years in R&D. A lot of that has a start-up coming to reality, N1, Spark, IPS product categories, a lot on imaging. Now it's the time to really see the benefit of it. Thoughtful about capacity building, make sure that we are investing where we see result. Coming back a little bit on the R&D side, putting some energy around capacity building, commercial activities, that's what we have been doing, and we are hoping that, that process is going to accelerate our growth, and we will see better margin going forward.

That makes sense. So speaking of R&D and sort of new products, so can you talk about how Spark, particularly, and sort of what are you hearing from doctors and patients as we've come through COVID and, obviously, more practitioners have had more time to do more cases sort of how is -- how do you see that trending as we exit the year?

So let me first give you some numbers that would highlight this. At the end of October compared to beginning of July, we have 50% more doctors using Spark than they did at the beginning of July. So that obviously has ramped up. We have doctors. If you saw beginning of July to end of October, Europe now is coming up to speed, and we have cases coming from Europe, and we are getting that ramped up. We have -- some of the DSOs are signing up, start using Spark going forward. And then as you know, in China, we not only have approval, clinical approval, but also manufacturing capability build in China, and we are ramping that up. So that's a little bit of -- from a outside point of view. But let's go back to what we are hearing and this is -- I encourage you and all those who are participants -- participating, do your own homework. What we are hearing from doctors is a product that it is easier to use, more transparent, customers -- patient like it because it's easier on them because it is connection. Software is more modern. Company -- sold by the same company that gives them optionalities, optionality of bracket and wire that has continued to evolve over time, plus clear aligner. And we have seen more and more of a combination treatment. Whether you start with bracket and wire, you go to aligner or some combination in a different form. The feedback on the product has been extremely positive. And we are really proud of what we have been able to do in here on our own. The capacity has continued to ramp up. As I mentioned, 50% -- another 50%, we took -- in the past 5, 8 or 9 months, one of the areas that we invested very heavily was around Spark, buying the entire lines that would allow us to bring that up to speed and do more cases. So the delivery would not be as much of an issue as it had been at some point in the past. So we think this is between Spark, N1 and IPS. It’s about a 200 basis point of growth for us. And so far, what we have seen, what we saw in Q3, what we've seen in Q4 gives us a confidence that the path that we have taken is exactly the right approach. Focus on orthodontists, make sure combination approach, make sure that these services and training is different than what others are providing and continue to build on what we have built in the past couple of years.

That makes sense. And maybe sticking with orthodontics, it seems like there's obviously been some share shift recently. Can you talk about the opportunities there, given practitioners who were previously using a competitive product be just kind of now I'm going to go look at the -- like portfolio of options out there. How do you think about that?

Yes. Just to give you some numbers. In Q3, our ortho business was double-digit growth. And when we look at the case start, the case starts were really a lot better than -- honestly, what we had expected on both fronts, not only on the bracket and wire, but also on the clear aligner. We are committed to this space. We are committed to the bracket and wire, $2 billion business -- $2 billion market, low single digit. We have been growing mid-single-digit, and we're going to continue to do that. And when you think about why we feel really good about a lot of others may be exiting that space, 70% of our business are back and a lot of business is outside United States. Over 20% of our business today comes from products that are less than 3 years old. So we continue to invest in. We have an incredible group of people, Dr. Damon, Dr. Frost, [ Dr. Dishing ] and many others around the world, that they are really champion in this, providing better, smart --teaching other people, coaching and helping other people to use that as a method in order to get better outcome. And then we have invested significantly in emerging markets. China is the fastest growing bracket and wire for us. Russia is behind it. And we'll keep adding that capability. So that combination of education, geographical mix, innovation really make this business, high margin, high growth for us, and we want to stay with that, but also gives us opportunity and permission to offer clear aligner to the same customers over time. We think there's opportunity -- I mean, obviously, we're gaining share as we speak today and a market that is flat to low single digit, and we are going mid-single-digit, but we think additional opportunity to share gain exists in the long run, and we are going after it aggressively.

No, that makes a ton of sense. And I think that nuance about the particular exposure of bracket and wire to emerging market. It's particularly important to highlight because I think sometimes that gets lost in the shuffle sometimes.

Yes. One other thing, Elizabeth on that, I think it's worth mentioning. Our best estimate is that about 14 million to 15 million case start in 2019, 14 million to 15 million, combination of bracket and wire and clear aligner. You have heard that from many other sources as well. And our assessment is that today, as of now, there are 500 million people that they can use, afford, if they had access to that kind of capability. So this market is so underpenetrated. There's so much opportunity for growth in all aspects of it. We're glad to see people are excited about it. We're glad to see people are really pumped up about all aspects that are direct-to-consumer, GPs, orthodontics. It’s a good thing. It's a positive thing. We embrace it, and we want to participate in it.

Yes. No, that makes a ton of sense. Maybe to switch in to one of your other key new projects, N1. How -- that's obviously a more recent lag. So can you talk about some of the early learnings there? What have people been particularly excited about? Where the -- you see the core opportunities in?

Yes. Similar to what I said about Spark, I really encourage to do your own homework, ask people who have placed N1. And what we are hearing, when they do it, they don't want to go back. We have launched it. Obviously, COVID has had a little bit of a challenge. We have launched it in Europe. 8 countries now they have access to it. We launched it. We got approval. Over 200 dentists they have placed N1 as of now in Europe, and they are coming back for second level of orders. So what we do is we get a group of smart -- very similar to what we did this far. 20, 25 dentists, we walk them through the training. We have experts to show them how it's done. We put all the processes in place. They placed this first set of orders. We help them do that and then help them to get to the next set of placement. We have said that this is going to be a major factor of growth getting Nobel to a mid-single-digit growth in 2021, 2022, and we are really bullish about it. What we are hearing from practitioners that this is an incredible product. And it's not just a product, it's not just a titanium's group. It's the whole system, the drilling, debulkment, the software that goes, that whole system, easier to use, less damage, easier on patient, faster recovery, and they are able to do more of it, which we think that not only oral surgeons, but it's going to be a major factor on DSOs and others that they try to do more impact. So far, everything looks really good. Capacity, again, we have continued to build capacity. We are hoping that approval in the United States would be somewhere in the second half of 2021, and that would be a factor for us, but Europe is ramping up pretty nicely and very quickly.

Got it. Okay. And then in terms of maybe just to know -- we're getting towards the end, but where do you see sort of the next R&D opportunity?

Yes. So we have said that our specialty business is where we want to put most of our energy, around ortho and implant. These businesses that have better margin, better growth potential, similar to what I said on ortho. In 2019, 20 million implants were placed worldwide on 12 million people. Can you just imagine the number of people that can use that. If we can continue to get better quality services, digitize it, simplify it, reduce the fear and time to healing, majority of our investment is going to be in those areas. But imaging is an important part of this equation. If you have diagnostic, planning, execution, now you have an integrated workflow. We're going to continue to put new imaging and software capabilities out there and continue to invest in these growth opportunities on a specialty and then add on top of it, M&A to be able to really build a portfolio that we deliver on that promise of Envista, high growth, high-margin business.

That makes a ton of sense. I guess in summary, what I would be curious to say, so where do you stay that like you are personally most excited about right now?

If anything we learned in the past 8 or 9 months is reinforcement that this industry is resilient. Let's just be very frank, everybody thought that all this is procedural thing, elective, they're not going to go, and that hasn't been the case. It's a resilient industry with significant amount of runway in the long. We in Envista, we see ourselves playing an important role in bringing dental care to masses. And the way to do that is by training and education, innovation and really be an important first is simplifying any grading and getting better clinical outcome and making dentists more productive. I'm excited about what we have done in the past 12 months as an independent company, and I think the road ahead is really exciting for the industry as a whole and for us to play a role in that.

Yes. Awesome. Well, unfortunately, we are out of time because there's so much more we could talk about. So I appreciate the time Amir, Howard, John. Thank you very much.

Thank you.

Thank you, Elizabeth.